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Share-Based Compensation | 9 Months Ended
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Sep. 30, 2022
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation Under various share-based compensation plans and under terms established or modified by our Board or a committee thereof, we grant equity awards to trustees, officers, and key employees, including non-qualified options to purchase the Company’s common shares, restricted share units (“RSUs”), deferred stock units (“DSUs”), and unrestricted common stock issued in lieu of trustee compensation. We recorded share-based compensation expense associated with our equity awards in the various expense categories in the Consolidated Statements of Income as set forth in the following table. In addition, $0.4 million and $2.4 million share-based compensation cost was capitalized as real estate facilities for the three and nine months ended September 30, 2022, respectively, as compared to $0.8 million and $3.1 million for the same periods of 2021, respectively.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
| (Amounts in thousands)
Self-storage cost of operations | $ | 4,203 |  |  | $ | 4,506 |  |  | $ | 13,740 |  |  | $ | 16,272 |  |  |
Ancillary cost of operations | 203 |  |  | 342 |  |  | 690 |  |  | 1,122 |  |  |
General and administrative | 9,335 |  |  | 9,747 |  |  | 30,167 |  |  | 30,291 |  |  |
Total | $ | 13,741 |  |  | $ | 14,595 |  |  | $ | 44,597 |  |  | $ | 47,685 |  |  |
Included in share-based compensation is $2.9 million and $12.4 million during the three and nine months ended September 30, 2022, respectively, as compared to $4.8 million and $15.8 million for the same periods in 2021, of retirement acceleration as discussed in Note 2 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. As of September 30, 2022, there was $96.8 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of three years. Stock Options We have service-based, performance-based and market-based stock options outstanding, which generally vest over 3 to 5 years, expire 10 years after the grant date, and have an exercise price equal to the closing trading price of our common shares on the grant date. New shares are issued for options exercised. Employees cannot require the Company to settle their award in cash. On August 4, 2022, we paid a Special Dividend of $13.15 per common share to shareholders of record as of August 1, 2022. Stock options that were outstanding at the time of the Special Dividend were adjusted pursuant to the anti-dilution provisions of the Company’s equity and performance-based incentive compensation plans that provide for equitable adjustments in the event of an extraordinary cash dividend. The anti-dilution adjustments proportionately increased the number of outstanding stock options and reduced the exercise prices of outstanding stock options by a conversion rate of 1.03275, resulting in an increase of 104,348 stock options outstanding. The adjustments did not result in incremental share-based compensation expense. During the nine months ended September 30, 2022, 142,683 stock options were granted, 146,608 options were exercised, and no options were forfeited. In addition, we expect an incremental 61,250 stock options to be issued based on the estimated achievement of performance targets on our multi-year performance-based stock options granted during the nine months ended September 30, 2021. A total of 3,201,624 stock options were outstanding at September 30, 2022 (3,039,951 at December 31, 2021). During the nine months ended September 30, 2022, we granted 65,000 stock options in connection with non-management trustee compensation. For the remaining 77,683 stock options granted during the nine months ended September 30, 2022, vesting is dependent upon meeting certain market conditions over the three-year period from January 1, 2022 through December 31, 2024, with continued service-based vesting through the first quarter of 2027. These stock options require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of specified peer groups and can result in grantees earning up to 200% of the target options originally granted. For the three and nine months ended September 30, 2022, we incurred share-based compensation cost for outstanding stock options of $4.2 million and $15.8 million, respectively, as compared to $5.5 million and $20.5 million for the same periods in 2021. Restricted Share Units We have service-based, performance-based and market-based RSUs outstanding, which generally vest over 5 to 8 years from the grant date. Upon vesting, the grantee receives new common shares equal to the number of vested RSUs, less common shares withheld to satisfy the grantee’s statutory tax liabilities arising from the vesting. During the nine months ended September 30, 2022, 27,943 RSUs were granted, 18,487 RSUs were forfeited and 76,818 RSUs vested. The vesting resulted in the issuance of 55,079 common shares. A total of 503,460 RSUs were outstanding at September 30, 2022 (570,822 at December 31, 2021). Included in the RSUs granted during the nine months ended September 30, 2022 are 21,985 RSUs where vesting is dependent upon meeting certain market conditions over a three-year period from January 1, 2022 through December 31, 2024, with continued service-based vesting through the first quarter of 2027. The amount of these RSUs that are earned and vested, if any, will be based, in addition to continued employment requirements, on the Company's relative total shareholder return over the three-year period as compared to the weighted average total shareholder return of the specified peer groups and can result in grantees earning up to 200% of the target RSUs originally granted. Also included in the RSUs granted during the nine months ended September 30, 2022 are 5,958 service-based RSUs. For the three and nine months ended September 30, 2022, we incurred share-based compensation cost for RSUs of $9.7 million and $30.6 million, respectively, as compared to $9.6 million and $29.4 million for the same periods in 2021. Trustee Deferral Program Non-management trustees may elect to receive all or a portion of their cash retainers in cash, shares of unrestricted common stock, or fully-vested DSUs to be settled at a specified future date. Shares of unrestricted stock and/or DSUs will be granted to the non-management trustee on the last day of each calendar quarter based on the cash retainer earned for that quarter and converted into a number of shares or units based on the applicable closing price of our common shares on such date. During the nine months ended September 30, 2022, we granted 1,742 DSUs and 310 shares of unrestricted common stock.

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