Share-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement, Noncash Expense [Abstract]

As of December 31, 2019, we had two share-based compensation plans; the Sun Communities, Inc. 2015 Equity Incentive Plan (“2015 Equity Incentive Plan”) and the First Amended and Restated 2004 Non-Employee Director Option Plan (“2004 Non-Employee Director Option Plan”). We believe granting equity awards will provide certain executives, key employees and directors additional incentives to promote our financial success and promote employee and director retention by providing an opportunity to acquire or increase the direct proprietary interest of those individuals in our operations and future.

Restricted Stock

The majority of our share-based compensation is awarded as service vesting restricted stock grants to executives and key employees. We have also awarded restricted stock to our non-employee directors. We measure the fair value associated with these awards using the closing price of our common stock as of the grant date to calculate compensation cost. Employee awards typically vest over several years and are subject to continued employment by the employee. Award recipients receive distribution payments on unvested shares of restricted stock.

2015 Equity Incentive Plan

At the Annual Meeting of Stockholders held on July 20, 2015, the stockholders approved the 2015 Equity Plan. The 2015 Equity Plan had been adopted by the Board and was effective upon approval by our stockholders. The maximum number of shares of common stock that may be issued under the 2015 Equity Plan is 1,750,000 shares of our common stock, with 974,864 shares remaining for future issuance.

2004 Non-Employee Director Option Plan

The director plan was approved by our stockholders at the Annual Meeting of Stockholders held on July 19, 2012. The director plan amended and restated in its entirety our 2004 Non-Employee Director Stock Option Plan. At the Annual Meeting of the Stockholders held on May 17, 2018, the stockholders approved the First Amendment to Sun Communities, Inc. First Amended and Restated 2004 Non-Employee Director Option Plan to increase the number of authorized shares under the plan by 200,000 shares.

The types of awards that may be granted under the director plan are options, restricted stock and OP units. Only non-employee directors are eligible to participate in the director plan. The maximum number of options, restricted stock and OP units that may be issued under the Director Plan is 375,000 shares, with 191,774 shares remaining for future issuance.

During the year ended December 31, 2019 and 2018, shares were granted as follows:



Grant Period	Type	Plan	Shares Granted		Grant Date Fair Value Per Share			Vesting Type	Vesting Anniversary	Percentage
2019	Executive Officers	2015 Equity Incentive Plan	44,000		$	115.39	⁽¹⁾	Time Based	20.0% annually over 5 years
2019	Executive Officers	2015 Equity Incentive Plan	66,000	⁽²⁾	$	115.39	⁽²⁾	Market Condition	3rd	100.0	%
2019	Directors	2004 Non-Employee Director Option Plan	18,000		$	113.68	⁽¹⁾	Time Based	3rd	100.0	%
2019	Key Employees	2015 Equity Incentive Plan	55,770		$	120.01	⁽¹⁾	Time Based	20.0% annually over 5 years
2019	Key Employees	2015 Equity Incentive Plan	6,250		$	142.48	⁽¹⁾	Time Based	20.0% annually over 5 years
2018	Key Employees	2015 Equity Incentive Plan	16,500		$	88.30	⁽¹⁾	Time Based	2nd	35.0	%
									3rd	35.0	%
									4th	20.0	%
									5th	5.0	%
									6th	5.0	%
2018	Key Employees	2015 Equity Incentive Plan	50,100		$	86.97	⁽¹⁾	Time Based	20.0% annually over 5 years
2018	Executive Officers	2015 Equity Incentive Plan	60,000		$	87.24	⁽¹⁾	Time Based	20.0% annually over 5 years
2018	Executive Officers	2015 Equity Incentive Plan	90,000		$	65.24	⁽³⁾	Market Condition	3rd	100.0	%
2018	Directors	2004 Non-Employee Director Option Plan	16,800		$	85.28	⁽¹⁾	Time Based	3rd	100.0	%

⁽¹⁾ Grant date fair value is measured based on the closing price of our common stock on the date(s) shares are issued.

⁽²⁾ Share-based compensation for restricted stock awards with market and performance conditions is measured based on an estimate of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. At the grant date, our common stock price was $115.39. Based on the Monte Carlo simulation we expect 75.1% of the 66,000 shares to vest.

⁽³⁾ Share-based compensation for restricted stock awards with market conditions is measured based on an estimate of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. At the grant date, our common stock price was $87.24. Based on the Monte Carlo simulation we expect 74.8% of the 90,000 shares to vest.

The following table summarizes our restricted stock activity for the years ended December 31, 2019, 2018, and 2017:



	Number of Shares		Weighted Average Grant Date Fair Value
Unvested restricted shares at January 1, 2017	841,634		$	56.38
Granted	219,400		$	79.38
Vested	(196,412	)	$	47.60
Forfeited	(4,769	)	$	56.43
Unvested restricted shares at December 31, 2017	859,853		$	64.25
Granted	233,400		$	87.12
Vested	(214,111	)	$	54.69
Forfeited	(8,025	)	$	72.16
Unvested restricted shares at December 31, 2018	871,117		$	72.65
Granted	190,020		$	117.47
Vested	(237,406	)	$	64.46
Forfeited	(10,690	)	$	79.58
Unvested restricted shares at December 31, 2019	813,041		$	85.43

Total compensation cost recognized for restricted stock was $17.5 million, $15.1 million, and $12.7 million for the years ended December 31, 2019, 2018, and 2017, respectively. The total fair value of shares vested was $15.3 million, $11.7 million, and $9.3 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The remaining share-based compensation cost, net related to our unvested restricted shares outstanding as of December 31, 2019 is approximately $39.0 million. The following table summarizes our expected share-based compensation cost, net related to our unvested restricted shares, in millions:



	2020		2021		2022		Thereafter
Expected share-based compensation costs, net	$	16.6	$	11.3	$	7.1	$	4.0

Options

During 2019, 1,500 non-employee director options exercised for net proceeds of less than $0.2 million. There were no non-employee director options exercised during 2018. At December 31, 2019, 1,500 fully vested non-employee director options remained outstanding with an intrinsic value of less than $0.1 million. These options had a weighted average exercise price of $37.35 and a weighted average contractual term of approximately 1.6 years. No options have been granted, and there has been no compensation expense associated with non-vested stock option awards for the years ended December 31, 2019, 2018, or 2017.