Share and Unit-based Plans:

The Company has established share and unit-based compensation plans for the purpose of attracting and retaining executive officers, directors and key employees.

2003 Equity Incentive Plan:

The 2003 Equity Incentive Plan ("2003 Plan") authorizes the grant of stock awards, stock options, stock appreciation rights, stock units, stock bonuses, performance-based awards, dividend equivalent rights and OP Units or other convertible or exchangeable units. As of December 31, 2018, stock awards, stock units, LTIP Units (as defined below), stock appreciation rights ("SARs") and stock options have been granted under the 2003 Plan. All stock options or other rights to acquire common stock granted under the 2003 Plan have a term of 10 years or less. These awards were generally granted based on the performance of the Company and the employees. None of the awards have performance requirements other than a service condition of continued employment unless otherwise provided. All awards are subject to restrictions determined by the Company's compensation committee. The aggregate number of shares of common stock that may be issued under the 2003 Plan is 19,825,428 shares. As of December 31, 2018, there were 6,243,447 shares available for issuance under the 2003 Plan.

Stock Awards:

The value of the stock awards was determined by the market price of the Company's common stock on the date of the grant. The following table summarizes the activity of non-vested stock awards during the years ended December 31, 2018, 2017 and 2016:



	2018			2017			2016
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Balance at beginning of year	—	$	—	—	$	—	1,612		$	62.01
Granted	—	—		—	—		—		—
Vested	—	—		—	—		(1,612	)	62.01
Balance at end of year	—	$	—	—	$	—	—		$	—

Stock Units:

The stock units represent the right to receive upon vesting one share of the Company's common stock for one stock unit. The value of the stock units was determined by the market price of the Company's common stock on the date of the grant. The following table summarizes the activity of non-vested stock units during the years ended December 31, 2018, 2017 and 2016:



	2018				2017				2016
	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Balance at beginning of year	151,355		$	73.32	148,428		$	78.53	132,086		$	74.58
Granted	87,983		58.79		86,827		66.46		85,601		79.22
Vested	(108,991	)	74.04		(81,205	)	75.62		(69,259	)	71.82
Forfeited	(890	)	68.81		(2,695	)	69.57		—		—
Balance at end of year	129,457		$	64.21	151,355		$	73.32	148,428		$	78.53

SARs:

The executives and key employees have up to 10 years from the grant date to exercise the SARs. Upon exercise, the executives and key employees will receive unrestricted common shares for the appreciation in value of the SARs from the grant date to the exercise date.

In connection with the payment of the Special Dividend (See Note 13—Stockholders' Equity), the compensation committee approved an adjustment to all outstanding SARs. The exercise price and number of outstanding SARs were adjusted such that each SAR had the same fair value to the holder before and after giving effect to the payment of the special dividend. As a result, the 417,783 outstanding SARs on January 6, 2016 with a weighted-average price of $55.13 were adjusted to 427,968 outstanding SARs with a weighted average price of $53.85.

The following table summarizes the activity of SARs awards during the years ended December 31, 2018, 2017 and 2016:



	2018				2017				2016
	Units		Weighted Average Exercise Price		Units		Weighted Average Exercise Price		Units		Weighted Average Exercise Price
Balance at beginning of year	235,439		$	53.83	284,146		$	53.85	417,783		$	55.13
Granted	—		—		—		—		—		—
Exercised	(235,439	)	53.83		(48,707	)	53.95		(143,822	)	53.73
Special dividend adjustment	—		—		—		—		10,185		53.88
Balance at end of year	—		$	—	235,439		$	53.83	284,146		$	53.85

Long-Term Incentive Plan Units:

Under the Long-Term Incentive Plan ("LTIP"), each award recipient is issued a form of operating partnership units ("LTIP Units") in the Operating Partnership. Upon the occurrence of specified events and subject to the satisfaction of applicable vesting conditions, LTIP Units (after conversion into OP Units) are ultimately redeemable for common stock of the Company, or cash at the Company's option, on a one-unit for one-share basis. LTIP Units receive cash dividends based on the dividend amount paid on the common stock of the Company. The LTIP may include both market-indexed awards and service-based awards.

