We measure the cost of employee service received in exchange for an award of equity instruments based on the grant-date fair value of the award. The compensation cost is amortized on a straight line basis over the period during which an employee is required to provide service in exchange for the award. The compensation cost related to performance awards that are contingent upon market-based criteria being met is recorded at the fair value of the award on the date of the grant and amortized over the performance period.

The Company established and our shareholders approved the Hersha Hospitality Trust 2012 Equity Incentive Plan, as amended, (the “2012 Plan”) for the purpose of attracting and retaining executive officers, employees, trustees and other persons and entities that provide services to the Company.

In its continuous effort to implement executive compensation strategies that further align the interests of the Company’s executives with those of shareholders, the Compensation Committee comprehensively redesigned the executive compensation programs for 2019. Prior to 2019, executives participated in our legacy incentive compensation programs, the Annual Cash Incentive Program (“ACIP”), the Annual Long Term Equity Incentive Program (“Annual EIP”), and the Multi-Year Long Term Equity Incentive Program (“Multi-Year EIP”). Beginning in 2019, executives will participate in the Short Term Incentive Program (“STIP”) and the Long-Term Incentive Program (“LTIP”), eliminating the legacy compensation programs.

On March 6, 2019, the Compensation Committee approved the 2019 STIP for the executive officers, pursuant to which the executive officers are eligible to earn cash and equity awards in the form of stock awards, LTIP Units, or performance share awards issuable pursuant to the 2012 Plan. Awards are earned under the 2019 STIP based on achieving a threshold, target or maximum level of defined performance objectives and any amounts earned are satisfied 50% in cash and 50% in equity awards. The Compensation Committee provided the option to the executive officers to elect shares in lieu of cash payment under the 2019 STIP. The Company accounts for grants as performance awards for which the Company assesses the probability of achievement of the performance conditions at the end of each period. As of June 30, 2019, no shares or LTIP Units have been issued in accordance with the 2012 Plan to the executive officers in settlement of 2019 STIP.



						Units Vested		Unearned Compensation
Issuance Date	Weighted Average Share Price		LTIP Units Issued	Vesting Period	Vesting Schedule	June 30, 2019	December 31, 2018	June 30, 2019		December 31, 2018
March 21, 2019
(2018 Annual EIP) (2018 ACIP)	$	18.00	498,261	3 years	25%/year ⁽¹⁾⁽²⁾	64,583	—	$	3,977	$	—
March 28, 2018
(2017 Annual EIP) (2017 ACIP)	17.91		564,434	3 years	25%/year ⁽¹⁾⁽³⁾	144,216	144,216	1,605		2,875
March 28, 2017
(2016 Annual EIP)	18.53		122,727	3 years	25%/year ⁽¹⁾	92,042	92,042	76		152
			1,185,422			300,841	236,258	$	5,658	$	3,027

Stock based compensation expense related to the STIP and our legacy short term incentive programs of $2,145 and $1,831, and $3,545 and $2,617 was incurred during the three and six months ended June 30, 2019 and 2018, respectively. Unearned compensation related to the legacy short term incentive programs as of June 30, 2019 and December 31, 2018 was $5,658 and $3,027, respectively.

Unearned compensation related to the grants and amortization of LTIP Units is included in Noncontrolling Interests on the Company’s Consolidated Balance Sheets and Consolidated Statements of Equity.

On March 6, 2019, the Compensation Committee approved the 2019 LTIP. This program has a three-year performance period which commenced on January 1, 2019 and ends December 31, 2021. As of June 30, 2019, no shares or LTIP Units have been issued to the executive officers in settlement of 2019 LTIP awards.



						Units Vested		Unearned Compensation
Compensation Committee Approval Date	Weighted Average Share Price		LTIP Units Issued	LTIP Issuance Date	Performance Period	June 30, 2019	December 31, 2018	June 30, 2019		December 31, 2018
March 6, 2019
(2019 LTIP)	$	10.08	—	N/A	1/1/2019 to 12/31/2021	—	—	$	1,830	$	—
March 8, 2018
(2018 Multi-Year EIP)	11.06		—	N/A	1/1/2018 to 12/31/2020	—	—	1,089		1,306
March 10, 2017
(2017 Multi-Year EIP)	9.25		—	N/A	1/1/2017 to 12/31/2019	—	—	449		598
March 17, 2016
(2016 Multi-Year EIP)	11.25		32,020	N/A	1/1/2016 to 12/31/2018	16,009	—	223		296
			32,020			16,009	—	$	3,591	$	2,200

The shares or LTIP Units issuable under the LTIP or legacy long term incentive programs are based on the Company’s achievement of a certain level of (1) absolute total shareholder return (37.5% of the award), (2) relative total shareholder return as compared to the Company’s peer group (37.5% of the award), and (3) relative growth in revenue per available room (RevPar) compared to the Company’s peer group (25.0% of the award).

