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Equity Based Compensation
 6 Months Ended
Jun. 30, 2020
Disclosure Of Compensation Related Costs Equity Based Payments [Abstract]  
Equity Based Compensation Equity Based Compensation
Equity Incentive Plan
In 2018, the Company adopted an equity incentive plan (the “Equity Incentive Plan”), which provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock awards, performance awards and LTIP units. Officers, employees, non-employee directors, consultants, independent contractors and agents who provide services to the Company or to any subsidiary of the Company are eligible to receive such awards. A maximum of 3,550,000 shares may be issued under the Equity Incentive Plan, subject to certain conditions.
Restricted Stock Awards
In January 2019, an aggregate of 46,368 shares of unvested restricted common stock awards (“RSAs”) were issued to the Company’s executive officers, other employees and an external consultant under the Equity Incentive Plan. These RSAs vest over periods ranging from one year to four years from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting dates. In June 2020, an additional 3,658 RSAs were issued to certain members of the Company's board of directors which vested immediately upon grant. The Company estimates the grant date fair value of the unvested RSAs granted under the Equity Incentive Plan using the average market price of the Company’s common stock on the date of grant.
The following table presents information about the Company’s RSAs for the periods presented:
Three months ended June 30,Six months ended June 30,
(in thousands)2020201920202019
Compensation cost recognized in general and administrative expense$993  $873  $1,887  $1,745  
Dividends declared on unvested RSAs and charged directly to distributions in excess of cumulative earnings55  109  166  264  
Fair value of shares vested during the period3,360  3,293  3,512  3,293  
The following table presents information about the Company’s RSAs as of the dates presented:
(Dollars in thousands)
June 30,
2020		December 31,
2019
Total unrecognized compensation cost
$3,197  $5,026  
Weighted average period over which compensation cost will be recognized (in years)1.11.6
Restricted Stock Units
In January 2019 and 2020, the Company issued target grants of 119,085 and 84,684 performance-based restricted stock units (“RSUs”), respectively, to the Company’s executive officers under the Equity Incentive Plan. Of these awards, 75% are non-vested RSUs for which vesting percentages and the ultimate number of units vesting will be calculated based on the total shareholder return (“TSR”) of the Company's common stock as compared to the TSR of peer companies identified in the grant agreements. The payout schedule can produce vesting percentages ranging from 0% to 250%. TSR will be calculated based upon the average closing price for the 20-trading day period ending December 31, 2021 (for the 2019 grants) or December 31, 2022 (for the 2020 grants), divided by the average closing price for the 20-trading day period ended January 1, 2019 (for the 2019 grants) or January 1, 2020 (for the 2020 grants). The target number of units is based on achieving a TSR equal to the 50th percentile of the peer group. The Company recorded expense on these TSR RSUs based on achieving the target.
The grant date fair value of the TSR RSUs was measured using a Monte Carlo simulation model based on the following assumptions as of each grant date:
January
20202019
Volatility20 %18 %
Risk free rate1.61 %2.57 %
The remaining 25% of the performance-based RSUs issued in January 2019 and 2020 vest based on a subjective evaluation by the Compensation Committee of the Company’s board of directors of the individual recipient’s achievement of certain strategic objectives. In May 2020, the Compensation Committee evaluated and subjectively awarded 7,596 of these RSUs to a former executive officer of the Company, which vested immediately. During the three and six months ended June 30, 2020, the Company recorded $0.1 million of compensation expense related to the subjective RSUs awarded to a former executive. As of June 30, 2020, the Compensation Committee had not identified specific performance targets relating to the individual recipients’ achievement of strategic objectives for the remainder of the subjective awards. As such, the remainder of these awards do not have either a service inception or a grant date for GAAP accounting purposes and the Company recorded no compensation cost with respect to this portion of the performance-based RSUs during the three and six months ended June 30, 2020 and 2019.
In June 2019, the Company issued 11,500 RSUs to the Company’s independent directors. These awards vest in full on the earlier of one year from the grant date or the first annual meeting of stockholders that occurs after the grant date, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting date. The Company estimated the grant date fair value of these RSUs using the average market price of the Company’s common stock on the date of grant.
Additionally, in January 2020, the Company issued an aggregate of 71,607 shares of unvested RSUs to the Company’s executive officers and other employees under the Equity Incentive Plan. These awards vest over a period of four years from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting dates.
The following table presents information about the Company’s RSUs for the periods presented:
Three months ended June 30,Six months ended June 30,
(in thousands)2020201920202019
Compensation cost recognized in general and administrative expense$840  $155  $1,454  $290  
Dividend equivalents declared and charged directly to distributions in excess of cumulative earnings23  2  42  2  
Fair value of units vested during the period896  —  896  —  
The following table presents information about the Company’s RSUs as of the dates presented:
(Dollars in thousands)June 30,
2020		December 31,
2019
Total unrecognized compensation cost$5,001  $1,584  
Weighted average period over which compensation cost will be recognized (in years)2.82.4
The following table presents information about the Company’s RSA and RSU activity during the six months ended June 30, 2020 and 2019:
Restricted Stock Awards
Restricted Stock Units
SharesWeighted Average Grant Date Fair ValueUnitsWeighted Average Grant Date Fair Value
Unvested, January 1, 2019691,290  $13.68  —  $—  
Granted46,368  14.12  100,814  22.80  
Vested(240,753) 13.68  —  —  
Forfeited—  —  —  —  
Unvested, June 30, 2019496,905  $13.72  100,814  $22.80  
Unvested, January 1, 2020492,701  $13.72  100,814  $22.80  
Granted3,658  15.68  182,681  28.32  
Vested(255,761) 13.73  (42,658) 21.00  
Forfeited—  —  (5,571) —  
Unvested, June 30, 2020240,598  $13.74  235,266  $27.95  
Unit Based Compensation
Prior to the Company’s IPO in 2018, certain of the Company’s management, board of directors and other external parties held Class B and Class D units in EPRT Holdings which had been granted as equity awards in prior periods. Following the completion of the IPO and related formation transactions, the Class B and Class D unitholders continued to hold vested and unvested interests in EPRT Holdings and, indirectly, the OP Units of the Company’s Operating Partnership held by EPRT Holdings.
On July 22, 2019, in conjunction with the completion of the Secondary Offering, 3,520 previously unvested Class B units and 1,200 previously unvested Class D units in EPRT Holdings automatically vested in accordance with the terms of the grant agreements, which represented all of the remaining outstanding unvested Class B and Class D units. Due to this accelerated vesting, the Company recorded all remaining unrecognized compensation cost on the Class B and Class D units to general and administrative expenses in its consolidated statements of operations at the time of vesting. No Class B or Class D units remained outstanding as of June 30, 2020 and December 31, 2019.
The following table presents information about the Class B and Class D unit activity during the six months ended June 30, 2019:
Class B UnitsClass D UnitsTotal
Unvested, January 1, 20195,230  1,800  7,030  
Granted—  —  —  
Vested(1,710) (600) (2,310) 
Forfeited—  —  —  
Unvested, June 30, 20193,520  1,200  4,720  
The following table presents information about the Class B and Class D units for the periods presented:
(in thousands)Three months ended June 30, 2019Six months ended June 30, 2019
Compensation cost recognized in general and administrative expense$219  $438  
Fair value of units vested during the period128718