EQUITY-BASED COMPENSATION

Our currently outstanding equity-based awards were issued under our Equity Plan which provides for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, and other equity-based awards or incentive awards.

Stock options granted may be either incentive stock options or non-qualified stock options. Vesting terms may vary with each grant, and stock option terms are generally five to ten years. We have outstanding equity-based awards in the form of stock options and restricted stock awards. All of our outstanding equity-based awards are classified as equity.

Stock Options Granted Under Our Equity Plan

The following table summarizes stock option activity under our Equity Plan:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms	Aggregate Intrinsic Value (Current Value Less Exercise Price)
			(per share)		(in years)	(in thousands)
Outstanding at December 31, 2015	470,000		$	9.75
Exercised	(235,000	)	9.75
Outstanding at December 31, 2016	235,000		9.75
Exercised	—		—
Outstanding at December 31, 2017	235,000		$	9.75	3.2	$	1,288

Exercisable at December 31, 2017	235,000		$	9.75	3.2	$	1,288

All stock options outstanding at December 31, 2017 vested in prior years. During the years ended December 31, 2016 and 2015, the total fair value of stock options that vested was $0.3 million and $0.9 million, respectively. The intrinsic value of options exercised during the years ended December 31, 2016 and 2015 was $1.0 million and $1.3 million, respectively. No stock options were exercised during the year ended December 31, 2017.

The intrinsic value of outstanding and exercisable options at December 31, 2017 was $1.3 million. The intrinsic value of outstanding and exercisable options at December 31, 2016 was $1.5 million. At December 31, 2015, the intrinsic value of outstanding options and exercisable options was $1.0 million and $0.8 million, respectively.

Time-Based Restricted Stock Awards Made Pursuant to Our Equity Plan

On March 6, 2017, we granted time-based restricted stock awards for 16,079 shares of common stock to certain of our non-executive employees. The awards vest over a four-year period based on continued service (20% on March 9, 2018, 2019 and 2020, and 40% on March 9, 2021).

On March 6, 2017, we granted time-based restricted stock awards for 120,024 shares of common stock to our executive officers. On April 18, 2017, we granted a time-based restricted stock award for 20,215 shares of common stock to an executive officer. The awards vest 25% on March 9, 2018, 25% on March 9, 2019 and 50% on March 9, 2020, based on continuous service through the vesting dates or in certain circumstances upon a change in control.

On February 24, 2016, we granted time-based restricted stock awards for 22,010 shares of common stock to certain of our non-executive employees. The awards vest over a four-year period based on continued service (20% on March 9, 2017, 2018 and 2019, and 40% on March 9, 2020).

On March 8, 2016, we granted time-based restricted stock awards for 169,707 shares of common stock to our executive officers. The awards vest 25% on March 9, 2017, 25% on March 9, 2018 and 50% on March 9, 2019, based on continuous service through the vesting dates or in certain circumstances upon a change in control.

On September 2, 2016, we granted time-based restricted stock awards for 406 shares of common stock to certain of our non-executive employees. The awards were forfeited in 2017.

On March 3, 2015, we granted time-based restricted stock awards for 149,410 shares of common stock to our executive officers and management. Of the total awards issued, 37,230 vest based on continued service on March 9, 2018, or upon a change in control. The remaining awards vest over a three year period based on continued service (25% on March 9, 2016 and 2017 and 50% on March 9, 2018), or upon a change in control.

On April 24, 2015, we granted a time-based restricted stock award for 16,930 shares of common stock to one of our executive officers. This award vested during the third quarter of 2015.

The holders of these awards have the right to vote the related shares of common stock and receive all dividends declared and paid whether or not vested. The fair value of time-based restricted stock awards granted is calculated based on the market value of our common stock on the date of grant.

The following table summarizes time-based restricted stock activity under our Equity Plan for 2017 and 2016:



	Number of Shares		Weighted Average Grant Date Fair Value		Aggregate Current Value
			(per share)		(in thousands)
Non-vested December 31, 2015	250,011		$	12.03
Granted	192,123		11.36
Vested	(82,869	)	11.06
Forfeited	(1,420	)	10.27
Non-vested December 31, 2016	357,845		11.90
Granted	156,318		15.52
Vested	(120,366	)	11.29
Forfeited	(2,320	)	13.70
Non-vested December 31, 2017	391,477		$	13.52	$	5,962

During the years ended December 31, 2017, 2016, and 2015, the total fair value of time-based restricted stock awards that vested was $1.4 million, $0.9 million and $1.0 million, respectively.

Performance-Based Restricted Stock Awards Made Pursuant to Our Equity Plan

On March 6, 2017, we granted performance-based restricted stock awards for 180,039 shares of common stock to our executive officers. On April 18, 2017, we granted a performance-based restricted stock award for 30,322 shares of common stock to an executive officer. Our performance-based restricted stock awards are market-based awards and are accounted for based on the fair value of our common stock on the grant date. The fair value of the performance-based restricted stock awards granted was estimated using a Monte Carlo simulation valuation model. These awards generally vest based on our percentile ranking within the SNL U.S. REIT Hotel Index at the end of the period beginning on March 6, 2017 and ending on the earlier of March 6, 2020 or upon a change in control. The awards require continued service during the measurement period and are subject to the other conditions described in the Equity Plan or award document unless modified.

