Share-based Compensation Plans

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Share-based Compensation PlansAs of March 31, 2020, we have two share-based compensation plans in effect: 1) the 2019 Omnibus Long-Term Incentive Plan (“2019 LTIP”) and 2) the Inducement Incentive Plan (“Inducement Plan”). On April 29, 2019, our shareholders approved the 2019 LTIP, which replaced the 2012 Omnibus Long-Term Incentive Plan (“2012 LTIP”). The 2019 LTIP is administered by the compensation committee of the Board (the “Compensation Committee”). The 2019 LTIP provides for the award to our trustees, officers, employees and other service providers of restricted shares, restricted share units, options to purchase shares, share appreciation rights, unrestricted shares, and other awards to acquire up to an aggregate of 3.5 million common shares of beneficial interest plus any shares that become available under the 2012 LTIP as a result of the forfeiture, expiration or cancellation of outstanding awards or any award settled in cash in lieu of shares under such plan. As of March 31, 2020, there were 2.8 million shares of beneficial interest available for issuance under the 2019 LTIP. The Inducement Plan was approved by the Board in April 2018 and under such plan the Compensation Committee may grant, subject to any Company performance conditions as specified by the Compensation Committee, restricted shares, restricted share units, options and other awards to individuals who were not previously employees or members of the Board as an inducement to the individual's entry into employment with the Company. The Inducement Plan allows us to issue up to 6.0 million common shares of beneficial interest, of which 5.0 million remained available for issuance as of March 31, 2020; however, we do not intend to make further awards under the Inducement Plan following adoption of the 2019 LTIP.

As of March 31, 2020, we had 276,753 unvested service-based share awards outstanding under the 2019 LTIP, 145,952 unvested service-based share awards outstanding under the Inducement Plan, and 157,811 unvested service-based share awards outstanding under the 2012 LTIP. These awards have various expiration dates through March 2023.

During the three months ended March 31, 2020, we granted the following awards:

•211,769 shares of service-based restricted stock. The service-based awards were valued based on our closing stock price as of the grant date; and

•performance-based equity awards that are earned subject to a future performance measurement based on a three-year shareholder return peer comparison (“TSR Grants”).

The service-based restricted share awards to employees vest over three years or five years and the compensation expense is recognized on a graded vesting basis. The service-based restricted share awards to trustees vest over one year. We recognized expense related to service-based restricted share grants of $0.8 million for both the three months ended March 31, 2020 and March 31, 2019.

Pursuant to ASC 718 – Stock Compensation, we determine the grant date fair value of TSR Grants that will be settled in cash, and any subsequent re-measurements, based upon a Monte Carlo simulation model. We will recognize the compensation expense ratably over the requisite service period. We are required to re-value the cash awards at the end of each quarter using the same methodology as was used at the initial grant date and adjust the compensation expense accordingly. If at the end of the three-year measurement period the performance criterion is not met, compensation expense related to the cash awards previously recognized would be reversed. Compensation benefit related to the cash awards was $0.3 million for both the three months ended March 31, 2020 and March 31, 2019. The weighted average assumptions used in the Monte Carlo simulation models are summarized in the following table:


	March 31, 2020		December 31, 2019
Closing share price	$6.03		$15.04
Expected dividend rate	14.6	%	5.9	%
Expected stock price volatility	47.7	%	22.6	%
Risk-free interest rate	0.2	%	1.6	%
Expected life (years)	1.75		2.00

The Company also determines the grant date fair value of the TSR Grants that will be settled in equity based upon a Monte Carlo simulation model and recognizes the compensation expense ratably over the requisite service period. These equity awards are not re-valued at the end of each quarter. The compensation cost will be recognized regardless of whether the performance criterion are met, provided the requisite service has been provided. Compensation expense related to the equity awards was $0.6 million and $0.5 million for the three months ended March 31, 2020 and March 31, 2019, respectively. The fair value of each grant for the reported periods is estimated on the date of grant using the Monte Carlo simulation model using the weighted average assumptions noted in the following table:


	Three Months Ended March 31,
	2020		2019
Closing share price	$13.09		$12.05
Expected dividend rate	6.7	%	7.3	%
Expected stock price volatility	23.3	%	22.9	%
Risk-free interest rate	0.9	%	2.5	%
Expected life (years)	2.85		2.85

We recognized total share-based compensation expense of $1.1 million and $1.0 million for the three months ended March 31, 2020 and March 31, 2019, respectively.

As of March 31, 2020, we had $9.2 million of total unrecognized compensation expense related to unvested restricted shares and performance based equity and cash awards. This expense is expected to be recognized over a weighted-average period of 2.3 years.