11. Equity Incentive Plan

In connection with our IPO, the Company's Board of Directors adopted the 2010 Equity Incentive Plan (as amended, the "2010 Plan"). The 2010 Plan is administered by the Board of Directors, or the plan administrator. Awards issuable under the 2010 Plan include common stock, stock options, restricted stock, stock appreciation rights, dividend equivalents and other incentive awards. Following approval by the Board of Directors on March 30, 2013, our stockholders on May 22, 2013, approved the amendment and restatement of the 2010 Plan which, among other things, increased the number of shares of common stock authorized for issuance by 3,000,000 shares. We have reserved a total of 6,000,000 shares of our common stock for issuance pursuant to the 2010 Plan, which may be adjusted for changes in our capitalization and certain corporate transactions. To the extent that an award expires, terminates or lapses, or an award is settled in cash without the delivery of shares of common stock to the participant, then any unexercised shares subject to the award will be available for future grant or sale under the 2010 Plan. Shares of restricted stock which are forfeited or repurchased by us pursuant to the 2010 Plan may again be optioned, granted or awarded under the 2010 Plan. The payment of dividend equivalents in cash in conjunction with any outstanding awards will not be counted against the shares available for issuance under the 2010 Plan.

As of December 31, 2013, 3,686,242 shares of our common stock were available for issuance pursuant to the 2010 Plan.

Stock Options

Stock option awards are granted with an exercise price equal to the closing market price of the Company's common stock at the date of grant. The fair value of each option granted under the 2010 Plan is estimated on the date of grant using the Black-Scholes option-pricing model. The fair values are being amortized on a straight-line basis over the vesting periods.

The following table sets forth the stock option activity under the 2010 Plan for the years ended December 31, 2013, 2012, and 2011:

			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value

Options outstanding, December 31, 2010	587,555			16.00	9.7 years	$—
Granted	543,380			15.27
Forfeited	(122,848	)		15.80
Expired	(8,074	)		16.00
Exercised	(1,962	)		16.00		Less than $0.1 million


Options outstanding, December 31, 2011	998,051		$	15.63	8.9 years	$2.2 million
Granted	236,893			23.87
Forfeited	(119,723	)		16.62
Expired	(156	)		16.00
Exercised	(97,870	)		16.04		$0.8 million


Options outstanding, December 31, 2012	1,017,195			17.25	8.2 years	$10.6 million
Granted	209,268			32.50
Forfeited	(37,232	)		23.00
Expired	(535	)		34.82
Exercised	(54,781	)		16.86		$1.0 million


Options outstanding, December 31, 2013	1,133,915			19.89	7.6 years	$14.0 million
Exercisable at December 31,
2011	130,942		$	16.00	8.7 years	$0.2 million
2012	287,036		$	15.74	7.9 years	$3.4 million
2013	498,176		$	16.51	7.1 years	$7.8 million

The following table sets forth the number of shares subject to option that are unvested as of December 31, 2013, 2012, and 2011, and the fair value of these options at the grant date:

			Weighted Average Fair Value at Grant Date

Unvested balance, December 31, 2010	587,555			4.95
Granted	543,380			4.89
Forfeited	(122,848	)		4.93
Vested	(140,978	)		4.92


Unvested balance, December 31, 2011	867,109		$	4.92
Granted	236,893			7.76
Forfeited	(119,723	)		5.24
Vested	(254,120	)		4.96


Unvested balance, December 31, 2012	730,159		$	5.70
Granted	209,268			10.01
Forfeited	(37,232	)		7.21
Vested	(266,456	)		5.54


Unvested balance, December 31, 2013	635,739		$	7.10

As of December 31, 2013, total unearned compensation on options was approximately $3.3 million, and the weighted average vesting period was 2.0 years. The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. As the Company has been a publicly traded company only since September 28, 2010, expected volatilities used in the Black-Scholes model are based on the historical volatility of a group of comparable REITs. We utilize the simplified method of estimating the term for options granted due to the lack of historical exercise data necessary to provide a reasonable basis upon which to estimate the term. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following table summarizes the assumptions used to value the stock options granted during the years ended December 31, 2013, 2012, and 2011:



Expected term (in years)	6.25		6.25		6.25
Expected volatility	43.86	%	44.08	%	43.07	%
Expected annual dividend	3.33	%	3.00	%	3.41	%
Risk-free rate	1.26	%	1.56	%	2.76	%

Restricted Awards

During the years ended December 31, 2013, 2012, and 2011, the Company issued 188,710, 405,608 and 263,393 shares of restricted stock, respectively, which had values of $6.1 million, $9.9 million, and $4.0 million, respectively, on the grant date. Also during the years ended December 31, 2013, 2012, and 2011, the Company issued 5,592, 7,172 and 10,080 restricted stock units or RSUs, respectively, which each grant had values of $0.2 million on the grant date. The principal difference between these instruments is that RSUs are not shares of the Company's common stock and do not have any of the rights or privileges thereof, including voting rights. On the applicable vesting date, the holder of an RSU becomes entitled to a share of common stock. The restricted awards will be amortized on a straight-line basis to expense over the vesting period. The following table sets forth the number of unvested restricted awards and the weighted average fair value of these awards at the date of grant:

			Weighted Average Fair Value at Grant Date

Unvested balance, December 31, 2010	195,437			15.98
Granted	273,473			15.19
Forfeited	(51,213	)		15.81
Vested	(74,466	)		16.10


Unvested balance, December 31, 2011	343,231			15.35
Granted	412,780			24.59
Forfeited	(48,599	)		18.26
Vested	(108,717	)		15.46


Unvested balance, December 31, 2012	598,695		$	21.37
Granted	194,302			32.43
Forfeited	(58,199	)		28.44
Vested	(239,647	)		20.96


Unvested balance, December 31, 2013	495,151		$	25.08

As of December 31, 2013, total unearned compensation on restricted awards was approximately $9.0 million, and the weighted average vesting period was 2.1 years.

Operating Partnership Units

In connection with the IPO, we issued 25,883 Operating Partnership units, which were fair valued at $15.98 per unit or $0.4 million in total. The Operating Partnership units will be amortized on a straight-line basis to expense over the vesting period. As of December 31, 2013, 24,392 units have vested, 1,491 were forfeited and there were no unvested units. These units have the same rights as holders of Common Operating Partnership units.