Compensation Plans

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock Based Compensation

On May 11, 2006, the Company’s stockholders approved the 2006 Performance Incentive Plan, which was amended and restated in 2009 (“the 2006 Plan”). On May 1, 2014, the Company’s stockholders approved the 2014 Performance Incentive Plan (“the 2014 Plan”) (collectively, the “Plans”). Following the adoption of the 2014 Plan, no new awards will be issued under the 2006 Plan. The Plans provide for the granting of stock-based compensation, including stock options, restricted stock, and restricted stock units to officers, employees, and directors in connection with their employment with or services provided to the Company. The maximum number of shares reserved for awards under the 2014 Plan is 33 million shares, and, as of December 31, 2022, 25 million of the reserved shares under the 2014 Plan are available for future awards, of which 16 million shares may be issued as restricted stock or restricted stock units.

Total share-based compensation cost was $32 million, $23 million, and $21 million for the years ended December 31, 2022, 2021, and 2020, respectively, which was recognized in general and administrative expenses. Of the total share-based compensation cost, $4 million, $3 million, and $2 million was capitalized as part of real estate for the years ended December 31, 2022, 2021, and 2020, respectively. The year ended December 31, 2022 includes $10 million of severance-related charges resulting from a decrease in the requisite service period of restricted stock units associated with the Company's former CEO, as further described below. As of December 31, 2022, there was $19 million of future expense related to unvested share-based compensation arrangements granted under the Company’s incentive plans, which is expected to be recognized over a weighted average period of 1.5 years associated with future employee service.

Departure of Executives

On October 6, 2022, the Company and Thomas M. Herzog mutually agreed that Mr. Herzog would step down from his position as CEO and from the board of directors of the Company, effective immediately. On November 1, 2022, the Company and Troy E. McHenry mutually agreed that Mr. McHenry would step down from his position as Chief Legal Officer and General Counsel, effective immediately. During the fourth quarter of 2022, the Company recognized total severance-related charges of $33 million in general and administrative expenses on the Consolidated Statements of Operations, $10 million of which related to a decrease in the requisite service period of restricted stock units as discussed above. These restricted stock units will continue to vest in accordance with the original terms of the grants. As of December 31, 2022, $15 million of these severance-related charges have not yet been paid and were included in accounts payable, accrued liabilities, and other liabilities on the Consolidated Balance Sheets.

Stock Options

There have been no grants of stock options since 2014. Stock options outstanding and exercisable were 0.3 million at December 31, 2022 and 0.4 million at December 31, 2021. There were no stock options exercised under the Plans for the year ended December 31, 2022. For the years ended December 31, 2021 and 2020, proceeds received from stock options exercised under the Plans were $3 million, and $2 million, respectively. No compensation cost related to stock options was incurred during the years ended December 31, 2022, 2021, and 2020.

Restricted Stock Awards

Under the Plans, restricted stock awards, including restricted stock units and performance stock units are granted subject to certain restrictions. Conditions of vesting are determined at the time of grant. Restrictions on certain awards generally lapse, as provided in the Plans or in the applicable award agreement, upon retirement, a change in control or other specified events. The fair market value of restricted stock awards, both time vesting and those subject to specific performance criteria, are expensed over the period of vesting. Restricted stock units, which vest based solely upon passage of time generally vest over a period of three to six years. The fair value of restricted stock units is determined based on the closing market price of the Company’s shares on the grant date. Performance stock units, which are restricted stock awards that vest dependent upon attainment of various levels of performance that equal or exceed threshold levels, generally vest in their entirety at the end of a three year performance period. The number of shares that ultimately vest can vary from 0% to 200% of target depending on the level of achievement of the performance criteria. The fair value of performance stock units is determined based on the Monte Carlo valuation model primarily using the following assumptions for awards granted during the years ended December 31, 2022, 2021, and 2020, respectively: (i) expected term of 3 years, 3 years, and 3 years (equal to the remaining performance period at the grant date), (ii) historical volatility of 38.9%, 39.1%, and 20.0%, (iii) dividend yield of 3.5%, 4.0%, and 4.2%, (iv) risk-free rate of 1.8%, 0.2%, and 1.4%, and (v) post-vesting restrictions discount of 5.8%, 12.9%, and 0.0%. The total grant date fair value of restricted stock and performance based units for the years ended December 31, 2022, 2021, and 2020 was $27 million, $23 million, and $24 million, respectively. The total fair value (at vesting) of restricted stock and performance based units for the years ended December 31, 2022, 2021, and 2020 was $27 million, $29 million, and $20 million, respectively. The compensation cost recognized for all restricted stock awards is net of actual forfeitures.

Upon vesting of restricted stock awards, the participant is required to pay the related tax withholding obligation. The Company reduces the number of common stock shares delivered to pay the employee tax withholding obligation. The value of the shares withheld is dependent on the closing market price of the Company’s common stock on the trading date prior to the relevant transaction occurring. During the years ended December 31, 2022, 2021, and 2020, the Company withheld 356,000, 418,000, and 298,000 shares, respectively, to offset tax withholding obligations with respect to the vesting of the restricted stock and performance restricted stock unit awards.

Holders of restricted stock awards, including restricted stock units and performance stock units, are generally entitled to receive dividends equal to the amount that would be paid on an equivalent number of shares of common stock.

The following table summarizes restricted stock award activity, including performance stock units, for the year ended December 31, 2022 (units in thousands):


	Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested at January 1, 2022	1,692	$	33.72
Granted	983	32.94
Vested	(820)	32.87
Forfeited	(146)	34.02
Unvested at December 31, 2022	1,709	$	33.66