20.	Incentive Compensation

Stock-Based Compensation

In November 2014, we adopted our 2014 Equity Incentive Plan (the “Plan”), under which we expect to grant future cash and equity incentive awards to our executive officers, non-employee directors, eligible employees and other key persons in order to attract, motivate and retain the talent for which we compete. Under the Plan, awards may be granted up to a maximum of 17,142,857 shares, if all awards granted are “full value awards,” as defined, and up to 34,285,714 shares, if all of the awards granted are “not full value awards,” as defined. “Full value awards” are awards such as restricted stock or long-term incentive plan (“LTIP”) units that do not require the payment of an exercise price. “Not full value awards” are awards such as stock options or stock appreciation rights that require the payment of an exercise price. As of December 31, 2016, we have 12,228,883 shares available for future grants under the Plan, if all awards granted are full value awards, as defined in the 2014 Equity Incentive Plan.

We account for all stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. Below are the components of stock-based compensation expense for the years ended December 31, 2016 and 2015 and for the period from November 24, 2014 to December 31, 2014.

					Period from
	For the Year Ended December 31,				November 24, 2014
(Amounts in thousands)	2016		2015		to December 31, 2014
Stock options ⁽¹⁾	$	1,590	$	1,241	$	79
LTIP units ⁽²⁾		5,617		4,507		296
Restricted stock		391		142		16
Performance programs		3,680		1,110		-
Total	$	11,278	$	7,000	$	391

⁽¹⁾

The years ended December 31, 2016 and 2015 include $412 and $294 of expense, respectively, related to the acceleration of vesting of stock options in connection with certain separation agreements.

⁽²⁾

The years ended December 31, 2016 and 2015 include $1,443 and $1,567 of expense, respectively, related to the acceleration of vesting of LTIP units in connection with the aforementioned separation agreements.

Stock Options

We grant certain of our executive officers and other employees stock options which vest over periods ranging from three to five years and expire 10 years from the date of grant. The stock options granted in the years ended December 31, 2016 and 2015 and in the period from November 24, 2014 to December 31, 2014 had grant date fair values of $3.40, $4.44 and $3.39 per stock option, respectively, which are being amortized into expense on a straight-line basis over the vesting period. The fair value of the option is estimated using an option-pricing model with the following weighted-average assumptions for grants in the years ended December 31, 2016 and 2015 and in the period from November 24, 2014 to December 31, 2014.

					Period from
	For the Year Ended December 31,				November 24, 2014
	2016		2015		to December 31, 2014
Expected volatility		29.0%		27.0%		23.0%
Expected life	5.9 years		6.5 years		6.5 years
Risk free interest rate		1.5%		1.8%		2.1%
Expected dividend yield		2.3%		2.0%		2.3%

As of December 31, 2016, there was $3,347,000 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.8 years. Below is a summary of our stock option activity for year ended December 31, 2016.

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2015		1,624,450		$	17.69
Granted		238,971			14.94
Exercised		-			-
Cancelled or expired		(19,300	)		17.50
Outstanding as of December 31, 2016		1,844,121		$	17.34		8.1	$	250,920
Options vested and expected to vest as of December 31, 2016		1,012,693		$	17.04		8.2	$	240,171
Options exercisable as of December 31, 2016		742,000		$	17.76		7.9	$	-

LTIP Units

We grant our executive officers, non-employee directors and other employees LTIP units which vest over a period of four to five years and are subject to a taxable book-up event, as defined. The LTIP units granted in the years ended December 31, 2016, December 31, 2015 and in the period from November 24, 2014 to December 31, 2014 had grant date fair values of $10,106,000, $2,081,000 and $14,700,000, respectively, which are being amortized into expense on a straight-line basis over the vesting period. As of December 31, 2016, there was $15,390,000 of total unrecognized compensation cost related to unvested LTIP units, which is expected to be recognized over a weighted-average period of 3.0 years. Below is a summary of our LTIP unit activity for the year ended December 31, 2016.


