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Share-Based Compensation
 3 Months Ended
Mar. 31, 2025
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
Recipients of the Company’s restricted shares have the same voting rights as any other common shareholder. During the period of restriction, holders of unvested restricted shares are eligible to receive dividend payments on their shares at the same rate and on the same date as any other common shareholder.  The restricted shares are service based awards and vested over a service period determined by the Compensation Committee of our Board of Trustees, or the Compensation Committee.
Recipients of the Company’s restricted stock units, or RSUs, are entitled to receive dividends with respect to the common shares underlying the RSUs if and when the RSUs are earned, at which time the recipient will be entitled to receive an amount in cash equal to the aggregate amount of cash dividends that would have been paid in respect to the common shares underlying the recipient’s earned RSUs had such common shares been issued to the recipient on the first day of the performance period. To the extent that an award does not vest, the dividends related to unvested RSUs will be forfeited. The RSUs are market-based awards with a service condition and recipients may earn RSUs based on the Company’s total shareholder return, or TSR, relative to the TSRs of the companies that comprise the Nareit Office Index over a three-year performance period. Following the end of the three-year performance period, the number of earned awards will be determined. The earned awards vested in two tranches with 50% of the earned award vesting following the end of the performance period on the date the Compensation Committee determines the level of achievement of the performance metric and the remaining 50% of the earned award vesting approximately one year thereafter, subject to the grant recipient’s continued employment. Compensation expense for the RSUs was determined using a Monte Carlo simulation model and was recognized ratably from the grant date to the vesting date of each tranche.
LTIP Units are a class of beneficial interests in the Operating Trust that may be issued to employees, officers or trustees of the Operating Trust, the Company or their subsidiaries. Time-based LTIP Units have the same general characteristics as restricted shares and market-based LTIP Units have the same general characteristics as RSUs. Each LTIP Unit will convert automatically into an OP Unit on a one-for-one basis when the LTIP Unit becomes vested and its capital account is equalized with the per-unit capital account of the OP Units. Holders of LTIP Units generally will be entitled to receive the same per-unit distributions as the other outstanding OP Units in the Operating Trust, except that market-based LTIP Units will not participate in distributions until expiration of the applicable performance period, at which time any earned market-based LTIP Units generally will become entitled to receive a catch-up distribution for the periods prior to such time.
Our Board determined that a change in control occurred on February 25, 2025 as a result of the sale of 1225 Seventeenth Street Plaza, which it determined constituted a sale of substantially all of our assets. Accordingly, equity awards outstanding that remained unvested on February 25, 2025 vested on an accelerated basis.
2025 Equity Award Activity
During the three months ended March 31, 2025, 873,406 RSUs vested, and, as a result, we issued 873,406 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 7).
In December 2024, as part of the Plan of Sale and to facilitate an efficient wind-down of the Company, the Company terminated its various Registration Statements on Form S-8, which were used to register the Company’s common shares reserved for issuance as equity awards pursuant to the 2015 Omnibus Plan. As a result, the Company was not able to issue additional shares under the 2015 Omnibus Plan with respect to the portion of any outstanding performance-based awards that was determined to be earned as a result of above-target performance. Consequently, on January 27, 2025, the Compensation Committee amended the 2022 Performance-Based Awards granted to our employees who received January 26, 2022 Performance-Based Awards, including our named executive officers, to provide that such awards would be settled in cash as to the portion of the 2022 Performance-Based Awards measured above target, with 50% of such awards vesting on February 4, 2025, when the Compensation Committee approved the performance measurement, and 50% of such awards vesting on the change in control date, subject to the terms and conditions of the applicable award agreements.
2024 Equity Award Activity
During the three months ended March 31, 2024, 391,061 RSUs vested, and, as a result, we issued 391,061 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 7).
On January 29, 2024, the Compensation Committee approved grants in the aggregate amount of 142,146 restricted shares and 288,596 RSUs at target (719,326 RSUs at maximum) to the Company’s officers and certain employees, as part of their compensation for fiscal year 2023. The restricted shares were valued at $19.36 per share, the closing price of our common
shares on the New York Stock Exchange, or the NYSE, on the grant date. The RSUs were valued at $27.08 per share, their fair value on the grant date.
Outstanding Equity Awards
As of March 31, 2025, we did not have any unvested restricted shares, time-based LTIP Units, RSUs and market-based LTIP Units as a result of the change in control.
During the three months ended March 31, 2024, we recorded $2.6 million of compensation expense, net of forfeitures, in general and administrative expense for grants to our trustees, employees and an eligible consultant related to our equity compensation plans. We did not record any accelerated vesting during the three months ended March 31, 2024. Forfeitures were recognized as they occur.
The Equity Commonwealth 2015 Omnibus Incentive Plan, as amended, the 2015 Omnibus Plan, automatically terminated on March 18, 2025, ten years after the Board of Trustees approval of the 2015 Omnibus Plan, and we are not able to issue any new equity awards.