On March 8, 2016, we granted performance-based restricted stock awards for 254,563 shares of common stock to our executive officers. Our performance-based restricted stock awards are market-based awards and are accounted for based on the fair value of our common stock on the grant date. The fair value of the performance-based restricted stock awards granted was estimated using a Monte Carlo simulation valuation model. These awards generally vest based on our percentile ranking within the SNL U.S. REIT Hotel Index at the end of the period beginning on March 8, 2016 and ending on the earlier of March 8, 2019 or upon a change in control. The awards require continued service during the measurement period and are subject to the other conditions described in the Equity Plan or award document.

On March 3, 2015, we granted performance-based restricted stock awards for 154,505 shares of common stock to certain of our executive officers. The fair value of the performance-based restricted stock awards granted was estimated using a Monte Carlo simulation valuation model. These awards vest based on our percentile ranking within the SNL U.S. REIT Hotel Index at the end of the period beginning on January 1, 2015 and ending on the earlier of December 31, 2017, or upon a change in control. The awards require continued service during the measurement period and are subject to the other conditions described in the Equity Plan or award document.

The number of shares the executive officers may earn under these awards range from zero shares to twice the number of shares granted based on our percentile ranking within the index at the end of the measurement period. In addition, a portion of the performance-based shares may be earned based on the Company's absolute total shareholder return calculated during the performance period. The holders of these grants have the right to vote the granted shares of common stock and any dividends declared will be accumulated and will be subject to the same vesting conditions as the awards. Further, if additional shares are earned based on our percentile ranking within the index, dividend payments will be issued as if the additional shares had been held throughout the measurement period.

The fair value of performance-based restricted stock awards granted was estimated using a Monte Carlo simulation valuation model and the following assumptions:



	2017			2016			2015
Expected dividend yield	4.14		%	4.01		%	3.42		%
Expected stock price volatility	24.8		%	24.2		%	22.2		%
Risk-free interest rate	1.59		%	1.04		%	1.02		%
Monte Carlo iterations	100,000			100,000			100,000
Weighted average estimated fair value of performance-based restricted stock awards	$	17.13		$	13.77		$	18.78

The expected dividend yield was calculated based on our annual expected dividend payments at the time of grant. The expected volatility was based on historical price changes of our common stock for a period comparable to the performance period. The risk-free interest rates were interpolated from the Federal Reserve Bond Equivalent Yield rates for “on-the-run” U.S. Treasury securities.

The following table summarizes performance-based restricted stock activity under our Equity Plan for 2017 and 2016:



	Number of Shares		Weighted Average Grant Date Fair Value		Aggregate Current Value
			(per share)		(in thousands)
Non-vested December 31, 2015	308,367		$	12.95
Granted	254,563		13.77
Vested	(113,903	)	7.10
Non-vested December 31, 2016	449,027		14.90
Granted	210,361		17.13
Vested	(39,959	)	7.12
Non-vested December 31, 2017	619,429		$	16.16	$	9,434

Director Stock Awards Made Pursuant to Our Equity Plan

During the years ended December 31, 2017 and 2016, we granted 28,426 and 32,180 shares of common stock, respectively, to our non-employee directors as a part of our director compensation program. These grants were made pursuant to our Equity Plan and were vested upon grant.

Our non-employee directors have the option to receive shares of our common stock in lieu of cash for their director fees. In 2017 and 2016, we issued 4,663 and 7,618 shares of common stock, respectively, for director fees. The fair value of director stock awards is calculated based on the market value of our common stock on the date of grant.

Equity-Based Compensation Expense

Equity-based compensation expense included in Corporate General and Administrative expense in the Consolidated Statements of Operations for the years ended December 31, 2017, 2016, and 2015 was as follows (in thousands):



	2017		2016		2015
Stock options	$	—	$	55	$	633
Time-based restricted stock	2,145		1,594		1,691
Performance-based restricted stock	3,183		2,107		1,957
Director stock	559		465		472
	$	5,887	$	4,221	$	4,753

We recognize equity-based compensation expense ratably over the vesting terms. The amount of expense may be subject to adjustment in future periods due to a change in the forfeiture assumptions.

Unrecognized equity-based compensation expense for all non-vested awards pursuant to our Equity Plan was $6.7 million at December 31, 2017 as follows (in thousands):



	Total		2018		2019		2020		2021
Time-based restricted stock	$	2,741	$	1,599	$	945	$	187	$	10
Performance-based restricted stock	3,976		2,374		1,401		201		—
	$	6,717	$	3,973	$	2,346	$	388	$	10