Share-Based Compensation

All share-based compensation cost is measured at the grant date, based on the estimated fair value of the award. The Company issues time-based, performance-based and market performance-based equity awards. Time-based and market performance-based awards are recognized on a straight-line basis over the employees’ requisite service period, as adjusted for estimate of forfeitures. Performance-based awards are recognized ratably over the vesting period using a graded vesting attribution model upon the achievement of the performance target, as adjusted for estimate of forfeitures. The only performance-based awards issued by the Company were granted in 2016 and 2017.

Aggregate stock-based compensation charges related to stock options and restricted stock units were $10.7 million, $2.4 million and $2.5 million during the years ended December 31, 2018, 2017 and 2016, respectively, and were included as a component of "Selling, general and administrative" expense on the accompanying consolidated statements of operations. As of December 31, 2018, there was $24.0 million of unrecognized stock‑based compensation expense related to stock options and restricted stock units, which will be recognized over a weighted-average period of 2.5 years.

Americold Realty Trust 2008 and 2010 Equity Incentive Plans

During December 2008, the Company and the common shareholders approved the Americold Realty Trust 2008 Equity Incentive Plan (2008 Plan), whereby the Company may issue either stock options or stock appreciation rights based upon a reserved pool of 4,900,025 common shares. The Company awarded no options in 2018, 2017 or 2016 under the 2008 Plan. The only active awards remaining under the 2008 Plan were exercised during 2018. The Company is no longer permitted to grant awards under this Plan as a result of replacing the 2008 Plan with the 2010 Plan. During December 2010, the Company and the common shareholders approved the Americold Realty Trust 2010 Equity Incentive Plan (2010 Plan), whereby the Company could issue stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and/or dividend equivalents with respect to the Company’s common shares, cash bonus awards, and/or performance compensation awards to certain eligible participants, as defined, based upon a reserved pool of 3,849,976 of the Company’s common shares.

Modification of Restricted Stock Units

On January 4, 2018, the Company’s board of trustees approved the modification of awards to allow the grant of dividend equivalents to all participants in the 2010 Plan with respect to any and all vested restricted stock units of the Company that have not been settled pursuant to the 2010 Plan. On the same day, the Company’s board of trustees resolved that no further awards may be granted under the 2010 Plan after the approval of the Americold Realty Trust 2017 Equity Incentive Plan (2017 Plan). As a result, the Company recognized share-based compensation expense of $2.0 million to reflect the change in fair value associated with the modification of the dividend equivalents rights of the outstanding equity awards under the 2010 Plan.

Americold Realty Trust 2017 Equity Incentive Plan

On January 4, 2018, the Company’s board of trustees adopted the 2017 Plan, which permits the grant of various forms of equity- and cash-based awards from a reserved pool of 9,000,000 common shares of the Company. The maximum aggregate number of shares granted to any participant other than a non-employee trustees or consultant in any calendar year for which options or stock appreciation rights (SARs) shall be 1,000,000 shares, for awards other than options or SARs that are performance-based compensation, denominated in shares, shall be 1,500,000 shares.

On January 17, 2018, the Company’s shareholders approved the 2017 Plan. Equity-based awards issued under the 2017 Plan have the rights to receive dividend equivalents on an accrual basis. Dividend equivalents accrued are paid upon the vesting of the awards, and for awards that are forfeited during the vesting period no dividend equivalents will be paid. Certain restricted stock units issued in connection with the IPO to retain key employees of the Company and time-based awards have the right to receive nonforfeitable dividend equivalent distributions on unvested units. As of December 31, 2018, 7,399,311 shares of common stock, including awards convertible into or exchangeable for shares of common stock remained available for future issuance under the 2017 Plan.

Restricted Stock Units

Restricted stock units are nontransferable until vested. Prior to the issuance of a common share, the grantees of restricted stock units are not entitled to vote the shares. Time-based restricted stock unit awards vest in equal annual increments over the vesting period. The grant date fair values for time-based restricted unit stock awards is equal to the closing market price of Americold Realty Trust common stock on the grant date. Performance-based and market performance-based restricted stock unit awards vest upon the achievement of the performance target, as well as completion of performance period.

