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Incentive Award Plan

12 Months Ended

Dec. 31, 2023

12. Incentive Award Plan

In April 2022, the Company’s stockholders approved the 2022 Incentive Award Plan (the “Plan”), which replaced the Company’s prior long-term incentive plan. The Plan provides for granting discretionary awards to employees, consultants and non-employee directors. The awards may be made in the form of options, restricted stock awards, dividend equivalents, stock payments, restricted stock units, other incentive awards, LTIP units or share appreciation rights. The Company has reserved 3,750,000 common shares for issuance under the Plan, and 2,581,199 shares remain available for future issuance as of December 31, 2023. At December 31, 2023, only shares of restricted stock were issued and outstanding under the Plan.

Should a stock grant be forfeited prior to its vesting, the shares covered by the stock grant are added back to the Plan and remain available for future issuance. Shares of common stock tendered or withheld to satisfy the grant or exercise price or tax withholding obligations upon the vesting of a stock grant are not added back to the Plan.

Restricted shares and units are measured at fair value on the date of grant and amortized as compensation expense over the relevant requisite service period or derived service period. The Company has elected to account for forfeitures as they occur.

As of December 31, 2023, the Company’s issued and outstanding awards consisted of both time-based and performance-based restricted stock grants. The Company’s amortization expense, including forfeitures related to restricted shares was as follows (in thousands):


	2023		2022		2021
Amortization expense, including forfeitures	$	10,775	$	10,891	$	12,788	(1)

Capitalized compensation cost (2)	$	467	$	481	$	490

(1)	In 2021, the Company recognized $1.1 million in amortization of deferred stock compensation expense related to the departure of its former Chief Executive Officer.

(2)	The Company capitalizes compensation costs related to restricted shares granted to certain employees whose work is directly related to the Company’s capital investment in hotels.

As of December 31, 2023, $10.9 million in compensation expense related to non-vested restricted stock grants remained to be recognized over a weighted-average period of 21 months.

Restricted Stock Awards

The Company’s restricted stock awards are time-based restricted shares that generally vest over periods ranging from three years to five years from the date of grant. The following is a summary of non-vested restricted stock grant activity:


	2023			2022			2021
		Weighted			Weighted			Weighted
		Average			Average			Average
	Shares	Price		Shares	Price		Shares	Price
Outstanding at beginning of year	1,289,146	$	11.65	1,463,315	$	12.15	1,336,836	$	14.01
Granted	450,964	$	10.58	555,501	$	11.41	1,478,874	$	11.55
Vested	(699,652)	$	11.76	(694,863)	$	12.50	(1,116,989)	$	13.65
Forfeited	(8,192)	$	11.12	(34,807)	$	11.79	(235,406)	$	11.81
Outstanding at end of year	1,032,266	$	11.11	1,289,146	$	11.65	1,463,315	$	12.15

Restricted Stock Units

In February 2023 and 2022, the Company granted restricted stock units that vest at the end of a three-year performance period and are subject to the achievement of a market condition based on a measure of the Company’s total shareholder return relative to the total shareholder return of the companies that comprise the FTSE Nareit Equity Lodging/Resorts Index who have a market capitalization in excess of $500 million as of the first day of the applicable performance period (the “TSR Three-Year Performance Period Shares”). The number of TSR Three-Year Performance Period Shares that may become vested ranges from zero to 200% of the number of related shares granted to the employee, based on the level of achievement of the foregoing performance measure.

Additionally, in February 2022, the Company granted special awards that will vest in January 2024 after a two-year performance period which ended December 31, 2023 (the “TSR Two-Year Performance Period Shares”). The TSR Two-Year Performance Period Shares were subject to the achievement of a market condition based on a measure of the Company’s total shareholder return relative to the total shareholder return of the companies that comprise the FTSE Nareit Equity Lodging/Resorts Index who have a market capitalization in excess of $500 million as of the first day of the applicable performance period. The number of TSR Two-Year Performance Period Shares that may become vested ranges from zero to 200% of the number of related shares granted to the employee, based on the level of achievement of the foregoing performance measure.

In March 2022, the Company granted special awards that are subject to the achievement of five increasing levels of the Company’s closing common stock price per share, from $13.50 to $19.50, sustained over a 20 consecutive trading day period (the “Stock Price Target Five-Year Performance Period Shares”). The Stock Price Target Five-Year Performance Period Shares will vest on the later to occur of the date on which the stock price target is achieved and the third anniversary of the grant date.

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


	2023			2022			2021
		Weighted			Weighted			Weighted
		Average			Average			Average
	Shares	Price		Shares	Price		Shares	Price
Outstanding at beginning of year	612,584	$	10.40	—	$	—	—	$	—
Granted	463,576	$	11.07	612,584	$	10.40	—	$	—
Vested	—	$	—	—	$	—	—	$	—
Outstanding at end of year	1,076,160	$	10.69	612,584	$	10.40	—	$	—

The grant date fair value of the performance awards was determined based on a Monte Carlo simulation method with the following assumptions:


Performance Award Grant Date	Expected Volatility		Dividend Yield (1)	Risk-Free Rate		Expected Term
February 9, 2023
TSR Three-Year Performance Period Shares	38.0	%	—	4.18	%	3 years

February 10, 2022
TSR Two-Year Performance Period Shares	41.0	%	—	1.56	%	2 years
TSR Three-Year Performance Period Shares	41.0	%	—	1.78	%	3 years

March 7, 2022
Stock Price Target Five-Year Performance Period Shares	40.0	%	—	1.72	%	5 years

(1)	Dividend equivalents are assumed to be reinvested in shares of the Company’s common stock and dividend equivalents will only be paid to the extent the award vests.