SHARE-BASED COMPENSATION

Compensation Plans

The Company has a share-based compensation plan (the "Plan") which is utilized to compensate key employees and non-employee trustees. In addition, the Company has a 2008 Long-Term Incentive Plan (the "2008 Plan") which is applicable to the Company's executive officers. Pursuant to both the Plan and the 2008 Plan, grants of stock options, restricted shares and restricted stock units have been made. The Company has authorized the grant of shares and options under the Plan and the 2008 Plan of up to 21.1 million common shares of the Company.

Options

All options granted have a 10-year term and most options vest and are expensed over a 3-year period, with options to purchase up to 20% of the shares exercisable after the first anniversary, up to 50% after the second anniversary and 100% after the third anniversary of the date of grant.

Share-based compensation cost related to options for the years ended December 31, 2015, 2014 and 2013 was $1.5 million, $1.8 million and $1.6 million, respectively.

The fair value of share option awards is estimated on the date of the grant using the Black-Scholes option valuation model. The following weighted-average assumptions were utilized in calculating the fair value of options granted during the periods indicated:



	Year Ended December 31,
	2015	2014	2013
Risk-free interest rate	1.8%	1.6%	1.1%
Dividend yield	5.2%	5.2%	5.4%
Historical volatility factor	0.240	0.236	0.356
Weighted-average expected life	7 years	6 years	6 years

The historical volatility factor is based on the Company's historical monthly share prices. The weighted-average expected life is based on the contractual term of the options as well as the historical periods held before exercise.

A summary of the Company's share option activity and related information for the year ended December 31, 2015 follows:



	Options (000s)		Weighted Average Exercise Price
Outstanding January 1, 2015	2,492		$	36.48
Granted	353		35.18
Exercised	(65	)	32.38
Forfeited	(171	)	41.53
Outstanding December 31, 2015	2,609		$	36.08
Exercisable at December 31, 2015	1,795		$	35.84

The weighted average fair value of options granted during the years ended December 31, 2015, 2014 and 2013 was $4.11, $4.09 and $7.18, respectively. Exercise prices for options outstanding as of December 31, 2015 ranged from $20.32 to $49.74. At December 31, 2015, the weighted average remaining contractual life of the options outstanding and exercisable was 5.4 years and 3.9 years, respectively.

During the years ended December 31, 2015, 2014 and 2013, the total intrinsic value of share options exercised (the difference between the market price at exercise and the price paid by the individual to exercise the option) was $364,000, $310,000 and $4.9 million, respectively. As of December 31, 2015, 1.7 million of the options outstanding and exercisable had an exercise price higher than the closing price of the Company's common shares and are considered to have no intrinsic value at that date. As of December 31, 2015, 141,000 options outstanding and exercisable had an exercise price lower than the closing price of the Company's common shares. The aggregate intrinsic value of these options was $1.2 million at that date. The total cash received from the exercise of options for the years ended December 31, 2015, 2014 and 2013 was $2.1 million, $1.4 million and $15.2 million, respectively. The Company has historically issued new shares to satisfy share option exercises.

As of December 31, 2015, there was $250,000 of unrecognized compensation costs related to nonvested options granted under the Plan and the 2008 Plan. That cost is expected to be recognized over a weighted average period of 0.8 years.

Long Term Incentive Shares ("LTI")

Restricted LTI share grants made under the Plan are valued at the grant date fair value, which is the market price of the underlying common shares, and vest ratably over a 5-year period beginning with the first anniversary of the grant.

