Incentive Award Plan

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

In May 2018, the Company’s stockholders approved the American Campus Communities, Inc. 2018 Incentive Award Plan (the “2018 Plan”). The 2018 Plan replaced the Company’s 2010 Incentive Award Plan (the “2010 Plan”). The 2018 Plan provides for the grant of various stock-based incentive awards to selected employees and directors of the Company and the Company’s affiliates. The types of awards that may be granted under the 2018 Plan include incentive stock options, nonqualified stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), profits interest units (“PIUs”), and other stock-based awards. The Company has reserved a total 3.5 million shares of the Company’s common stock for issuance pursuant to the 2018 Plan, subject to certain adjustments for changes in the Company’s capital structure, as defined in the 2018 Plan. Upon approval of the 2018 Plan, all remaining authorized shares that were not granted under the 2010 Plan were forfeited and are no longer available for issuance as new awards. As of December 31, 2019, 3.1 million shares were available for issuance under the 2018 Plan.

Restricted Stock Units

Upon initial appointment to the Board of Directors and reelection to the Board of Directors at each Annual Meeting of Stockholders, each independent member of the Board of Directors is granted RSUs. On the Settlement Date, the Company will deliver to the recipients a number of shares of common stock or cash, as determined by the Compensation Committee of the Board of Directors, equal to the number of RSUs granted to the recipients. In addition, recipients of RSUs are entitled to dividend equivalents equal to the cash distributions paid by the Company on one share of common stock for each RSU issued, payable currently or on the Settlement Date, as determined by the Compensation Committee of the Board of Directors.

Upon reelection to the Board of Directors in May 2019, all members of the Company’s Board of Directors were granted RSUs in accordance with the 2018 Plan. These RSUs were valued at $162,500 for the Chairman of the Board of Directors and at $117,500 for all other members. Additionally, in July 2019, the Company appointed one new member to the Board of Directors who was granted RSUs valued at $117,500. The number of RSUs was determined based on the fair market value of the Company’s stock on the date of grant, as defined in the 2018 Plan. All awards vested and settled immediately on the date of grant, and the Company delivered shares of common stock, as determined by the Compensation Committee of the Board of Directors.

A summary of ACC’s RSUs under the Plan for the years ended December 31, 2019 and 2018 and activity during the years then ended is presented below:



	Number of RSUs		Weighted-Average Grant Date Fair Value Per RSU
Outstanding at December 31, 2017	—		$	—
Granted	27,376		39.45
Settled in common shares	(27,376	)	39.45
Outstanding at December 31, 2018	—		—
Granted	20,812		47.34
Settled in common shares	(18,318	)	47.37
Settled in cash	(2,494	)	47.11
Outstanding at December 31, 2019	—		—

The Company recognized expense of approximately $0.9 million, $1.1 million, and $0.9 million for the years ended December 31, 2019, 2018, and 2017, respectively, reflecting the fair value of the RSUs issued on the date of grant, and the expense was included in general and administrative expenses on the Company’s consolidated statements of comprehensive income. The weighted-average grant-date fair value for each RSU granted during the year ended December 31, 2017 was $46.67.

Restricted Stock Awards

The Company awards RSAs to its executive officers and certain employees that vest in equal annual installments over a five year period. Unvested awards are forfeited upon the termination of an individual’s employment with the Company under specified circumstances. Recipients of RSAs receive dividends, as declared by the Company’s Board of Directors, on unvested shares, provided that the recipient continues to be employed by the Company. A summary of the Company’s RSAs under the Plan for the years ended December 31, 2019 and 2018 is presented below:



	Number of RSAs		Weighted-Average Grant Date Fair Value Per RSA
Nonvested balance at December 31, 2017	810,870		$	44.16
Granted	357,387		39.41
Vested	(249,102	)	43.36
Forfeited	(56,475	)	43.64
Nonvested balance at December 31, 2018	862,680		$	42.46
Granted	387,341		44.08
Vested	(266,556	)	41.86
Forfeited	(16,124	)	42.91
Nonvested balance at December 31, 2019	967,341		$	43.27

The fair value of RSAs is calculated based on the closing market value of the Company’s common stock on the date of grant. The fair value of these awards is amortized to expense over the vesting periods, which amounted to approximately $12.7 million, $11.1 million and $13.1 million for the years ended December 31, 2019, 2018 and 2017, respectively. The amortization of restricted stock awards for the year ended December 31, 2017 includes $2.4 million of contractual executive separation and retirement charges incurred with regard to the retirement of the Company’s former Chief Financial Officer, representing the June 30, 2017 vesting of 46,976 RSAs, net of shares withheld for taxes, related to the retirement. The weighted-average grant date fair value for each RSA granted and forfeited during the year ended December 31, 2017 was $48.55 and $42.36, respectively.

The total fair value of RSAs vested during the year ended December 31, 2019 was approximately $11.2 million. Additionally, as of December 31, 2019, the Company had approximately $30.9 million of total unrecognized compensation cost related to granted RSAs, which is expected to be recognized over a remaining weighted-average period of 3.2 years.

Per the provisions of the Plan, an employee becomes retirement eligible when (i) the sum of an employee’s full years of service (a minimum of 120 contiguous full months) and the employee’s age on the date of termination (a minimum of 50 years of age) equals or exceeds 70 years (hereinafter referred to as the “Rule of 70”); (ii) the employee gives at least six months prior written notice to the Company of his or her intention to retire; and (iii) the employee enters into a noncompetition agreement and a general release of all claims in a form that is reasonably satisfactory to the Company. As of December 31, 2019, 19 employees have met the Rule of 70, including the Company’s Chief Executive Officer and President. A total of 330,134 unvested RSAs are held by such employees. Once the other two conditions of retirement eligibility are met, the shares held by these employees will be subject to accelerated vesting.