Stockholders’ Equity

6 Months Ended

Jun. 30, 2017

Stockholders’ Equity

Stockholders’ Equity

Note 24 – Stockholders’ Equity

Common stock dividends

The following table presents cash dividends declared by our board of directors on our common stock from January 1, 2016 through June 30, 2017:

			Dividend per
Declaration Date	Record Date	Payment Date	Share
August 23, 2016	September 2, 2016	September 16, 2016	$	0.45	(1)
October 11, 2016	October 14, 2016	October 25, 2016	$	0.36	(1)
December 21, 2016	December 30, 2016	January 27, 2017	$	0.35
March 14, 2017	March 31, 2017	April 13, 2017	$	0.37
June 15, 2017	June 30, 2017	July 31, 2017	$	0.37
(1) Retrospectively adjusted for the equivalent number of shares after reverse acquisition

Incentive fee stock issuance

On January 8, 2016, the Company issued 27,199 shares at $17.74 per share to the Manager for the incentive distribution fee earned for the second and third quarters of 2015.  As discussed above, the Manager is entitled to an incentive distribution fee as defined in the Management Agreement. 

Stock incentive plan

In connection with the reverse merger, the Company adopted ZAIS Financial’s 2012 equity incentive plan (“the 2012 Plan”). The 2012 Plan authorizes the Compensation Committee to approve grants of equity-based awards to our officers, directors, and employees of the Manager and its affiliates. The equity incentive plan provides for grants of equity-based awards up to an aggregate of 5% of the shares of the Company’s common stock issued and outstanding from time to time on a fully diluted basis.

During the first quarter of 2017, the Company issued restricted stock units (“RSUs”) to its independent directors as compensation for their service on the board of directors. RSUs are awarded at no cost to the recipient upon their grant.  Each of our four independent directors received a one-time grant of 5,000 RSUs vesting immediately on a one-for-one basis for 5,000 shares of our common stock as compensation for service to date. Each independent director also received an annual grant of 5,000 RSUs that vested or will vest on a one-for-one basis for shares of our common stock in equal quarterly installments over a one year period ending December 31, 2017. The shares of stock associated with RSUs are not issued and are unvested until the directors, officers or employees meet certain vesting conditions and earn the right to those shares. Dividend equivalent rights will be paid on unvested RSUs at the same rate and at the same time as dividends on the Company’s common stock.

During the second quarter of 2017, the Company issued restricted stock awards (“RSAs”) to certain employees as compensation for their employment services. The RSAs are awarded at no cost to the recipient upon their grant. A total of 25,851 shares were awarded and will vest in equal installments over a three year period ending May 9, 2020. The shares of stock were issued during the second quarter of 2017, however, remain unvested until those service conditions are met, which they will then earn right to those shares. Dividend equivalent rights will be paid on unvested RSAs at the same rate and at the same time as dividends on the Company’s common stock.

The Company’s current policy for issuing shares upon settlement of stock-based incentive awards is to issue new shares.

The fair value of the RSUs and RSAs granted, which is determined based upon the stock price on the grant date, is recorded as compensation expense on a straight-line basis over the vesting periods for the awards, with an offsetting increase in stockholders’ equity.

The following table summarizes the Company’s RSU and RSA activity for the three and six months ended June 30, 2017:

	Independent Director RSUs						Employee RSAs
(In Thousands, except share data)	Number of shares		Weighted-average grant date fair value		Weighted-average grant date fair value (per share)		Number of shares		Weighted-average grant date fair value		Weighted-average grant date fair value (per share)
Outstanding, January 1		—	$	—	$	—		—	$	—	$	—
Granted		40,000		580		14.50		—		—		—
Vested		(25,000)		(363)		14.50		—		—		—
Forfeited		—		—		—		—		—		—
Canceled		—		—		—		—		—		—
Outstanding, March 31, 2017		15,000	$	217	$	14.50		—	$	—	$	—
Granted		—		—		—		25,861		380		14.70
Vested		(5,000)		(72)		14.50		—		—		—
Forfeited		—		—		—		—		—		—
Canceled		—		—		—		—		—		—
Outstanding, June 30, 2017		10,000	$	145	$	14.50		25,861	$	380	$	14.70

During the three and six months ended June 30, 2017, the Company recognized $0.1 million and $0.5 million of noncash compensation expense, respectively, related to its stock-based incentive plan in its consolidated statements of income.

At June 30, 2017, approximately $0.5 million of noncash compensation expense related to unvested awards had not yet been charged to net income. These costs are expected to be amortized into compensation expense ratably over the course of the remainder of the respective vesting periods.

Litigation settlement

On May 2, 2017, the Company issued approximately $4.0 million in shares of the Company's common stock (275,862 shares issued) to a counterparty in connection with a litigation settlement.