Long-Term Compensation

6 Months Ended

Jun. 30, 2013

Long-Term Compensation

10. Long-Term Compensation

Under its incentive plans, Prologis had stock options and full value awards (restricted stock, restricted share units (“RSUs”) and performance based shares (“PSAs”)) outstanding.

Summary of Activity

The activity for the six months ended June 30, 2013, with respect to our stock options, was as follows:

	Options Outstanding
	Number of Options			Weighted Average Exercise Price		Options Exercisable
Balance at December 31, 2012		7,513,217
Exercised		(752,015	)
Forfeited / Expired		(278,517	)
Balance at June 30, 2013		6,482,685		$	36.23		6,333,605

The activity for the six months ended June 30, 2013, with respect to our unvested restricted stock, was as follows:

	Number of Shares			Weighted Average Grant  Date Fair Value
Balance at December 31, 2012		687,277
Vested		(347,520	)
Forfeited		(2,992	)
Balance at June 30, 2013		336,765		$	34.01

The activity for the six months ended June 30, 2013, with respect to our RSU and PSA awards, was as follows:

	Number of Shares			Weighted Average Grant-Date Fair Value		Number of Shares  Vested
Balance at December 31, 2012		1,999,348
Granted		1,217,852
Vested		(797,121	)
Forfeited		(17,414	)
Balance at June 30, 2013		2,402,665		$	36.72		79,306

During the six months ended we granted 1,217,852 RSUs which, generally, will vest over three years.

Outperformance Plan

In February 2013, we granted points under our outperformance plan with an aggregate fair value of $23.9 million as of the date of the grant. Such points relate to a three-year performance period that began on January 1, 2013 and will end on December 31, 2015. If the compensation pool for this performance period is funded, the participants’ points will be paid in the form of restricted common stock. As the 2013 award is equity-classified, the fair value of the award is measured at the grant-date and amortized over the performance period. We recognized $4.0 million of compensation expense, during the six months ended June 30, 2013, for the 2013 award.

On May 1, 2013, the compensation committee of the Board approved a modification of the settlement terms for the award granted under our outperformance plan in 2012. The 2012 award is now payable in shares of common stock instead of cash and was reclassified from liability to equity based on the fair value at the modification date using the Monte Carlo simulation model. The new grant-date fair value less the amount of compensation expense recognized to date is amortized over the remaining performance period, through December 31, 2014. We recognized $9.0 million of compensation expense, during the six months ended June 30, 2013, for the 2012 award based on the fair value of $36.1 million as of the modification date in May 2013.