During 2015, 2014 and 2013, the Company granted restricted stock units to the executive officers pursuant to the 2008 Plan. For the chief executive officer's award, a portion of the restricted stock units will vest up to 272% at the end of a 3-year period for the 2015, 2014 and 2013 awards. For the other executives, a portion of the restricted stock units will vest up to 200% at the end of a 3-year period for the 2015, 2014 and 2013 awards. A portion ("First Portion") of the award vests based on whether the Company's total return exceeds the average total returns of a selected group of peer companies. The grant date fair value of the First Portion was calculated based on a Monte Carlo simulation model and was determined to be 110%, 157% and 150% of the market value of a common share as of the grant date ("Market Value") for the chief executive officer and 90%, 125% and 121% of the Market Value for the other executives for the 2015, 2014 and 2013 grants, respectively. The First Portion is amortized over the respective 3-year period subject to certain accelerated vesting due to the age and years of service of certain executive officers. Another portion ("Second Portion") of the award vests based on the Company's funds from operations. Targets are established for each of the 3 years in the relevant award period. Depending on how each year's performance compares to the projected performance for that year, the restricted stock units are deemed earned and will vest at the end of the award period. The fair value of the Second Portion is based on the market value of a common share as of the grant date and is being amortized to expense during the period from grant date to the vesting dates, adjusting for the expected level of vesting that is anticipated to occur at those dates also subject to certain accelerated vesting provisions as described above.

The key assumptions used in the Monte Carlo simulation are as follows:



	Year Ended December 31,
	2015	2014	2013
Risk-free interest rate	0.99%	0.68%	0.35%
Volatility	17%	24%	26%

The volatility factor is based on the Company's historical daily share prices.

Share-based compensation cost related to restricted LTI share grants for the years ended December 31, 2015, 2014 and 2013 was $10.0 million, $9.0 million and $9.1 million, respectively.

The Company's restricted LTI share activity for the year ended December 31, 2015 is as follows:



	Shares (000s)		Weighted Avg. Grant Date Fair value
Nonvested at January 1, 2015	753		$	36.89
Granted	216		35.14
Vested	(207	)	35.61
Forfeited	(39	)	36.68
Nonvested at December 31, 2015	723		$	36.75

The weighted average fair value of restricted shares granted during the years ended December 31, 2015, 2014 and 2013 was $35.14, $37.13 and $39.42 per share, respectively. As of December 31, 2015, there was $10.3 million of total unrecognized compensation cost related to nonvested shares granted under the Plan. That cost is expected to be recognized over a weighted average period of 1.2 years. The total fair value of restricted shares vested during the years ended December 31, 2015, 2014 and 2013 was $7.4 million, $9.3 million and $9.9 million, respectively.

Bonus Shares

The Plan provides that employees of the Company may elect to receive bonuses or commissions in the form of common shares in lieu of cash ("Bonus Shares"). By making such election, the employee receives shares equal to 120% of the cash value of the bonus or commission, less applicable withholding tax. Bonus Shares issued for the years ended December 31, 2015, 2014 and 2013 were 111,700, 103,834 and 79,271, respectively. Share-based compensation cost related to Bonus Shares for the years ended December 31, 2015, 2014 and 2013 was $3.9 million, $3.9 million and $3.1 million, respectively.

Profit Sharing Plan

The Plan provides that employees of the Company, below the officer level, may receive up to 5% of base pay in the form of cash contributions to an investment account depending on Company performance. Compensation cost related to the profit sharing plan for the years ended December 31, 2015, 2014 and 2013 was $965,000, $543,000 and $698,000 respectively.

An additional 5,574,605, 6,100,098 and 6,637,761 common shares were reserved for issuance for future grants under the Plan and the 2008 Plan at December 31, 2015, 2014 and 2013, respectively.

Employee Share Purchase Plan

The Company registered 750,000 common shares under the Securities Act of 1933, as amended, in connection with an employee share purchase plan ("ESPP"). The ESPP enables eligible employees to purchase shares of the Company, in amounts up to 10% of the employee's salary, at a 15% discount to fair market value. There were 13,127, 12,612 and 16,793 shares issued, in accordance with the ESPP, during the years ended December 31, 2015, 2014 and 2013, respectively. Share-based compensation cost related to the ESPP for the years ended December 31, 2015, 2014 and 2013 was $62,000, $104,000 and $71,000, respectively.