The market-indexed LTIP Units vest over the service period of the award based on the percentile ranking of the Company in terms of total return to stockholders (the "Total Return") per common stock share relative to the Total Return of a group of peer REITs, as measured at the end of the measurement period.

The fair value of the service-based LTIP Units was determined by the market price of the Company's common stock on the date of the grant. The fair value of the market-indexed LTIP Units are estimated on the date of grant using a Monte Carlo Simulation model. The stock price of the Company, along with the stock prices of the group of peer REITs (for market-indexed awards), is assumed to follow the Multivariate Geometric Brownian Motion Process. Multivariate Geometric Brownian Motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case, the stock price) to vary randomly from its current value and take any value greater than zero. The volatilities of the returns on the share price of the Company and the peer group REITs were estimated based on a look-back period. The expected growth rate of the stock prices over the "derived service period" is determined with consideration of the risk free rate as of the grant date.

The Company has granted the following LTIP units during the years ended December 31, 2018, 2017 and 2016:



Grant Date	Units	Type	Fair Value per LTIP Unit		Vest Date
1/1/2016	58,786	Service-based	$	80.69	12/31/2018
1/1/2016	266,899	Market-indexed	$	53.32	12/31/2018
3/4/2016	154,686	Service-based	$	79.20	3/4/2016
	480,371

1/1/2017	66,079	Service-based	$	70.84	12/31/2019
1/1/2017	297,849	Market-indexed	$	47.15	12/31/2019
3/3/2017	134,742	Service-based	$	66.57	3/3/2017
6/1/2017	1,522	Service-based	$	58.31	5/29/2020
6/1/2017	6,714	Market-indexed	$	39.66	5/29/2020
	506,906

1/1/2018	65,466	Service-based	$	65.68	12/31/2020
1/1/2018	291,326	Market-indexed	$	44.28	12/31/2020
1/29/2018	13,632	Service-based	$	66.02	2/1/2022
1/29/2018	1,893	Service-based	$	66.02	12/31/2020
1/29/2018	7,775	Market-indexed	$	48.23	12/31/2020
3/2/2018	99,407	Service-based	$	59.04	3/2/2018
4/26/2018	89,637	Service-based	$	55.78	4/26/2018
	569,136

The fair value of the market-indexed LTIP Units (Level 3) were estimated on the date of grant using a Monte Carlo Simulation model that based on the following assumptions



Grant Date	Risk Free Interest Rate		Expected Volatility
1/1/2016	1.32	%	20.31	%
1/1/2017	1.49	%	20.75	%
6/1/2017	1.45	%	21.40	%
1/1/2018	1.98	%	23.38	%
1/29/2018	2.25	%	23.86	%

The following table summarizes the activity of the non-vested LTIP Units during the years ended December 31, 2018, 2017 and 2016:



	2018				2017				2016
	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Balance at beginning of year	636,632		$	52.36	322,572		$	58.18	56,315		$	73.24
Granted	569,136		51.78		506,906		55.33		480,371		65.00
Vested	(253,625	)	61.17		(192,846	)	69.93		(214,114	)	77.45
Forfeited	(290,565	)	52.58		—		—		—		—
Balance at end of year	661,578		$	48.38	636,632		$	52.36	322,572		$	58.18

Stock Options:

In connection with the payment of the Special Dividend (See Note 13—Stockholders' Equity), the compensation committee approved an adjustment to all outstanding stock options. The exercise price and number of outstanding stock options were adjusted such that each stock option had the same fair value to the holder before and after giving effect to the payment of the Special Dividend. As a result, the 10,314 outstanding stock options on January 6, 2016 with a weighted-average price of $58.15 were adjusted to 10,565 outstanding stock options with a weighted average price of $56.77.

