Share and Unit-based Plans

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

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, 2019, 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, 2019, there were 6,056,813 shares available for issuance under the 2003 Plan.

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, 2019, 2018 and 2017:


	2019				2018					2017
	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	129,457	$	64.21	151,355	$	73.32	148,428	$	78.53
Granted	160,932	37.44		87,983	58.79		86,827	66.46
Vested	(85,157)	62.84		(108,991)	74.04		(81,205)	75.62
Forfeited	(5,245)	51.48		(890)	68.81		(2,695)	69.57
Balance at end of year	199,987	$	43.59	129,457	$	64.21	151,355	$	73.32

SARs:

Upon exercise, the recipients received unrestricted common shares for the appreciation in value of the SARs from the grant date to the exercise date.

The following table summarizes the activity of SARs awards during the years ended December 31, 2019, 2018 and 2017:


	2019				2018					2017
	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
Granted	—	—		—	—		—
Exercised	—	—		(235,439)	53.83		(48,707)	53.95
Balance at end of year	—	$	—	—	$	—	235,439	$	53.83

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, 2019, 2018 and 2017:


Grant Date	Units	Type	Fair Value per LTIP Unit		Vest Date
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

1/1/2019	81,732	Service-based	$	43.28	12/31/2021
1/1/2019	250,852	Market-indexed	$	29.25	12/31/2021
9/1/2019	4,393	Service-based	$	28.53	8/31/2022
9/1/2019	6,454	Market-indexed	$	19.42	8/31/2022
	343,431

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
1/1/2017	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	%
1/1/2019	2.46	%	23.52	%
9/1/2019	1.42	%	24.91	%

The following table summarizes the activity of the non-vested LTIP Units during the years ended December 31, 2019, 2018 and 2017:


	2019				2018					2017
	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	661,578	$	48.38	636,632	$	52.36	322,572	$	58.18
Granted	343,431	32.40		569,136	51.78		506,906	55.33
Vested	(76,306)	59.27		(253,625)	61.17		(192,846)	69.93
Forfeited	(312,484)	46.55		(290,565)	52.58		—	—
Balance at end of year	616,219	$	39.04	661,578	$	48.38	636,632	$	52.36

Stock Options:

On May 30, 2017, the Company granted 25,000 non-qualified stock options with a grant date fair value of $10.02 that vested 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, 2019, 2018 and 2017:


	2019				2018					2017
	Options	Weighted Average Exercise Price		Options	Weighted Average Exercise Price		Options	Weighted Average Exercise Price
Balance at beginning of year	35,565	$	57.32	35,565	$	57.32	10,565	$	56.77
Granted	—	—		—	—		25,000	57.55
Exercised	—	—		—	—		—	—
Balance at end of year	35,565	$	57.32	35,565	$	57.32	35,565	$	57.32

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, 2019, there were 134,638 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, 2019, 2018 and 2017:


	2019				2018					2017
	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	23,690	40.26		10,380	49.55		8,760	68.93
Vested	(16,474)	38.94		(12,193)	54.40		(10,551)	71.69
Forfeited	—	—		(2,241)	77.91		—	—
Balance at end of year	7,216	$	43.29	—	$	—	4,054	$	79.82

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, 2019 was 356,822.

Compensation:

The following summarizes the compensation cost under the share and unit-based plans for the years ended December 31, 2019, 2018 and 2017:


	2019		2018		2017
Stock units	$	4,598	$	6,355	$	6,045
LTIP units	11,372		26,311		30,161
Stock options	51		125		85
Phantom stock units	702		760		714
	$	16,723	$	33,551	$	37,005

The Company capitalized share and unit-based compensation costs of $4,691, $6,184 and $6,206 for the years ended December 31, 2019, 2018 and 2017, respectively.

The fair value of the stock awards and stock units that vested during the years ended December 31, 2019, 2018 and 2017 was $3,577, $6,479 and $5,257, respectively. Unrecognized compensation costs of share and unit-based plans at December 31, 2019 consisted of $1,647 from LTIP Units, $2,949 from stock units and $0 from stock options.