All TCIL share counts in the following description have been retroactively converted to reflect the share exchange ratios of 0.80 for TCIL related to the Merger.

TCIL Share Options

TCIL adopted a share-based compensation plan (the “Option Plan”) for the benefit of certain executives of TCIL and its consolidated subsidiaries effective May 23, 2011. TCIL granted market based options to purchase 5,370,640 Class A common shares and service based options to purchase 2,681,297 Class A common shares in 2011.

On November 9, 2015, TCIL entered into option transaction agreements (the “Option Transaction Agreements”) with option holders in anticipation of the closing of the Merger with TAL. In accordance with the terms of the agreements, TCIL settled and canceled all vested and unvested market based options in exchange for 692,126 fully vested Class A common shares at $18.14 per share or $12.6 million total fair value. Approximately 297,000 fully vested shares were redeemed to satisfy tax withholding obligations in respect of their settlement. On July 8, 2016, TCIL settled and canceled all vested and unvested service-based options in exchange for approximately 517,000 fully vested Class A common shares at $13.68 per share, or a fair value of $7.1 million. Approximately 232,300 options were redeemed to satisfy tax withholding obligations in respect of the settlement.

There were no market based or service based options granted under the Option Plan during 2017, 2016 or 2015.

The Company recognized $2.3 million, and $11.5 million of compensation costs reported as transaction and other costs on the consolidated statements of operations for the years ended December 31, 2016 and 2015, respectively, related to options granted during the years 2011 through 2013 and the settlement and cancellation as described above. There was no compensation costs related to options for the year ended December 31, 2017.

TCIL Non-Employee Director Equity Plan

On July 12, 2016, 26,058 of restricted Class A common shares that were issued to participants of the non-employee director equity plan, became fully vested and the remaining unamortized compensation costs of $0.4 million was expensed and recorded in transaction and other costs on the consolidated statements of operations.

For the years ended December 31, 2016 and 2015, compensation expense of $0.3 million and $0.5 million, respectively, was included in administrative expenses on the consolidated statements of operations. There was no compensation expense related to the TCIL non-employee director equity plan during the year ended December 31, 2017.

TCIL Restricted Shares

On July 8, 2016, TCIL issued 113,942 restricted shares at a fair value of $13.68 per share. The Company recognized $0.5 million of compensation costs which are included in transaction and other costs on the consolidated statements of operations for the year ended December 31, 2016. These unvested TCIL restricted shares converted to Triton restricted shares upon the Merger and will vest on a straight line basis over the remaining vesting term.

Note 9—Share Based Compensation and Other Equity Matters (continued)

TAL Stock Based Compensation Plan

TAL’s previously existing stock-based compensation plans consisted of the 2005 Management Omnibus Incentive Plan and the 2014 Equity Incentive Plan. The TAL restricted shares granted in 2014 and 2015 vested on July 12, 2016 upon the closing of the Merger and were included in the purchase price consideration. TAL granted 140,000 restricted shares in January 2016 that were converted to Triton restricted shares upon the Merger and will vest on a straight line basis over the remaining vesting term.

2016 Triton Plan

On July 8, 2016, the Company’s 2016 Equity Incentive Plan (“2016 Equity Plan”) became effective. The 2016 Equity Plan provides for the granting of service based and performance based restricted shares to various executives, certain employees and directors. The maximum aggregate number of shares that may be issued under the 2016 Equity Plan is initially 5,000,000 common shares. Any awards issued under the 2016 Equity Plan that are forfeited by the participant, will become available for future grant under the 2016 Equity Plan.

On September 7, 2016, the Company approved the grants of 47,075 restricted shares to non-employee directors at a fair value of $14.55 per share that vested immediately. On May 10, 2017, the Company approved the grants of 38,675 restricted shares to directors at a fair value of $28.04 per share that vested immediately. The compensation expense for the years ended December 31, 2017 and 2016 included in administrative expenses on the consolidated statements of operations was $1.1 million and $0.7 million, respectively. There was no compensation expense for the year ended December 31, 2015 related to director share grants under the 2016 Equity Plan.

Additional shares may be granted based upon the satisfaction of certain performance criteria.

The following table summarizes the Company’s restricted share activity for the years ended December 31, 2017 and 2016:



	Number of Shares Outstanding		Weighted Average Fair Value
Non-vested balance at December 31, 2015	—		$	—
Shares converted (1)	253,942		14.56
Shares granted	465,097		14.55
Shares vested	(83,847	)	14.55
Non-vested balance at December 31, 2016	635,192		$	14.55
Shares granted	161,194		24.99
Shares vested(2)	(44,372	)	26.20
Non-vested balance at December 31, 2017	752,014		$	16.10

(1) Shares converted represent TCIL and TAL equity awards that were converted to Triton equity awards as part of the Merger.

(2) Plan participants tendered 1,962 common shares, all of which were subsequently retired by the Company, to satisfy payment.

As of December 31, 2017, the total unrecognized compensation costs related to restricted shares is approximately $7.3 million, which is expected to be recognized over the remaining weighted average vesting period of approximately 1.7 years.

Equity Issuance

On September 12, 2017, the Company completed a common share offering in which it sold 5,350,000 common shares at a public offering price of $32.75 per share. On September 22, 2017, the Company sold an additional 802,500 common shares at a public offering price of $32.75 per share pursuant to the full exercise of an option granted to the underwriters in connection with the offering. The aggregate net proceeds received by the Company from the offering, including the exercise of the option, amounted to $192.9 million after deducting underwriting discounts and commissions, and before deducting total expenses incurred in connection with the offering of approximately $1.3 million. The net proceeds were used for general corporate purposes, including the purchase of containers.

Note 9—Share Based Compensation and Other Equity Matters (continued)

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive (loss) income consisted of the following as of the dates indicated (in thousands and net of tax effects):



	Cash Flow Hedges			Foreign Currency Translation			Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2016	$	31,182		$	(4,424	)	$	26,758
Change in fair value of derivative instruments designated as cash flow hedges	(407		)	—			(407		)
Reclassification of realized loss on interest rate swap agreements designated as cash flow hedges	440			—			440
Foreign currency translation adjustment	—			151			151
Other comprehensive income	33			151			184
Balance as of December 31, 2017	$	31,215		$	(4,273	)	$	26,942



	Cash Flow Hedges		Foreign Currency Translation			Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2015	$	—	$	(3,666	)	$	(3,666	)
Change in fair value of derivative instruments designated as cash flow hedges	30,405		—			30,405
Reclassification of realized loss on interest rate swap agreements designated as cash flow hedges	777		—			777
Foreign currency translation adjustment	—		(758		)	(758		)
Other comprehensive income (loss)	31,182		(758		)	30,424
Balance as of December 31, 2016	$	31,182	$	(4,424	)	$	26,758

The following table summarizes reclassifications out of accumulated other comprehensive income (loss) for the period indicated (in thousands):



	Amounts Reclassified From Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Consolidated Statements of Operations
	December 31, 2017			December 31, 2016
Amounts reclassified from accumulated other comprehensive (loss) before income tax	$	611		$	1,200		Interest and debt expense
Income tax (benefit)	(171		)	(423		)	Income tax expense
Amounts reclassified from accumulated other comprehensive (loss), net of tax	$	440		$	777		Net income