The following table summarizes restricted stock unit grants by grantee type during the years ended December 31, 2018, 2017 and 2016:



Year Ended December 31	Grantee Type	Number of Restricted Stock Units Granted	Vesting Period	Grant Date Fair Value
2018	Director group	373,438	1-3 years	$	5,975,008
2018	Employee group	1,263,751	1-4 years	$	22,195,706
2017	Director group	18,348	2-3 years	$	198,892
2017	Employee group	141,288	5 years	$	1,897,498
2016	Director group	18,348	2-3 years	$	198,892

Of the restricted stock units granted for the year ended December 31, 2018, (i) 331,250 were time-based restricted stock units with a three-year vesting period issued to non-employee trustees in connection with the IPO, (ii) 42,188 were time-based restricted stock units with a one-year vesting period issued to non-employee trustees as part of their annual compensation, (iii) 659,751 were time-based restricted stock units with various vesting periods ranging from one to four years issued to certain employees and (iv) 604,000 were market performance-based restricted stock units with a three-year vesting period issued to certain employees.

Of the restricted stock units granted for the year ended December 31, 2017, (i) 18,348 were time-based restricted stock units with a three-year vesting period issued to non-employee trustees as part of their annual compensation, (ii) 69,860 were time-based restricted stock units with a five-year vesting period issued to certain employees a (iii) 71,428 were performance-based restricted stock units with a five-year vesting period based upon achievement of annual Company EBITDA performance against target.

The restricted stock units granted for the year ended December 31, 2016 were time-based with a three-year vesting period, issued to non-employee trustees as part of their annual compensation.

The following table provides a summary of restricted stock awards activity under the 2010 and 2017 Plans as of December 31, 2018:



Year Ended December 31, 2018
Restricted Stock	Number of Time-Based Restricted Stock Units		Aggregate Intrinsic Value (in millions)		Number of Performance-Based Restricted Stock Units	Aggregate Intrinsic Value (in millions)		Number of Market Performance-Based Restricted Stock Units		Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2017	34,633		N/A		71,428	N/A		—		N/A
Granted	1,033,189				—			604,000
Vested ⁽¹⁾	(19,566	)			—			—
Forfeited	(20,000	)			—			(16,500	)
Non-vested as of December 31, 2018	1,028,256		$	26.3	71,428	$	1.8	587,500		$	15.0

The weighted average grant-date fair value of restricted stock units granted during years 2018, 2017, and 2016 was $17.21, $13.13 and $10.84 per unit, respectively. As of December 31, 2018 the weighted average grant date fair value of vested restricted stock units was $11.27, for forfeited restricted stock units was $14.83, and non-vested restricted stock units was $17.06 per unit.

(1)

For certain vested restricted stock units, common shares shall not be issued until the first to occur of: (1) termination of service; (2) change in control; (3) death; or (4) disability, as defined in the 2010 Plan. For certain vested restricted stock units, common shares shall not be issued until the first to occur of: (1) change in control or (2) set cliff vesting dates, as defined in the 2010 Plan. Holders of these certain vested restricted stock units are entitled to receive dividends, but are not entitled to vote the shares until common shares are issued. The amount of vested restricted stock units was 613,605 as of December 31, 2018 and had a related aggregate intrinsic value of $15.7 million at $25.54 per unit.

Market Performance-Based Restricted Stock Units

Market performance-based restricted units, which were determined to contain a market condition, utilize absolute total shareholder return (TSR) over a three-year measurement period as the market performance metric. Awards will vest based on the Company’s TSR relative to the percentage appreciation (rounded to the nearest tenth of a percent), in the value per share of stock during the performance period, over a three-year market performance period, commencing on January 18, 2018 and ending on December 31, 2020 (or, if earlier, ending on the date on which a change in control of the Company occurs), subject to continued services. In the event that the TSR upon completion of the market performance period is achieved at the “minimum,” “target” or “maximum” level as set forth below, the awards will become vested as to the market condition with respect to the percentage RSUs, as applicable, set forth below:



Performance Level Thresholds	TSR	Market Performance Percentage
Minimum	8%	50% of Target Award
Target	10%	100% of Target Award
Maximum	12%	150% of Target Award

In the event TSR falls between 8% and 10%, TSR shall be determined using a straight line linear interpolation between 50% and 100% and in the event it falls between 10% and 12%, TSR shall be determined using a straight line linear interpolation between 100% and 150%.

