Long-Term Incentive Plan

12 Months Ended

Dec. 31, 2011

Long-Term Incentive Plan

Long-Term Incentive Plan

14. Long-Term Incentive Plan

Stock Grants

The Company has a Long-Term Incentive Plan (“LTIP”) which provides for the granting to directors, officers and eligible employees of incentive or nonqualified share options, restricted shares, deferred shares, share purchase rights and share appreciation rights in tandem with options, or any combination thereof. The Company has reserved 6,050,000 common shares for issuance under the LTIP, and 2,775,769 shares remain available for future issuance as of December 31, 2011.

Restricted shares and restricted share units granted pursuant to the Company’s Long-Term Incentive Plan generally vest over periods from one to five years from the date of grant. In August 2011, the Company granted both time-based and performance-based shares to Kenneth E. Cruse upon Mr. Cruse’s appointment as the Company’s Chief Executive Officer. The time-based shares, representing 60.0% of the total shares granted, will vest on a pro-rata basis commencing on the third anniversary of the grant date, and will vest in equal amounts on each of the third, fourth and fifth anniversary of the grant date. The remaining 40.0% of the total shares granted to Mr. Cruse are subject to performance- or market-based, cliff vesting on the fifth anniversary of the grant date, depending on the satisfaction of three measures: the Company’s total stockholder return (“TSR”); the Company’s TSR relative to companies in the NAREIT Equity Index; and the ratio of the Company’s total net debt to the Company’s adjusted EBITDA.

Compensation expense related to awards of restricted shares, restricted share units and performance shares are measured at fair value on the date of grant and amortized over the relevant requisite service period or derived service period.

The Company’s compensation expense and forfeitures related to these restricted shares, restricted share units and performance awards for the years ended December 31, 2011, 2010 and 2009 were as follows (in thousands):

	2011		2010			2009
Compensation expense	$	4,135	$	5,811		$	5,621
Forfeiture expense (credit) adjustments	$	134	$	(48	)	$	43

In December 2010, the Company recorded $1.7 million in stock compensation and amortization expense related to the departure of its former Chief Executive Officer, Arthur L. Buser.

The following is a summary of non-vested stock grant activity:

	2011				2010				2009
	Shares		WeightedAveragePrice		Shares		WeightedAveragePrice		Shares		WeightedAveragePrice
Outstanding at beginning of year	668,934		$	7.70	1,301,451		$	7.68	692,767		$	17.93
Granted	1,260,845		9.10		438,665		9.06		1,073,084		4.58
Vested	(428,935	)	8.85		(767,052	)	8.84		(400,647	)	17.15
Forfeited	(93,692	)	8.43		(304,130	)	6.71		(63,753	)	7.36
Outstanding at end of year	1,407,152		8.55		668,934		7.70		1,301,451		7.68

At December 31, 2011, there were no deferred shares, share purchase rights, or share appreciation rights issued or outstanding under the LTIP.

Stock Options

In April 2008, the Compensation Committee of the Company’s board of directors approved a grant of 200,000 non-qualified stock options (the “Options”) to Robert A. Alter, the Company’s former Chief Executive Officer and current Chairman Emeritus and Founder. The Options fully vested in April 2009, and will expire in April 2018. The exercise price of the Options is $17.71 per share.

The initial fair value of the Options was $0.7 million, and was estimated using a binomial option pricing model with the following assumptions:

Expected dividend yield	7.90	%
Risk-free interest rate	3.29	%
Expected volatility	26.90	%
Expected life (in years)	5.5

The expected life was calculated using the simplified method as outlined in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107.