Share-Based Payments

In conjunction with the Company's IPO and concurrent private placement, the Company's Board of Directors approved the Western Asset Mortgage Capital Corporation Equity Plan (the "Equity Plan") and the Western Asset Manager Equity Plan (the "Manager Equity Plan" and collectively the "Equity Incentive Plans"). The Equity Incentive Plans include provisions for grants of restricted common stock and other equity-based awards to the Manager, its employees and employees of its affiliates and to the Company's directors, officers and employees. The Company can issue up to 3.0% of the total number of issued and outstanding shares of its common stock (on a fully diluted basis) at the time of each award (other than any shares previously issued or subject to awards made pursuant to one of the Company's Equity Incentive Plans) under these Equity Incentive Plans. At May 15, 2012, there were 308,335 shares of common stock initially reserved for issuance under the Equity Incentive Plans. Upon the completion of the follow-on offerings, the number of shares of common stock available for issuance under the Equity Incentive Plans increased to 1,237,711. Approximately 725,449 of shares have been issued under the Equity Plans with 512,262 shares available for issuance as of December 31, 2017.

Under the Equity Plan, the Company made the following grants during the years ended December 31, 2017 and December 31, 2016:

On June 1, 2017, the Company granted a total of 15,536 (3,884 each) of restricted common stock under the Equity Plan to the Company’s four independent directors. These restricted shares will vest in full on June 1, 2018, the first anniversary of the grant date. Each of the independent directors has elected to defer the shares granted to him under the Company’s Director Deferred Fee Plan (the “Director Deferred Fee Plan”). The Director Deferred Fee Plan permits eligible members of the Company's board of directors to defer certain stock awards made under its director compensation programs. The Director Deferred Fee Plan allows directors to defer issuance of their stock awards and therefore defer payment of any tax liability until the deferral is terminated, pursuant to the election form executed each year by each eligible director.

On June 2, 2016, the Company granted a total of 17,132 (4,283 each) of restricted common stock under the Equity Plan to the Company’s four independent directors. These restricted shares vested in full on June 2, 2017, the first anniversary of the grant date. Each of the independent directors has elected to defer the shares granted to him under the Director Deferred Fee Plan . The Director Deferred Fee Plan permits eligible members of the Company’s board of directors to defer certain stock awards made under its director compensation programs. The Director Deferred Fee Plan allows directors to defer issuance of their stock awards and therefore defer payment of any tax liability until the deferral is terminated, pursuant to the election form executed each year by each eligible director.

During the years ended December 31, 2017, December 31, 2016 and December 31, 2015, 152,630, 200,983 and 175,824 restricted common shares vested, respectively, including shares whose issuance has been deferred under the Director Deferred Fee Plan. The Company recognized stock-based compensation expense of approximately $981 thousand, approximately $1.7 million and approximately $2.3 million for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, respectively. In addition, the Company had unamortized compensation expense of $66 thousand for equity awards and approximately $111 thousand for liability awards and $67 thousand for equity awards and approximately $895 thousand for liability awards at December 31, 2017 and December 31, 2016, respectively.

All restricted common shares granted, other than those whose issuance has been deferred pursuant to the Director Deferred Fee Plan, possess all incidents of ownership, including the right to receive dividends and distributions currently, and the right to vote. Dividend equivalent payments otherwise allocable to restricted common shares under the Deferred Compensation Plan are deemed to purchase additional phantom shares of the Company's common stock that are credited to each participant's deferral account. The award agreements include restrictions whereby the restricted shares cannot be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of prior to the lapse of restrictions under the respective award agreement. The restrictions lapse on the unvested restricted shares awarded when vested, subject to the grantee's continuing to provide services to the Company as of the vesting date. Unvested restricted shares and rights to dividends thereon are forfeited upon termination of the grantee.

The following is a summary of restricted common stock vesting dates as of December 31, 2017 and December 31, 2016, including shares whose issuance has been deferred under the Director Deferred Fee Plan:



	December 31, 2017	December 31, 2016
Vesting Date	Shares Vesting	Shares Vesting
March 2017	—	133,334
June 2017	—	18,196
March 2018	66,667	66,667
June 2018	16,488	—
	83,155	218,197

The following table presents information with respect to the Company's restricted stock for the years ended December 31, 2017 and December 31, 2016, including shares whose issuance has been deferred under the Director Deferred Fee Plan:



	December 31, 2017			December 31, 2016
	Shares of Restricted Stock	Weighted Average Grant Date Fair Value⁽¹⁾		Shares of Restricted Stock	Weighted Average Grant Date Fair Value⁽¹⁾
Outstanding at beginning of period	707,861	$	17.17	688,394	$	17.39
Granted⁽²⁾	17,588	10.30		19,467	9.40
Outstanding at end of period	725,449	$	17.00	707,861	$	17.17
Unvested at end of period	83,155	$	14.07	218,197	$	14.98


(1)	The grant date fair value of restricted stock awards is based on the closing market price of the Company's common stock at the grant date.


(2)	Included 2,052 shares and 2,335 shares of restricted stock attributed to dividends on restricted stock under the Director Deferred Fee Plan for the years ended December 31, 2017 and December 31, 2016, respectively.