Share-Based Payments

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement, Noncash Expense [Abstract]

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, including restricted stock units 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. The number of shares of common stock available under the Equity Incentive Plans is 1,804,258. Approximately 1,148,225 of shares have been issued under the Equity Plans with 656,033 shares available for issuance as of December 31, 2021.

Under the Equity Plan, the Company made the following grants during the years ended December 31, 2021 and December 31, 2020:

On June 19, 2020, the Company granted a total of 127,275 restricted stock units (25,455 each) under the Equity Plan to the Company’s then five independent directors. In May 2021, one of the independent directors retired. As a result 25,455 shares of the unvested restricted stock were forfeited during the year ended December 31, 2021. The remaining restricted stock units in this grant vested in full on June 19, 2021, the first anniversary of the grant date, and will be settled in shares of the Company's common stock upon a separation from service with the Company

On June 25, 2021, the Company granted a total of 81,160 restricted stock units (20,290 each) under the Equity Plan to the Company’s four independent directors. These restricted stock units will vest in full on June 25, 2022, the first anniversary of the grant date, and will be settled in shares of the Company's common stock upon a separation from service with the Company

During the years ended December 31, 2021, December 31, 2020 and December 31, 2019, 137,820, 67,480 and 29,200 restricted stock units vested, respectively. The Company recognized stock-based compensation expense of approximately $618 thousand, $699 thousand and $564 thousand for the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively. In addition, the Company had unamortized compensation expense of $211 thousand and $619 thousand for equity awards at December 31, 2021 and December 31, 2020, respectively.

Holders of restricted stock units are entitled to receive dividends (or dividend equivalent payments) and distributions that become payable on the restricted stock units during the restricted period. Dividend equivalent payments allocable to restricted stock units 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 stock units 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 stock units awarded when vested, subject to the grantee's

continuing to provide services to the Company as of the vesting date. Unvested restricted stock units and rights to dividends thereon are forfeited upon termination of the grantee.

The following is a summary of restricted stock units vesting dates as of December 31, 2021 and December 31, 2020:


	December 31, 2021	December 31, 2020
Vesting Date	Shares Vesting	Shares Vesting







March 2021	—	36,000
June 2021	—	130,365
March 2022	36,000	36,000
June 2022	81,160	—
	117,160	202,365

The following table presents information with respect to the Company's restricted stock units for the years ended December 31, 2021 and December 31, 2020:


	December 31, 2021			December 31, 2020
	Restricted Stock Units	Weighted Average Grant Date Fair Value(1)		Restricted Stock Units	Weighted Average Grant Date Fair Value(1)
Outstanding at beginning of period	1,025,542	$	14.10	894,289	$	15.76
Granted(2)	148,138	5.07		131,253	2.79
Cancelled/forfeited	(25,455)	2.75		—	—
Outstanding at end of period	1,148,225	$	13.19	1,025,542	$	14.10
Unvested at end of period	117,160	$	5.62	202,365	$	5.50

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

(2)Includes 66,978 shares and 3,978 restricted stock units attributed to dividends on restricted stock units for the years ended December 31, 2021 and December 31, 2020, respectively.