The acquisition of JBG/Operating Partners, L.P. in the Combination, resulted in the issuance of 3.3 million OP Units to the former owners with an estimated grant-date fair value of $110.6 million. The OP Units are subject to post-combination vesting over

periods of either 12 or 60 months based on continued employment. The significant assumptions used to value the OP Units included expected volatility (18.0% to 27.0%), risk-free interest rates (1.3% to 1.5%) and post-vesting restriction periods (1 year to 3 years). Compensation expense for these OP Units is recognized over the graded vesting period. See Note 3 for additional information.

On June 23, 2017, our Board of Trustees adopted the JBG SMITH 2017 Omnibus Share Plan (the "Plan"), effective as of July 17, 2017, and authorized the reservation of 10.3 million of our common shares pursuant to the Plan. As of December 31, 2019, there were 3.9 million common shares available for issuance under the Plan.

Pursuant to the Plan, on July 18, 2017, we granted 2.7 million formation awards ("Formation Awards") based on an aggregate notional value of approximately $100 million divided by the volume-weighted average price on July 18, 2017 of $37.10 per common share. In 2018, we granted 93,784 Formation Awards based on an aggregate notional value of $3.2 million divided by the volume-weighted average price on the date of issuance of $34.40 per common share.

The Formation Awards are structured in the form of profits interests in JBG SMITH LP that provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the volume-weighted average price of a common share at the time the formation unit was granted. The Formation Awards, subject to certain conditions, generally vest 25% on each of the third and fourth anniversaries and 50% on the fifth anniversary, of the date granted, subject to continued employment with JBG SMITH through each vesting date.

The value of vested Formation Awards is realized through conversion of the award into a number of LTIP Units, and subsequent conversion into a number of OP Units determined based on the difference between the volume-weighted average price of a common share at the time the Formation Award was granted and the value of a common share on the conversion date. The conversion ratio between Formation Awards and OP Units, which starts at zero, is the quotient of (i) the excess of the value of a common share on the conversion date above the per share value at the time the Formation Award was granted over (ii) the value of a common share as of the date of conversion. Like options, Formation Awards have a finite 10-year term over which their value is allowed to increase and during which they may be converted into LTIP Units (and in turn, OP Units). Holders of Formation Awards will not receive distributions or allocations of net income or net loss prior to vesting and conversion to LTIP Units.

The aggregate grant-date fair value of the Formation Awards granted during the years ended December 31, 2018 and 2017 was $725,000 and $23.7 million estimated using Monte Carlo simulations. No Formation Awards were granted during the year ended December 31, 2019. Compensation expense for these awards is being recognized over a five-year period. The following is a summary of the significant assumptions used to value the Formation Awards:



	Unvested Shares		Weighted Average Grant-Date Fair Value
Unvested at December 31, 2018	2,655,394		$	8.81
Vested	(160,746	)	8.84
Forfeited	(9,702	)	8.55
Unvested at December 31, 2019	2,484,946		8.81

During the years ended December 31, 2019 and 2018, as part of their annual compensation, we granted a total of 50,159 and 25,770 fully vested LTIP Units to non-employee trustees with an aggregate grant-date fair value of $1.8 million and $794,000. The LTIP Units may not be sold while such non-employee trustee is serving on the Board.

On July 18, 2017, we granted a total of 47,166 fully vested LTIP Units to the seven independent trustees in the notional amount of $250,000 each. On the same date, we also granted 59,927 LTIP units to a key employee of which 50% vested immediately and the remaining 50% vests ratably from the 31st to the 60th month following the grant date.

During each of the three years in the period ended December 31, 2019, we granted 351,982, 367,519 and 302,518 Time-Based LTIP Units to management and other employees with a weighted average grant-date fair value of $34.26, $31.48 and $33.71 per unit that vest over four years, 25.0% per year, subject to continued employment. Compensation expense for these units is being recognized over a four-year period.

During the year ended December 31, 2019, we granted 91,636 of fully vested LTIP Units, with a grant-date fair value of $34.21 per unit, to certain executives who elected to receive all or a portion of their cash bonus paid in 2019, related to 2018 service, as LTIP Units.

Additionally, during the year ended December 31, 2018, related to our successful pursuit of Amazon's additional headquarters in National Landing, we granted 356,591 Special Time-Based LTIP Units to management and other employees with a weighted average grant-date fair value of $36.84 per unit. The Special Time-Based LTIP Units vest 50% on each of the fourth and fifth anniversaries of the grant date, subject to continued employment. Compensation expense for these units is being recognized over a five-year period.

The aggregate grant-date fair value of the LTIP, Time-Based LTIP and Special Time-Based LTIP Units granted (collectively "Granted LTIPs") for each of the three years in the period ended December 31, 2019 was $17.0 million, $25.5 million and $13.7 million, valued using Monte Carlo simulations. Holders of the Granted LTIPs have the right to convert all or a portion of vested units into OP Units, which are then subsequently exchangeable for our common shares. Granted LTIPs do not have redemption rights, but any OP Units into which units are converted are entitled to redemption rights. Granted LTIPs, generally, vote with the OP Units and do not have any separate voting rights except in connection with actions that would materially and adversely affect the rights of the Granted LTIPs. The following is a summary of the significant assumptions used to value the Granted LTIPs:



	Year Ended December 31,
	2019	2018	2017

Expected volatility	18.0% to 24.0%	20.0% to 22.0%	17.0% to 19.0%
Risk-free interest rate	2.3% to 2.6%	1.9% to 2.6%	1.3% to 1.5%
Post-grant restriction periods	2 to 3 years	2 to 3 years	2 to 3 years



	Unvested Shares		Weighted Average Grant-Date Fair Value
Unvested at December 31, 2018	962,662		$	34.03
Granted	493,777		34.40
Vested	(360,703	)	33.15
Forfeited	(393	)	34.52
Unvested at December 31, 2019	1,095,343		34.35

The total-grant date fair value of the Granted LTIPs that vested for each of the three years in the period ended December 31, 2019 was $12.0 million, $3.6 million and $2.5 million. In 2020, we issued 471,598 LTIP Units to management and employees with an estimated aggregate grant-date fair value of $18.3 million.

