Share-Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

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 awards and cliff vesting 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 share-based compensation charges were $4.3 million and $5.7 million during the three months ended March 31, 2020 and 2019, respectively. Routine share-based compensation expense is included as a component of “Selling, general and administrative” expense on the accompanying Condensed Consolidated Statements of Operations. During the first quarter of 2019, approximately $3.1 million of share-based compensation expense was recorded as a component of “Acquisition, litigation and other” expense on the accompanying Condensed Consolidated Statements of Operations due to accelerated vesting of awards outstanding to former executives and an equity award modification upon trustee resignation. The award modifications and awards with accelerated vesting are discussed further under the section Modification of Restricted Stock Units and Accelerated Vesting of Awards. As of March 31, 2020, there was $31.7 million of unrecognized share‑based compensation expense related to stock options and restricted stock units, which will be recognized over a weighted-average period of 2.4 years.

Americold Realty Trust 2010 Equity Incentive Plans

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. No additional awards may be granted under the 2010 Plan.

Americold Realty Trust 2017 Equity Incentive Plan

On January 4, 2018, the Company’s Board of Trustees adopted the Americold Realty Trust 2017 Equity Incentive Plan (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. 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 for market performance-based awards are forfeitable in the event of termination for cause or when voluntary departure occurs during the vesting period. Otherwise, dividend equivalents are accrued at the time of declaration and are paid upon the vesting of the awards. Time-based awards have the right to receive nonforfeitable dividend equivalent distributions on unvested units throughout the vesting period. As of March 31, 2020 and December 31, 2019, the Company accrued $1.4 million and $1.1 million, respectively, of dividend equivalents on unvested units payable to employees and non-employee trustees.

All awards granted under the 2017 Plan dated on March 8, 2020 and thereafter include a retirement provision. The retirement provision allows that if a participant has either attained the age of 65, or has attained the age of 55 and has ten full years of service with the Company, and there are no facts, circumstances or events exist which would give the Company a basis to effect a termination of service for cause, then the award recipient is entitled to continued vesting of any outstanding equity-based awards which include the retirement provision. Should the participant choose to retire from the Company, the awards with the retirement provision would continue to vest. Accordingly, grants of time-based awards to an employee who has met the retirement criteria on or before the date of grant will be expensed at the date of grant. In addition, grants of time-based awards to employees who will meet the retirement criteria during the awards normal vesting period will be expensed between the date of grant and the date upon which the award recipient meets the retirement criteria. Time-based awards granted to recipients who meet the retirement criteria will continue vesting on the original vesting schedule. A pro-rated portion of market-performance based awards granted to recipients who meet the retirement criteria will remain outstanding and eligible to vest based on actual performance through the last day of the performance period based on the number of days during the performance period that the recipient was employed.

Modification of Restricted Stock Units and Accelerated Vesting of Awards

During the first quarter of 2019, the Company’s Compensation Committee approved the modification of an award issued in 2018 to a member of the Board of Trustees upon his resignation. This modification immediately accelerated the next vesting tranche of 100,000 restricted stock units which otherwise would not have vested until 2020 assuming the trustee continued service, under the original award agreement. As a result of this modification, the Company recognized approximately $2.9 million of share-based compensation expense during the first quarter of 2019.

Additionally, during the first quarter of 2019, the Company recognized accelerated share-based compensation expense of $0.2 million upon the termination of former executives, in accordance with the terms of their original award agreements.

Restricted Stock Units Activity

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. Performance-based and market performance-based restricted stock unit awards cliff vest upon the achievement of the performance target, as well as completion of the performance period.

The following table summarizes restricted stock unit grants under the 2017 Plan during the three months ended March 31, 2020 and 2019, respectively:



Three Months Ended March 31,	Grantee Type	Number of Restricted Stock Units Granted	Vesting Period	Grant Date Fair Value (in thousands)
2020	Employees	283,471	1-3 years	$	8,699
2019	Trustees	12,285	1 year	$	375
2019	Employees	455,504	1-3 years	$	15,169

Of the restricted stock units granted for the three months ended March 31, 2020, (i) 174,661 were time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain employees and (ii) 108,810 were market performance-based cliff vesting restricted stock units with a three-year vesting period issued to certain employees. The vesting of such market performance-based awards will be determined based on Americold Realty Trust’s total shareholder return (TSR) relative to the MSCI US REIT Index (RMZ), computed for the performance period that began January 1, 2020 and will end December 31, 2022.