	Units			Weighted-Average Grant-Date Fair Value
Unvested as of December 31, 2015		714,959		$	16.84
Granted		673,237			15.01
Vested		(281,626	)		17.00
Cancelled or expired		(13,715	)		16.63
Unvested as of December 31, 2016		1,092,855		$	15.68

Restricted Stock

We grant shares of restricted stock to a non-employee director and other employees which vests over four years. The shares of restricted stock granted in the years ended December 31, 2016 and December 31, 2015 and in the period from November 24, 2014 to December 31, 2014 had grant date fair values of $1,600,000, $100,000 and $100,000, respectively, which are being amortized into expense on a straight-line basis over the vesting period. As of December 31, 2016, there was $1,146,000 of total unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted-average period of 3.1 years. Below is a summary of restricted stock activity for the year ended December 31, 2016.

	Shares			Weighted-Average Grant-Date Fair Value
Unvested as of December 31, 2015		5,219		$	19.16
Granted		100,673			15.90
Vested		(5,219	)		19.16
Cancelled or expired		(5,850	)		15.90
Unvested as of December 31, 2016		94,823		$	15.90

2016 Performance Program

In March 2016, our Compensation Committee approved the 2016 Performance Program, a multi-year performance-based equity compensation program. The purpose of the 2016 Performance Program is to further align the interests of our stockholders with that of management by encouraging our senior officers to create stockholder value in a “pay for performance” structure. Under the 2016 Performance Program, participants may earn awards in the form of Long LTIP units of our operating partnership based on our total return to stockholders (“TRS”) over a three-year performance measurement period beginning on March 18, 2016, and continuing through March 17, 2019, on both an absolute basis and relative basis. 25.0% of the award is earned if we outperform a predetermined absolute TRS and the remaining 75.0% is earned if we outperform a predetermined relative TRS. Specifically, participants begin to earn awards under the 2016 Performance Program if our TRS for the performance measurement period equals or exceeds 21.0% on an absolute basis and is within 250 basis points of the performance of the SNL Office REIT Index on a relative basis, and awards will be fully earned if our TRS for the performance measurement period equals or exceeds 36.0% on an absolute basis and exceeds the performance of the SNL Office REIT Index by 400 basis points on a relative basis. Participants will not earn any awards under the 2016 Performance Program if our TRS during the performance measurement period does not meet either of these minimum thresholds. The number of LTIP units that are earned if performance is above the minimum thresholds, but below the maximum thresholds, will be determined based on linear interpolation between the percentages earned at the minimum and maximum thresholds. During the performance measurement period, participants will receive per unit distributions equal to one-tenth of the per share dividends otherwise payable to our common stockholders with respect to their LTIP units. If the LTIP units are ultimately earned based on the achievement of the designated performance objectives, participants will receive cash or additional LTIP units based on the additional amount the participants would have received if per unit distributions during the performance measurement periods for the earned LTIP units had equaled per share dividends paid to our common stockholders less the amount of distributions participants actually received during the performance measurement period.

If the designated performance objectives are achieved, awards earned under the 2016 Performance Program will also be subject to vesting based on continued employment with us through March 17, 2020, with 50.0% of each award vesting following the conclusion of the performance measurement period, and the remaining 50.0% vesting on March 17, 2020. The fair value of the awards granted under the 2016 Performance Program on the date of the grant was $10,914,000 and is being amortized into expense over the four-year vesting period using a graded vesting attribution method.

Deferred Compensation

In connection with the Formation Transactions, we assumed a deferred compensation plan (the “1993 Plan”) from our Predecessor. The 1993 Plan permits certain management employees to defer certain percentages of their compensation, as defined. The assets of the 1993 Plan remain the sole property of the Company and are subject to the claims of its general creditors. The assets of the 1993 Plan are included in “marketable securities” and “restricted cash,” with an offsetting liability included in “other liabilities” on our consolidated balance sheets. Income from the mark-to-market of investments in our deferred compensation plan is included in “interest and other income” and this amount is entirely offset by expense from the mark-to-market of plan liabilities, which is included as a component of “general and administrative” expenses on our consolidated statements of income. The 1993 Plan had a balance of $30,743,000 and $28,947,000 as of December 31, 2016 and 2015, respectively.