Share Incentive Plan

During 2012, the Company terminated the 1999 and 2003 Plans and adopted the Amended 2006 Plan. The Amended 2006 Plan increased the authorization to issue options, Restricted Shares and LTIP Units (collectively "Awards") available to officers and employees by 1.9 million shares to 2.1 million shares. Options are granted by the Compensation Committee (the "Committee"), which currently consists of three non-employee Trustees, and will not have an exercise price less than 100% of the fair market value of the Common Shares and a term of greater than ten years at the grant date. Vesting of options is at the discretion of the Committee. The Committee determines the restrictions placed on Awards, including the dividends or distributions thereon and the term of such restrictions. The Committee also determines the award and vesting of the awards based on the attainment of specified performance objectives of the Company within a specified performance period.

On February 28, 2014, the Company issued a total of 326,230 LTIP Units and 918 Restricted Share Units to officers of the Company and 10,527 Restricted Share Units to other employees of the Company. Vesting with respect to these awards is generally recognized ratably over the five annual anniversaries following the issuance date. Vesting with respect to 16% of the awards issued to officers is also generally subject to achieving certain Company performance measures. LTIP Units are similar to Restricted Shares but provide for a quarterly partnership distribution in a like amount as paid to Common OP Units. This distribution is paid on both unvested and vested LTIP Units. The LTIP Units are convertible into Common OP Units and Common Shares upon vesting and a revaluation of the book capital accounts.

On March 31, 2014 , the Company entered into an Amended and Restated Employment Agreement with Kenneth Bernstein, Chief Executive Officer, and issued an additional 114,198 LTIP Units which are subject to a five-year vesting period.

These awards were measured at their fair value as if they were vested on the grant date. Fair value was established as the market price of the Company's Common Shares as of the close of trading on the day preceding the grant date.

The total value of the above Restricted Share Units and LTIP Units as of the grant date was $11.9 million, of which $0.5 million was recognized as compensation expense in 2013, and $11.4 million will be recognized as compensation expense over the vesting period. The weighted average fair value for Restricted Shares and LTIP Units granted for the years ended December 31, 2014, 2013 and 2012 were $26.30, $26.40 and $22.31, respectively.

Total long-term incentive compensation expense, including the expense related to the above mentioned plans, was $6.2 million, $7.3 million and $3.6 million for the years ended December 31, 2014, 2013 and 2012, respectively and is recorded in General and Administrative on the consolidated statements of income.

On June 4, 2014, the Company issued 17,118 Restricted Shares and 1,518 LTIP Units to Trustees of the Company in connection with Trustee fees. Vesting with respect to 6,276 of the Restricted Shares and 1,518 of the LTIP Units will be on the first anniversary of the date of issuance and 10,842 of the Restricted Shares vest over three years with 33% vesting on each of the next three anniversaries of the issuance date. The Restricted Shares do not carry voting rights or other rights of Common Shares until vesting and may not be transferred, assigned or pledged until the recipients have a vested non-forfeitable right to such shares. Dividends are not paid currently on unvested Restricted Shares, but are paid cumulatively from the issuance date through the applicable vesting date of such Restricted Shares. Trustee fee expense of $0.2 million for the year ended December 31, 2014 has been recognized in the accompanying consolidated statement of income related to this issuance.

In 2009, the Company adopted the Long Term Investment Alignment Program (the "Program") pursuant to which the Company may award units primarily to senior executives which would entitle them to receive up to 25% of any future Fund III Promote when and if such Promote is ultimately realized. The Company has awarded all of the units under the Program, and these units were determined to have no value at issuance or as of December 31, 2014. In accordance with ASC Topic 718, "Compensation - Stock Compensation," compensation relating to these awards will be recorded based on the change in the estimated fair value at each reporting period.

As of December 31, 2014, the Company had 46,347 options outstanding to officers and employees and 9,000 options outstanding to non-employee Trustees of the Company all of which have vested. These options are for ten-year terms from the grant date and vested in three equal annual installments, which began on their respective grant dates.

A summary of option activity under all option arrangements as of December 31, 2014 and 2013, and changes during the years then ended, is presented below:

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. Share Incentive Plan, continued



Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (dollars in thousands)
Outstanding and exercisable at December 31, 2012	137,647		$	18.71	2.6	$	877
Granted	—		—		—	—
Exercised	(23,815	)	15.96		—	211
Forfeited or Expired	(746	)	20.65		—	—
Outstanding and exercisable at December 31, 2013	113,086		19.28		3.5	628
Granted	—		—		—	—
Exercised	(57,739	)	17.68		—	828
Forfeited or Expired	—		—		—	—
Outstanding and exercisable at December 31, 2014	55,347		$	20.93	1.1	$	614

The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $0.8 million, $0.2 million and $0.1 million, respectively.

A summary of the status of the Company’s unvested Restricted Shares and LTIP Units as of December 31, 2014 and 2013 and changes during the years then ended is presented below:



Unvested Restricted Shares and LTIP Units	Restricted Shares		Weighted Grant-Date Fair Value		LTIP Units		Weighted Grant-Date Fair Value
Unvested at December 31, 2012	60,916		$	19.36	943,686		$	19.27
Granted	31,830		23.75		290,912		26.69
Vested	(28,179	)	18.77		(350,264	)	19.51
Forfeited	(830	)	23.00		—		—
Unvested at December 31, 2013	63,737		23.34		884,334		21.62
Granted	28,563		27.18		441,946		26.24
Vested	(34,598	)	23.40		(263,556	)	20.23
Forfeited	(2,684	)	23.54		(800	)	24.66
Unvested at December 31, 2014	55,018		$	25.90	1,061,924		$	23.92

As of December 31, 2014, there was $16.1 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under share incentive plans. That cost is expected to be recognized over a weighted-average period of 2.4 years. The total fair value of Restricted Shares that vested during the years ended December 31, 2014, 2013 and 2012 was $0.8 million, $0.5 million and $0.8 million, respectively. The total fair value of LTIP Units that vested during the years ended December 31, 2014, 2013 and 2012 was $5.3 million, $6.8 million and $3.0 million, respectively.