During each of the three years in the period ended December 31, 2019, we granted 478,411, 567,106 and 605,072 Performance-Based LTIP Units to management and other employees. During the year ended December 31, 2018, related to our successful pursuit of Amazon's additional headquarters at our properties in National Landing, we granted 511,555 Special Performance-Based LTIP Units to management and other employees.

Performance-Based LTIP Units, including the Special Performance-Based LTIP Units, are performance-based equity compensation pursuant to which participants have the opportunity to earn LTIP Units based on the relative performance of the total shareholder return ("TSR") of our common shares compared to the companies in the FTSE NAREIT Equity Office Index, over the defined performance period beginning on the grant date, inclusive of dividends and stock price appreciation.

Our Performance-Based LTIP and Special Performance-Based LTIP Units have a three-year performance period. Fifty percent of any Performance-Based LTIP Units that are earned vest at the end of the three-year performance period and the remaining 50% on the fourth anniversary of the date of grant, subject to continued employment. Fifty percent of any Special Performance-Based LTIP Units that are earned at the end of the three-year performance period vest on the fourth anniversary of the date of grant and the remaining 50% on the fifth anniversary of the date of grant, subject to continued employment.

The aggregate grant-date fair value of the Performance-Based LTIP and Special Performance-Based LTIP Units granted for each of the three years in the period ended December 31, 2019 was $9.3 million, $21.1 million and $9.7 million, valued using Monte Carlo simulations. Compensation expense for the Performance-Based LTIP Units is being recognized over a four-year period, while compensation expense for the Special Performance Based LTIP Units is being recognized over a five-year period. The following is a summary of the significant assumptions used to value both the Performance-Based LTIP and Special Performance-Based LTIP Units:



	Year Ended December 31,
	2019	2018	2017

Expected volatility	19.0% to 23.0%	19.9% to 26.0%	18.0	%
Dividend yield	2.3% to 2.5%	2.5% to 2.7%	2.3	%
Risk-free interest rate	2.3% to 2.6%	2.3% to 3.0%	1.5	%



	Unvested Shares		Weighted Average Grant-Date Fair Value
Unvested at December 31, 2018	1,657,578		$	18.27
Granted	478,411		19.49
Forfeited	(18,054	)	18.00
Unvested at December 31, 2019	2,117,935		18.55

The JBG SMITH 2017 ESPP authorized the issuance of up to 2.1 million common shares. The ESPP provides eligible employees an option to purchase, through payroll deductions, our common shares at a discount of 15.0% of the closing price of a common share on relevant determination dates, provided that the fair market value of common shares, determined as of the first day of the relevant offering period, purchased by any eligible employee may not exceed $25,000 in any calendar year. The maximum aggregate number of common shares reserved for issuance under the ESPP will automatically increase on January 1 of each year, unless the Compensation Committee of the Board of Trustees determines to limit any such increase, by the lesser of (i) 0.10% of the total number of outstanding common shares on December 31 of the preceding calendar year or (ii) 206,600 common shares.

Pursuant to the ESPP, employees purchased 47,022 and 20,178 common shares for $1.5 million and $597,000 during the years ended December 31, 2019 and 2018. The following is a summary of the significant assumptions used to value the ESPP common shares using the Black-Scholes model:



	Year Ended December 31,
	2019			2018			2017
	(In thousands)
Time-Based LTIP Units	$	11,386		$	10,095		$	2,211
Performance-Based LTIP Units	8,716			5,271			1,172
LTIP Units	1,000			794			—
Other equity awards ⁽¹⁾	4,535			3,826			1,526
Share-based compensation expense - other	25,637			19,986			4,909
Formation Awards	5,734			5,606			5,169
OP Units ⁽²⁾	29,826			29,455			21,467
LTIP Units ⁽²⁾	456			277			2,615
Special Performance-Based LTIP Units ⁽³⁾	2,843			323			—
Special Time-Based LTIP Units ⁽³⁾	3,303			369			—
Share-based compensation related to Formation Transaction and special equity awards ⁽⁴⁾	42,162			36,030			29,251
Total share-based compensation expense	67,799			56,016			34,160
Less amount capitalized	(2,526		)	(3,341		)	(467		)
Share-based compensation expense	$	65,273		$	52,675		$	33,693

As of December 31, 2019, we had $77.4 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 2.2 years.

We have a 401(k) defined contribution plan covering substantially all of our officers and employees which permits participants to defer compensation up to the maximum amount permitted by law. We provide a discretionary matching contribution. Employees’ contributions vest immediately and our matching contributions vest after one year. Our contributions for each of the three years in the period ended December 31, 2019 were $2.0 million, $1.8 million and $3.6 million.