Of the restricted stock units granted for the three months ended March 31, 2019, (i) 12,285 were time-based graded vesting restricted stock units with a one-year vesting period issued to non-employee trustees in recognition of their efforts and oversight in the first year as a public company, (ii) 222,937 were time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain employees and (iii) 232,567 were market performance-based cliff vesting restricted stock units with a three-year vesting period issued to certain employees. The vesting of such market performance-based awards will be determined based on Americold Realty Trust’s total shareholder return (TSR) relative to the MSCI US REIT Index (RMZ), computed for the performance period that began January 1, 2019 and will end December 31, 2021.

The following table provides a summary of restricted stock awards activity under the 2010 and 2017 Plans as of March 31, 2020:



Three Months Ended March 31, 2020
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⁽²⁾		Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2019	714,063		$	25.0	57,142		$	2.0	779,188		$	27.3
Granted	174,661				—				108,810
Vested	(243,009	)			(14,286	)			—
Forfeited	(2,283	)			—				(6,186	)
Non-vested as of March 31, 2020	643,432		$	21.9	42,856		$	1.5	881,812		$	30.0
Shares vested, but not released⁽¹⁾	615,643		21.0		28,571		1.0		—		—
Total outstanding restricted stock units	1,259,075		$	42.9	71,427		$	2.5	881,812		$	30.0

(1)

For certain vested restricted stock units, common share issuance is contingent upon the first to occur of: (1) termination of service; (2) change in control; (3) death; or (4) disability, as defined in the 2010 Plan. Of these vested restricted stock units, 568,753 belong to a member of the Board of Trustees who has resigned and common shares shall not be issued until the first to occur: (1) change in control; or (2) April 13, 2022. 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 weighted average grant date fair value of these units is $9.38 per unit. During 2020 an additional 14,286 of these restricted stock units vested. Of the total restricted stock units vested, but not yet released, 615,643 time-based restricted stock units and 14,286 performance-based restricted stock units vested prior to January 1, 2020.


(2)	The number of market performance-based restricted stock units are reflected within this table based upon the number of shares issuable upon achievement of the performance metric at target.

The weighted average grant date fair value of restricted stock units granted during three months ended March 31, 2020 was $30.69 per unit, for vested and converted restricted stock units was $20.67, for forfeited restricted stock units was $22.45. The weighted average grant date fair value of non-vested restricted stock units was $24.30 and $22.50 per unit as of March 31, 2020 and December 31, 2019, respectively.

OP Units Activity

During 2019, upon recommendation by the Compensation Committee, the Board of Trustees approved the grant of OP units in connection with the annual grant to the Board of Trustees. The trustees have the option to elect their annual grant in the form of either time-vested restricted stock units or time-vested OP units. Additionally, the Board of Trustees approved the future award of grants for certain members of management to receive their awards in the form of either OP units or restricted stock units (applicable to time-vested and market-performance based awards). The terms of the OP units mirror the terms of the restricted stock units granted in connection with the annual grant for the first quarter of 2020.

The following table summarizes OP unit grants under the 2017 Plan during the three months ended March 31, 2020 (none were issued during the first quarter of 2019):



Three Months Ended March 31,	Grantee Type	Number of OP Units Granted	Vesting Period	Grant Date Fair Value (in thousands)
2020	Employee group	255,720	1 - 3 years	$	7,719

The following table provides a summary of the OP unit awards activity under the 2017 Plan as of March 31, 2020:



Three Months Ended March 31, 2020
OP Units	Number of Time-Based OP Units	Aggregate Intrinsic Value (in millions)		Number of Market Performance-Based OP Units	Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2019	20,190	$	0.7	—	$	0.0
Granted	76,855			178,865
Vested	—			—
Forfeited	—			—
Non-vested as of March 31, 2020	97,045	$	3.3	178,865	$	6.1

The OP units granted for the three months ended March 31, 2020 had an aggregate grant date fair value of $7.7 million.

Stock Options Activity

The following tables provide a summary of option activity for the three months ended March 31, 2020, respectively:



Options	Shares (In thousands)		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Terms (Years)
Outstanding as of December 31, 2019	794,498		$	9.81	5.8
Granted	—		—
Exercised	(27,500	)	9.81
Forfeited or expired	—		—
Outstanding as of March 31, 2020	766,998		9.81		5.6

Exercisable as of March 31, 2020	372,000		$	9.81	5.1

The total fair value at grant date of stock option awards that vested during the three months ended March 31, 2020 and 2019 was approximately $0.6 million and $0.1 million, respectively. The total intrinsic value of options exercised for the three months ended March 31, 2020 and 2019, was $0.6 million and $11.0 million, respectively.