Share-Based and Long-Term Compensation Plans

The Company grants share-based awards under the Parkway Properties, Inc. and Parkway Properties LP 2015 Omnibus Equity Incentive Plan (the "2015 Equity Plan") that was approved by the stockholders of the Company on May 14, 2015. The 2015 Equity Plan, which amends and restates the Parkway Properties, Inc. and Parkway Properties LP 2013 Omnibus Equity Incentive Plan (the "2013 Equity Plan"), permits the grant of awards with respect to a number of shares of common stock equal to the sum of (1) 2,500,000 shares, plus (2) the number of shares available for future awards under the 2013 Equity Plan, plus (3) the number of shares related to awards outstanding under the 2013 Equity Plan that terminate by expiration or forfeiture, cancellation, or otherwise without the issuance of such shares of Common Stock. All of the employees of the Company and the Operating Partnership, employees of certain subsidiaries of the Company, non-employee directors and any consultants or advisors to the Company and the Operating Partnership are eligible to participate in the 2015 Equity Plan.

The 2015 Equity Plan authorizes the following types of awards: (1) stock options, including nonstatutory stock options and incentive stock options; (2) stock appreciation rights ("SARs"); (3) restricted shares; (4) RSUs; (5) LTIP units; (6) dividend equivalent rights; and (7) other forms of awards payable in or denominated by reference to shares of common stock. Full value awards, i.e., awards other than options and SARs, vest over a period of three years or longer, except that any full value awards subject to performance-based vesting must become vested over a period of one year or longer. The Compensation Committee of the Board of Directors of the Company (the "Board") may waive vesting requirements upon a participant’s death, disability, retirement, or other specified termination of service or upon a change in control.

Through March 31, 2016, the Company had stock options, RSUs and LTIP units outstanding under the 2015 Equity Plan, each as described below.

Long-Term Equity Incentives

At March 31, 2016, a total of 1,293,750 shares underlying stock options had been granted to officers of the Company and remain outstanding under the 2015 Equity Plan, of which 431,250 options remain unvested, and 862,500 options remain unexercised. The unvested stock options are valued at $1.8 million, which equates to an average price per option of $4.17. Each stock option will vest in increments of 25% per year on each of the first, second, third and fourth anniversaries of the grant date, subject to the grantee's continued service.

At March 31, 2016, a total of 536,764 time-vesting RSUs had been granted to officers of the Company and remain outstanding under the 2015 Equity Plan. The time-vesting RSUs are valued at $8.3 million, which equates to an average price per share of $15.51.

At March 31, 2016, a total of 555,076 LTIP units had been granted to officers of the Company and remain outstanding under the 2015 Equity Plan. LTIP units are a form of limited partnership interest issued by the Operating Partnership, and will be considered earned if, and only to the extent to which applicable total shareholder return ("TSR") performance measures are achieved during the performance period. Grant date fair values of the LTIP units are estimated and the resulting expense is recorded regardless of whether the TSR performance measures are achieved if the required service is delivered. The grant date fair values are being amortized to expense over the period from the grant date to the date at which the awards, if any, would become vested. The LTIP units are valued at $3.8 million, which equates to an average price per share of $6.80.

At March 31, 2016, a total of 336,240 performance-vesting RSUs had been granted to officers of the Company and remain outstanding under the 2015 Equity Plan. The performance-vesting RSUs are valued at $2.1 million, which equates to an average price per share of $6.20. Each performance-vesting RSU will vest based on the attainment of TSR performance measures during the applicable performance period, subject to the grantee's continued service.

Total compensation expense related to restricted shares, deferred incentive share units, stock options, RSUs, and LTIP units of $1.5 million and $1.7 million was recognized in general and administrative expenses on the Company's consolidated statements of operations and comprehensive income during the three months ended March 31, 2016 and 2015, respectively. Total compensation expense related to non-vested awards not yet recognized was $8.7 million at March 31, 2016. The weighted average period over which this expense is expected to be recognized is approximately 1.7 years.

A summary of the Company's restricted shares, stock options, RSUs, and LTIP unit activity for the three months ended March 31, 2016 is as follows:



	Restricted Shares				Stock Options				Time-Vesting RSUs				Performance-Vesting RSUs				LTIP Units
	# of Shares		Weighted Average Grant-Date Fair Value		# of Options		Weighted Average Grant-Date Fair Value		# of Share Units		Weighted Average Grant-Date Fair Value		# of Share Units		Weighted Average Grant-Date Fair Value		# of LTIP Units		Weighted Average Grant-Date Fair Value
Balance at December 31, 2015	5,189		$	13.65	1,293,750		$	4.17	386,748		$	18.09	215,527		$	8.11	447,938		$	8.58
Granted	—		—		—		—		247,520		12.47		164,640		4.66		206,640		4.77
Vested / Exercised	(5,189	)	13.65		(431,250	)	4.17		(93,904	)	18.21		—		—		—		—
Forfeited	—		—		—		—		(3,600	)	14.13		(6,000	)	5.57		—		—
TSR Not Achieved	—		—		—		—		—		—		(37,927	)	10.50		(99,502	)	10.60
Balance at March 31, 2016	—		$	—	862,500		$	4.17	536,764		$	15.51	336,240		$	6.20	555,076		$	6.80