Share-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

2021 Equity Incentive Plan

The Company’s 2021 Equity Incentive Plan (the “2021 Plan”), which replaced the 2012 Equity Incentive Plan (the “2012 Plan”), provides for the issuance of Class A common shares through the grant of a variety of awards including stock options, stock appreciation rights, restricted share units (“RSUs”), unrestricted shares, dividend equivalent rights and performance-based awards. When the Company issues Class A common shares under the 2021 Plan, the Operating Partnership issues an equivalent number of Class A units to AH4R.

During the six months ended June 30, 2022 and 2021, the Human Capital and Compensation Committee granted RSUs to employees that vest over a three-year service period and RSUs to non-management trustees that vest over a one-year service period.

During the six months ended June 30, 2022 and 2021, the Human Capital and Compensation Committee granted performance-based restricted share units (“PSUs”) to certain senior employees that cliff vest at the end of a three-year service period. The performance conditions of the PSUs are measured over the three-year performance period January 1, 2022 through December 31, 2024 for PSUs granted during the six months ended June 30, 2022 and January 1, 2021 through December 31, 2023 for PSUs granted during the six months ended June 30, 2021. A portion of the PSUs are based on (i) the achievement of relative total shareholder return compared to a specified peer group (the “TSR Awards”), and a portion are based on (ii) average annual growth in core funds from operations per share (the “Core FFO Awards”). The number of PSUs that may ultimately vest range from zero to 200% of the number of PSUs granted based on the level of achievement of these performance conditions. For the TSR Awards, grant date fair value was determined using a multifactor Monte Carlo model and the resulting compensation cost is amortized over the service period regardless of whether the performance condition is achieved. For the Core FFO Awards, fair value is based on the market value on the date of grant and compensation cost is recognized based on the probable achievement of the performance condition at each reporting period.

The following table summarizes stock option activity under the 2012 Plan and 2021 Plan for the six months ended June 30, 2022 and 2021:


	For the Six Months Ended June 30,
	2022	2021
Options outstanding at beginning of period	824,300	1,090,300
Granted	—	—
Exercised	(33,750)	(114,000)
Forfeited	—	—
Options outstanding at end of period	790,550	976,300
Options exercisable at end of period	785,550	938,800

The following table summarizes RSU activity under the 2012 Plan and 2021 Plan for the six months ended June 30, 2022 and 2021:


	For the Six Months Ended June 30,
	2022	2021
RSUs outstanding at beginning of period	1,050,599	651,537
Awarded	446,883	568,313
Vested	(375,039)	(200,939)
Forfeited	(28,140)	(17,697)
RSUs outstanding at end of period	1,094,303	1,001,214

The following table summarizes PSU activity under the 2012 Plan and 2021 Plan for the six months ended June 30, 2022 and 2021:


	For the Six Months Ended June 30,
	2022	2021
PSUs outstanding at beginning of period	92,319	—
Awarded	202,104	92,319
Vested	—	—
Forfeited	—	—
PSUs outstanding at end of period	294,423	92,319

2021 Employee Stock Purchase Plan

In 2021, the Company’s shareholders approved and the Company adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which provides for the issuance of 3,000,000 Class A common shares. The 2021 ESPP terminates in June 2031 or the date on which there are no longer any Class A common shares available for issuance. The 2021 ESPP allows employees to acquire the Company’s Class A common shares through payroll deductions, subject to maximum purchase limitations, during six-month purchase periods. The purchase price for Class A common shares may be set at a maximum discount equal to 85% of the lower of the closing price of the Company’s Class A common shares on the first day or the last day of the applicable purchase period. When the Company issues Class A common shares under the 2021 ESPP, the Operating Partnership issues an equivalent number of Class A units to AH4R.

Share-Based Compensation Expense

The Company’s noncash share-based compensation expense relating to corporate administrative employees is included in general and administrative expense and the noncash share-based compensation expense relating to centralized and field property management employees is included in property management expenses. Noncash share-based compensation expense relating to employees involved in the purchases of single-family properties, including newly constructed properties from third-party builders, the development of single-family properties, or the disposal of certain properties or portfolios of properties is included in acquisition and other transaction

costs. The following table summarizes the activity related to the Company’s noncash share-based compensation expense for the three and six months ended June 30, 2022 and 2021 (amounts in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
General and administrative expense	$	5,932	$	1,823	$	9,962	$	6,165
Property management expenses	1,132		599		2,131		1,598
Acquisition and other transaction costs	3,579		729		5,955		3,498
Total noncash share-based compensation expense	$	10,643	$	3,151	$	18,048	$	11,261