On May 30, 2017, the Company granted 25,000 non-qualified stock options with a grant date fair value of $10.02 that will vest on May 30, 2019. The Company measured the value of each option awarded using the Black-Scholes Option Pricing Model based upon the following assumptions: volatility of 30.19%, dividend yield of 4.93%, risk free rate of 2.08%, current value of $57.55 and an expected term of 8 years.

The following table summarizes the activity of stock options for the years ended December 31, 2018, 2017 and 2016:



	2018			2017			2016
	Options	Weighted Average Exercise Price		Options	Weighted Average Exercise Price		Options	Weighted Average Exercise Price
Balance at beginning of year	35,565	$	57.32	10,565	$	56.77	10,314	$	58.15
Granted	—	—		25,000	57.55		—	—
Exercised	—	—		—	—		—	—
Special dividend adjustment	—	—		—	—		251	56.77
Balance at end of year	35,565	$	57.32	35,565	$	57.32	10,565	$	56.77

Directors' Phantom Stock Plan:

The Directors' Phantom Stock Plan offers non-employee members of the board of directors ("Directors") the opportunity to defer their cash compensation and to receive that compensation in common stock rather than in cash after termination of service or a predetermined period. Compensation generally includes the annual retainers payable by the Company to the Directors. Deferred amounts are generally credited as units of phantom stock at the beginning of each three-year deferral period by dividing the present value of the deferred compensation by the average fair market value of the Company's common stock at the date of award. Compensation expense related to the phantom stock awards was determined by the amortization of the value of the stock units on a straight-line basis over the applicable service period. The stock units (including dividend equivalents) vest as the Directors' services (to which the fees relate) are rendered. Vested phantom stock units are ultimately paid out in common stock on a one-unit for one-share basis. To the extent elected by a Director, stock units receive dividend equivalents in the form of additional stock units based on the dividend amount paid on the common stock. The aggregate number of phantom stock units that may be granted under the Directors' Phantom Stock Plan is 500,000. As of December 31, 2018, there were 159,374 stock units available for grant under the Directors' Phantom Stock Plan.

The following table summarizes the activity of the non-vested phantom stock units for the years ended December 31, 2018, 2017 and 2016:



	2018				2017				2016
	Stock Units		Weighted Average Grant Date Fair Value		Stock Units		Weighted Average Grant Date Fair Value		Stock Units		Weighted Average Grant Date Fair Value
Balance at beginning of year	4,054		$	79.82	5,845		$	81.47	—		$	—
Granted	10,380		49.55		8,760		68.93		21,088		80.21
Vested	(12,193	)	54.40		(10,551	)	71.69		(15,243	)	79.73
Forfeited	(2,241	)	77.91		—		—		—		—
Balance at end of year	—		$	—	4,054		$	79.82	5,845		$	81.47

Employee Stock Purchase Plan ("ESPP"):

The ESPP authorizes eligible employees to purchase the Company's common stock through voluntary payroll deductions made during periodic offering periods. Under the ESPP common stock is purchased at a 15% discount from the lesser of the fair value of common stock at the beginning and end of the offering period. A maximum of 750,000 shares of common stock is available for purchase under the ESPP. The number of shares available for future purchase under the plan at December 31, 2018 was 415,013.

Compensation:

The following summarizes the compensation cost under the share and unit-based plans for the years ended December 31, 2018, 2017 and 2016:



	2018		2017		2016
Stock awards	$	—	$	—	$	20
Stock units	6,355		6,045		6,305
LTIP units	26,311		30,161		32,957
Stock options	125		85		16
Phantom stock units	760		714		1,231
	$	33,551	$	37,005	$	40,529

The Company capitalized share and unit-based compensation costs of $6,184, $6,206 and $7,241 for the years ended December 31, 2018, 2017 and 2016, respectively.

The fair value of the stock awards and stock units that vested during the years ended December 31, 2018, 2017 and 2016 was $6,479, $5,257 and $5,644, respectively. Unrecognized compensation costs of share and unit-based plans at December 31, 2018 consisted of $2,395 from LTIP Units, $1,833 from stock units and $51 from stock options.