In the event that the Company’s TSR does not meet 50% of the Target Award (i.e., the minimum threshold listed above), the Restricted Stock Units shall be automatically forfeited and neither the Company nor any Subsidiary shall have any further obligations to the participant under the agreement. In no event will the number of RSUs that vest pursuant to the agreement exceed 150% of the Target Award.

The fair values of the awards were measured using a Monte Carlo simulation to estimate the probability of the market vesting condition being satisfied. The Company’s achievement of the market vesting condition is contingent on its TSR over a three-year market performance period, relative to the total stock price. Monte Carlo simulation is well-accepted for pricing market based awards, where the number of shares that will vest depends on the future stock price movements. For each simulated path, the TSR is calculated at the end of the performance period and determines the vesting percentage based on achievement of the performance target. Upon achieving the minimum performance target, RSUs will vest on the date and their payout will be the stock price at the time of vesting multiplied by the vesting percentage, plus cumulative dividends paid; then discounted at the future payout of vested RSUs to the valuation date by the risk free rate. The fair value of the RSUs is the average discounted payout across all simulation paths. Assumptions used in the valuations are summarized as follows:



Award Date	Expected Stock Price Volatility	Risk-Free Interest Rate	Dividend Yield
2/26/2018	30%	2.35%	4.70%
4/2/2018	30%	2.34%	4.04%
7/1/2018	30%	2.58%	3.41%
10/1/2018	25%	2.85%	3.01%

Performance-Based Restricted Stock Units

The grant of performance-based restricted stock unit award in April 2017 resulted in a grant date fair value of $13.43 and was measured utilizing the Black-Scholes methodology. The Company’s achievement of the performance vesting condition was contingent on the achievement of Core EBITDA. The key assumptions used in the valuation of the April 2017 award was as follows:



Award Date	Expected Stock Price Volatility	Risk-Free Interest Rate	Dividend Yield
4/10/2017	30%	1.63%	2%

Stock Options Activity

The Company did not grant any stock options during 2018 or 2017. The following table summarizes stock option grants under the 2010 Plan during the year ended December 31, 2016:



Year Ended December 31	Grantee Type	# of Options Granted	Vesting Period	Weighted- Average Exercise Price	Grant Date Fair Value
2016	Employee group	1,355,000	5 years	$9.81	$	4,674,750

The Company’s calculations of the fair value of stock options granted during the year ended December 31, 2016 were determined based on the Black-Scholes option-pricing model utilizing the following assumptions:



	2016
Weighted-average expected life	6.6 years
Risk-free interest rate	1.6%
Expected volatility	33%
Expected dividend yield	2.0%

The expected term is calculated using the assumption that the options will be exercised ratably from the date of vesting to the end of the contractual term for each vesting tranche of awards. Our history approximates the ratable exercise period. The risk-free interest rate is based on the U.S. Treasury yield curve for the period of the expected term of the stock option. Expected volatility is calculated using an index of publicly traded peer companies.

The following table provides a summary of option activity for the year ended December 31, 2018:



	Number of Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Terms (Years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2017	5,477,617		$	9.72	6.0	N/A
Granted	—		—
Exercised	(2,993,709	)	9.69
Forfeited or expired	(128,121	)	8.84
Outstanding as of December 31, 2018	2,355,787		$	9.81	5.4	$	37.1

Exercisable as of December 31, 2018	1,167,789		$	9.81	3.8	$	18.4

The total fair value at grant date of stock option awards that vested during the years ended December 31, 2018, 2017 and 2016 was approximately $1.5 million, $1.6 million and $1.3 million, respectively. The total intrinsic value of options exercised for the year ended December 31, 2018, was $38.8 million. There were no options exercised during the years ended December 31, 2017 and 2016.