The Company accounts for the total shareholder return components of these grants as market based awards where the Company estimates unearned compensation at the grant date fair value which is then amortized into compensation cost over the vesting period of each individual plan. The Company accounts for the RevPAR component of the grants as performance-based awards for which the Company assesses the probable achievement of the performance conditions at the end of the reporting period.

Stock based compensation expense of $470 and $337, and $690 and $889 was recorded for the three and six months ended June 30, 2019 and 2018, respectively, for the 2019 LTIP and the legacy long term incentive programs. Unearned compensation related to the Multi-Year EIPs as of June 30, 2019 and December 31, 2018, respectively, was $3,591, and $2,200.

The Compensation Committee approved a program that allows the Company’s trustees to make a voluntary election to receive any portion of their board fee compensation in the form of common equity valued at a 25% premium to the cash that would have been received. On December 31, 2018, we issued 10,863 shares which do not fully vest until December 31, 2019. Compensation expense incurred for the three and six months ended June 30, 2019 and 2018 was $48 and $50, and $95 and $101, respectively. The following table is a summary of all unvested share awards issued to trustees in lieu of board fee compensation:



						Unearned Compensation
Original Issuance Date	Shares Issued	Share Price on Date of Grant		Vesting Period	Vesting Schedule	June 30, 2019		December 31, 2018
December 31, 2018	10,863	$	17.54	12 months	100%	$	95	$	191

Compensation expense for the Multi-Year Long Term Incentive Programs for the Company’s trustees incurred for the three and six months ended June 30, 2019 and 2018 was $35 and $26, and $70 and $53, respectively. Unearned compensation related to the Multi-Year Long Term Equity Incentive Programs was $228 and $298 as of June 30, 2019 and December 31, 2018, respectively.



						Shares Vested		Unearned Compensation
Original Issuance Date	Weighted Average Share Price		Shares Issued	Vesting Period	Vesting Schedule	June 30, 2019	December 31, 2018	June 30, 2019		December 31, 2018
December 31, 2018	$	17.54	9,000	3 years	33% /year	—	—	$	132	$	158
December 29, 2017	17.40		9,000	3 years	33% /year	3,000	3,000	78		104
December 30, 2016	21.50		5,000	3 years	33% /year	3,335	3,335	18		36
						6,335	6,335	$	228	$	298

Compensation expense related to share awards issued to the Company’s trustees of $402 and $420 was incurred during the three and six months ended June 30, 2019 and 2018, respectively, and is recorded in general and administrative expense on the consolidated statements of operations. Share grants issued to the Company’s trustees are immediately vested. On June 3, 2018, an aggregate of 23,333 shares were issued to the Company’s trustees at a price per share on the date of grant of $17.22.

In addition to share based compensation expense related to awards to executives and trustees under the programs described above, share based compensation expense related to restricted common shares issued to employees of the Company and non-employees for services provided to the Company totaled $374 and $459 and $630 and $649 for the three and six months ended June 30, 2019 and 2018, respectively. Unearned compensation related to these restricted share awards as of June 30, 2019 and December 31, 2018 was $635 and $829, respectively.



					Shares Vested		Unearned Compensation
Original Year of Issuance Date	Shares Issued	Range of Share Price on Date of Grant	Vesting Period	Vesting Schedule	June 30, 2019	December 31, 2018	June 30, 2019		December 31, 2018
2019	31,508	$16.61-$18.00	0-2 years	50-100% /year	8,344	—	$	334	$	—
2018	54,676	$17.91-$22.65	1-4 years	25-100% /year	43,131	2,189	239		641
2017	41,897	$18.47-$18.53	2 years	50% /year	38,378	24,111	62		174
2016	29,294	$18.02-$21.11	2 years	50%/year	29,294	29,294	—		—
2015	15,703	$28.09	2-4 years	25-50% /year	15,703	14,469	—		14
Total	173,078				134,850	70,063	$	635	$	829