Equity Incentive Plan

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

On January 8, 2020, the Company granted performance units approved by the compensation committee of the board of directors under the 2011 Plan to certain key employees of the Company. The terms of the performance units granted on January 8, 2020 are substantially the same as the terms of the performance units granted on January 7, 2019, except that the measuring period commenced on January 1, 2020 and ends on December 31, 2022.

The fair value of the performance units at the date of grant was determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation. The fair value of the performance units are based on Level 3 inputs and are non-recurring fair value measurements. The performance unit equity compensation expense is recognized ratably from the grant date into earnings over the vesting period. The following table summarizes the assumptions used in valuing the performance units granted during the six months ended June 30, 2020.


Performance Units	Assumptions
Grant date	January 8, 2020
Expected volatility	17.4		%
Expected dividend yield	5.75		%
Risk-free interest rate	1.59		%
Fair value of performance units grant (in thousands)	$	5,389

On December 31, 2019 the measuring period pursuant to the January 6, 2017 performance units concluded and it was determined that the Company’s total stockholder return exceeded the threshold percentage and return hurdle. The compensation committee of the board of directors approved the issuance of 76,096 vested LTIP units and 46,376 vested shares of common stock to the participants (of which 18,241 shares of common stock were repurchased and retired), which were issued on January 8, 2020. The compensation committee of the board of directors also approved the issuance of 65,969 LTIP units and 3,398 restricted shares of common stock that will vest on December 31, 2020, which were issued on January 8, 2020.

The unrecognized compensation expense associated with the Company’s performance units at June 30, 2020 was approximately $8.6 million and is expected to be recognized over a weighted average period of approximately 2.0 years.

Non-cash Compensation Expense

The following table summarizes the amount recorded in general and administrative expenses in the accompanying Consolidated Statements of Operations for the amortization of restricted shares of common stock, LTIP units, performance units, and the Company’s director compensation for the three and six months ended June 30, 2020 and 2019.


	Three months ended June 30,						Six months ended June 30,
Non-Cash Compensation Expense (in thousands)	2020		2019		2020		2019
Restricted shares of common stock	$	481	$	444	$	948	$	871
LTIP units	978		899		1,942		1,786
Performance units	1,341		1,096		2,648		1,955
Director compensation ⁽¹⁾	138		98		252		203
Total non-cash compensation expense	$	2,938	$	2,537	$	5,790	$	4,815

(1)All of the Company’s independent directors elected to receive shares of common stock in lieu of cash for their service during the three and six months ended June 30, 2020 and 2019. The number of shares of common stock granted is calculated based on the trailing ten days average common stock price ending on the third business day preceding the grant date.