Stock-Based Compensation

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

13.

Stock-Based Compensation

The Company records stock-based compensation expense within General and administrative expenses in the accompanying Consolidated Statements of Operations and recognizes forfeitures as they occur.


	Year ended December 31,
(in thousands)	2024			2023			2022
Restricted stock (1)	$	18,549			17,277			16,667
Directors' fees paid in common stock and other employee stock grants		528			590			589
Capitalized stock-based compensation		(1,941	)		(954	)		(735	)
Stock-based compensation, net of capitalization (2)	$	17,136			16,913			16,521

(1)

Includes amortization of the grant date fair value of restricted stock awards over the respective vesting periods.

(2)

In addition, the Company expensed within Other operating expenses $6.4 million and $3.2 million during 2024 and 2023, respectively, in connection with restricted stock units related to the acquisition of UBP.

The Company established its Omnibus Incentive Plan (the "Plan") under which the Board of Directors may grant stock options and other stock-based awards to officers, directors, and other key employees. The Plan allows the Company to issue up to 5.0 million shares in the form of the Parent Company's common stock or stock options. As of December 31, 2024, there were 3.8 million shares available for grant under the Plan.

Restricted Stock Units

The Company grants restricted stock under the Plan to its employees as a form of long-term compensation and retention. The terms of each restricted stock grant vary depending upon the participant's responsibilities and position within the Company. The Company's stock grants can be categorized as either time-based awards, performance-based awards, or market-based awards. All awards are valued at grant date fair value, earn dividends throughout the vesting period, and have no voting rights. Fair value is measured using the grant date market price for all time-based and performance-based awards. Market based awards are valued using a Monte Carlo simulation model to estimate the fair value based on the probability of satisfying the market conditions and the projected stock price at the time of payout, discounted to the valuation date over a three year performance period. Assumptions used in the estimate include historic volatility over the previous three year period, risk-free interest rates, and Regency's historic daily return as compared to the market index. Since the award payout includes dividend equivalents and the total shareholder return includes the value of dividends, no dividend yield assumption is required for the valuation. Compensation expense is measured at the grant date and recognized on a straight-line basis over the requisite service period for the entire award, regardless of whether the market condition is ultimately achieved.

The following table summarizes non-vested restricted stock activity:


	Year ended December 31, 2024
	Number of Shares			Intrinsic Value (in thousands)		Weighted Average Grant Date Fair Value
Non-vested as of December 31, 2023		754,518
Time-based awards granted (1) (4)		175,396				$	61.98
Performance-based awards granted (2) (4)		17,137				$	62.21
Market-based awards granted (3) (4)		158,807				$	58.36
Change in market-based awards earned for performance (3)		7,306				$	63.42
Vested (5)		(304,785	)			$	63.17
Forfeited		(4,590	)			$	64.43
Non-vested as of December 31, 2024 (6)		803,789		$	59,424

(1)

Time-based awards vest beginning on the first anniversary following the grant date over a one or four year service period. These grants are subject only to continued employment and are not dependent on future performance measures. Accordingly, if such vesting criteria are not met, compensation cost previously recognized is reversed.

(2)

Performance-based awards are earned subject to performance measurements. Once the performance criteria are achieved and the actual number of shares earned is determined, shares vest over a required service period. The Company considers the likelihood of meeting the performance criteria based upon management's estimates from which it determines the amounts recognized as expense on a periodic basis.

(3)

Market-based awards are earned dependent upon the Company's total shareholder return in relation to the shareholder return of a NAREIT index over a three-year period. Once the performance criteria are met and the actual number of shares earned is determined, the shares are immediately vested and distributed. The probability of meeting the criteria is considered when calculating the estimated fair value on the date of grant using a Monte Carlo simulation. These awards are accounted for as awards with market criteria, with compensation cost recognized over the service period, regardless of whether the performance criteria are achieved and the awards are ultimately earned. The significant assumptions underlying determination of fair values for market-based awards granted were as follows:


	Year ended December 31,
	2024			2023			2022
Expected volatility		25.50	%		45.50	%		43.10	%
Risk free interest rate		4.14	%		3.75	%		1.39	%

(4)

The weighted-average grant price for restricted stock granted during the years is summarized below:


	Year ended December 31,
	2024		2023		2022
Weighted-average grant date fair value for restricted stock	$	60.36	$	68.28	$	72.86

(5)

The total intrinsic value of restricted stock vested during the years is summarized below (in thousands):


	Year ended December 31,
	2024		2023		2022
Intrinsic value of restricted stock vested	$	19,254	$	19,717	$	17,797

(6)

As of December 31, 2024, there was $22.7 million of unrecognized compensation cost related to non-vested restricted stock granted under the Parent Company's Plan. When recognized, this compensation results in additional paid in capital in the accompanying Consolidated Statements of Equity of the Parent Company and in general partner preferred and common units in the accompanying Consolidated Statements of Capital of the Operating Partnership. This unrecognized compensation cost is expected to be recognized over the next three years. The Company issues new restricted stock from its authorized shares available at the date of grant.