Share Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

13. SHARE BASED COMPENSATION

Restricted Share Rights Awards

As of March 31, 2020, 689,184 restricted share rights ("Restricted Share Rights") were outstanding under the Company's long term equity incentive plan. These Restricted Share Rights vest over one to three years from the initial grant dates. The remaining compensation expense to be recognized with respect to these awards at March 31, 2020 was $3.5 million and is expected to be recognized over a weighted average remaining vesting period of 1.40 years. During the three months ended March 31, 2020 and 2019, the amortization related to outstanding Restricted Share Rights was $1.9 million (of which $0.3 million was capitalized) and $1.6 million (of which $0.2 million was capitalized), respectively. Compensation expense related to outstanding Restricted Share Rights is included in general and administrative expense.

The following table summarizes the Company’s Restricted Share Rights activity during the three months ended March 31, 2020:



	Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Non-vested at January 1, 2020	479,144		$	15.90	$	44.7
Granted	224,678		$	14.66	$	—
Vested	(12,718	)	$	15.60	$	—
Forfeited	(1,920	)	$	15.63	$	—
Non-vested at March 31, 2020	689,184		$	15.50	$	—

On March 5, 2020, the Compensation Committee of the Parent Company’s Board of Trustees awarded to officers of the Company an aggregate of 183,758 Restricted Share Rights, which vest over three years from the grant date. Each Restricted Share Right

entitles the holder to one common share upon settlement. The Parent Company pays dividend equivalents on the Restricted Share Rights prior to the settlement date. Vesting and/or settlement would accelerate if the recipient of the award were to die, become disabled or, in the case of certain of such Restricted Share Rights, retire in a qualifying retirement prior to the vesting or settlement date. Qualifying retirement generally means the recipient’s voluntary termination of employment after reaching at least age 57 and accumulating at least 15 years of service with the Company. In addition, vesting would also accelerate if the Parent Company were to undergo a change of control and, on or before the first anniversary of the change of control, the recipient’s employment were to cease due to a termination without cause or resignation with good reason.

The Restricted Share Rights granted in 2020 to certain senior executives include an “outperformance feature” whereby additional shares may be earned, up to 200% of the shares subject to the basic award, based on the Company’s achievement of targets for same-store net operating cash income growth and investment activity provided certain operating and balance sheet metrics are also achieved during the three-year period ending December 31, 2022. Half of any additional shares earned will vest based on continued service through each of January 1, 2023 and January 1, 2024, respectively, provided that this additional service requirement will be waived in the event of a death, disability or qualifying retirement. In addition to the basic award, up to 316,306 shares may be awarded under the outperformance feature. As of March 31, 2020, the Company has not recognized any compensation expense for the outperformance feature of these awards as it has been determined that it is not probable that the performance metrics will be achieved. The Company will evaluate progression towards achievement of the performance metrics on a quarterly basis and recognize compensation expense for the outperformance feature of these awards should it be determined that achievement of these metrics is probable.

In addition, on March 5, 2020, the Compensation Committee awarded non-officer employees an aggregate of 40,920 Restricted Share Rights that generally vest in three equal installments on April 15, 2021, 2022, and 2023. Vesting of these awards is subject to acceleration upon death, disability or termination without cause within one year following a change of control.

In accordance with the accounting standard for share-based compensation, the Company amortizes share-based compensation costs through the qualifying retirement dates for those executives who meet the conditions for qualifying retirement during the scheduled vesting period and whose award agreements provide for vesting upon a qualifying retirement.

Restricted Performance Share Units Plan

The Compensation Committee of the Parent Company’s Board of Trustees has granted performance share-based awards (referred to as Restricted Performance Share Units, or RPSUs) to officers of the Parent Company. The RPSUs are settled in common shares, with the number of common shares issuable in settlement determined based on the Company’s total shareholder return over specified measurement periods compared to total shareholder returns of comparative groups over the measurement periods. The table below presents certain information as to unvested RPSU awards.



	RPSU Grant
	2/28/2018		2/21/2019		3/5/2020		Total
(Amounts below in shares, unless otherwise noted)
Non-vested at January 1, 2020	190,296		206,069		—		396,365
Units Granted	—		—		319,600		319,600
Non-vested at March 31, 2020	190,296		206,069		319,600		715,965
Measurement Period Commencement Date	1/1/2018		1/1/2019		1/1/2020
Measurement Period End Date	12/31/2020		12/31/2021		12/31/2022
Units Granted	209,193		213,728		319,600
Fair Value of Units on Grant Date (in thousands)	$	4,276	$	4,627	$	5,389

The Company values each RPSU on its grant date using a Monte Carlo simulation. The fair values of each award are being amortized over the three year performance period. During the performance period, dividend equivalents are credited as additional RPSU's, subject to the same terms and conditions as the original RPSU's. The performance period will be abbreviated and the determination and delivery of earned shares will be accelerated in the event of a change in control or if the recipient of the award were to die, become disabled or retire in a qualifying retirement prior to the end of the otherwise applicable three year performance period; provided that, in the case of qualifying retirement for the March 5, 2020 grant, the number of shares deliverable will be pro-rated based on the portion of the performance period actually worked before retirement. In accordance with the February 2019 and 2018 grants, the Company amortizes stock-based compensation costs through the qualifying retirement date for those executives who meet the conditions for qualifying retirement during the scheduled vesting period.

For the three months ended March 31, 2020, the Company recognized amortization of the 2020, 2019 and 2018 RPSU awards of $0.6 million, of which $0.1 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation. For the three months ended March 31, 2019, amortization for the 2019, 2018 and 2017 RPSU awards was $2.7 million, of which $0.4 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation.

The remaining compensation expense to be recognized with respect to the non-vested RPSU's at March 31, 2020 was approximately $6.9 million and is expected to be recognized over a weighted average remaining vesting period of 2.37 years.

The Company issued 121,897 common shares on February 1, 2020 in settlement of RPSUs that had been awarded on March 1, 2017 (with a three-year measurement period ended December 31, 2019). Holders of these RPSUs also received a cash dividend of $0.19 per share for these common shares on January 22, 2020.