SHARE BASED PAYMENTS

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

On May 25, 2023, our shareholders approved an amendment to the Hersha Hospitality Trust 2012 Equity Incentive Plan which provides equity-based incentives for the purpose of attracting and retaining executive officers, employees, trustees and other persons and entities that provide services to the Company.

On March 9, 2023, the Compensation Committee approved the 2023 Long Term Incentive Plan ("2023 LTIP") in which 60% of the LTIP Units are issuable 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) and the remaining 40% of the LTIP Units awarded provide for time based vesting.

The 60% market-based portion of the 2023 LTIP has a three-year performance period which commenced on January 1, 2023 and ends December 31, 2025. As of September 30, 2023, no shares or LTIP Units have been issued to the executive officers in settlement of 2023 LTIP market-based awards.

A summary of our share based compensation activity from December 31, 2022 to September 30, 2023 is as follows:


	LTIP Unit Awards				Restricted Share Awards			Share Awards
	Number of Units		Weighted Average Grant Date Fair Value		Number of Restricted Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Unvested Balance as of December 31, 2022	1,105,573		$	9.65	164,166	$	9.83	—
Granted	1,297,419	(1)	5.90		52,710	5.90		145,615	$	6.36
Vested	(51,452)		5.90		(122,423)	10.03		(145,615)	6.36
Forfeited	—		N/A		(2,767)	10.52		—	N/A
Unvested Balance as of September 30, 2023	2,351,540		$	7.66	91,686	$	7.29	—

(1) On March 22, 2023, 1,104,874 Units were issued to the executive officers in settlement of the 2022 Short Term Incentive Program. These Units vest on December 31, 2024, the two year anniversary following the end of the performance period and were determined by dividing the dollar amount of award earned by $9.32, the per share volume weighted average trading price of the Company's common shares on the NYSE for the 20 trading days prior to December 31, 2022.

On June 21, 2023, the Compensation Committee awarded 192,545 LTIP Units related to the time based portion of the 2023 LTIP. These LTIP Units vest over a three year period from January 1, 2023 to December 31, 2025. The LTIP Units awarded were determined by dividing the dollar amount of award earned by $9.32, the per share volume weighted average trading price of the Company’s common shares on the NYSE for the 20 trading days prior to December 31, 2022.

The following table summarizes share based compensation expense for the three and nine months ended September 30, 2023 and 2022 and unearned compensation as of September 30, 2023 and December 31, 2022:


	Share Based Compensation Expense								Unearned Compensation
	For the Three Months Ended				For the Nine Months Ended				As of
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022		September 30, 2023		December 31, 2022
Issued Awards
LTIP Unit Awards	$	1,857	$	1,960	$	4,584	$	5,878	$	5,689	$	5,311
Restricted Share Awards	98		228		473		767		358		683
Share Awards	45		152		1,060		916		—		—
Unissued Awards
Market Based	339		428		971		1,047		2,632		2,541

Total	$	2,339	$	2,768	$	7,088	$	8,608	$	8,679	$	8,535

The weighted-average period of which the unrecognized compensation expense will be recorded is approximately 1.6 years for LTIP Unit Awards and 1.1 years for Restricted Share Awards.

The remaining unvested target units are expected to vest as follows:


	2023	2024	2025	2026
LTIP Unit Awards	1,110,621	1,176,738	64,181	—
Restricted Share Awards	—	73,758	10,464	7,464
	1,110,621	1,250,496	74,645	7,464

As noted in Note 1 - Company Overview and Merger Agreement, pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the Company Merger Effective Time, each Company Restricted Share Award that is outstanding immediately prior to the Company Merger Effective Time will vest, and each Company Restricted Share Award will be canceled and converted into the right to receive a payment (without interest and subject to applicable tax withholding) equal to the number of Company Common Shares underlying such Company Restricted Share Award at $10.00 per share. At the Partnership Merger Effective Time, each Company LTIP Unit that is outstanding and unvested as of immediately prior to the Partnership Merger Effective Time shall vest and become transferable and immediately thereafter, the Company shall cause a Forced Conversion (as defined in the Merger Agreement) with respect to all Company LTIP Units then eligible for conversion (after giving effect to the vesting of all Company LTIP Units as described in the Merger Agreement) such that, as of the Partnership Merger Effective Time, each then outstanding Company LTIP Unit will be converted into an equal number of common Company Partnership Units (with such converted Company Partnership Units treated in the same manner under the Merger Agreement as other outstanding Company Partnership Units).