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Shareholders' Equity
 6 Months Ended
Jun. 30, 2015
Shareholders' Equity.  
Shareholders' Equity

 

Note 8. Shareholders’ Equity

 

Participating Preferred Shares

 

As of June 30, 2015, the initial liquidation preference on the Company’s participating preferred shares, as adjusted by an amount equal to 50% of the cumulative change in value of an index based on the purchase prices of single-family properties located in our top 20 markets, for all of the Company’s outstanding 5.0% Series A participating preferred shares, 5.0% Series B participating preferred shares and 5.5% Series C participating preferred shares was $444.5 million.

 

Distributions

 

Our board of trustees declared distributions that totaled $0.05 per share on our Class A and Class B common shares during the quarters ended June 30, 2015 and 2014. Distributions declared on our 5.0% Series A participating preferred shares, 5.0% Series B participating preferred shares and 5.5% Series C participating preferred shares during the quarter ended June 30, 2015, totaled $0.3125 per share, $0.3125 per share and $0.34375 per share, respectively. Distributions declared on our 5.0% Series A participating preferred shares, 5.0% Series B participating preferred shares and 5.5% Series C participating preferred shares during the quarter ended June 30, 2014, totaled $0.3125 per share, $0.3125 per share and $0.225347 per share, respectively. Our board of trustees declared distributions that totaled $0.15113 per share on our Series C convertible units during the quarters ended June 30, 2015 and 2014.

 

Noncontrolling Interest

 

Noncontrolling interest as reflected in the Company’s condensed consolidated balance sheets primarily consists of the interest held by AH LLC in units in the Company’s Operating Partnership. AH LLC owned 14,440,670, or approximately 6.4%, of the total 225,927,834 and 225,914,576 Class A units in the Operating Partnership as of June 30, 2015, and December 31, 2014, respectively. Additionally, AH LLC owned all 31,085,974 Series C convertible units and all 4,375,000 Series D convertible units in the Operating Partnership as of June 30, 2015, and December 31, 2014. Also included in noncontrolling interest are outside ownership interests in certain consolidated subsidiaries of the Company.

 

Noncontrolling interest as reflected in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2015, of $3.7 million and $7.7 million, respectively, primarily consisted of $4.7 million and $9.4 million, respectively, of preferred income allocated to Series C convertible units, $0.8 million and $1.6 million, respectively, of net loss allocated to Class A units and $0.2 million and $0.1 million, respectively, of net loss allocated to noncontrolling interests in certain of the Company’s consolidated subsidiaries. Noncontrolling interest for the three and six months ended June 30, 2014, of $4.2 million and $7.8 million, respectively, primarily consisted of $4.7 million and $9.2 million, respectively, of preferred income allocated to Series C convertible units, $0.6 million and $1.3 million, respectively, of net loss allocated to Class A units and $0.1 million of net income and $0.1 million of net loss, respectively, allocated to noncontrolling interests in certain of the Company’s consolidated subsidiaries.

 

2012 Equity Incentive Plan

 

During the six months ended June 30, 2015 and 2014, the Company granted stock options for 588,500 and 1,220,000 Class A common shares, respectively, and 44,000 and 92,000 restricted stock units, respectively, to certain employees of the Company under the 2012 Equity Incentive Plan (the “Plan”). The options and restricted stock units granted during the six months ended June 30, 2015 and 2014, vest over four years and expire 10 years from the date of grant.

 

The following table summarizes stock option activity under the Plan for the six months ended June 30, 2015 and 2014:

 

 

 

Shares

 

Weighted-
Average
Exercise Price

 

Weighted-
Average
Remaining
Contractual Life
(in years)

 

Aggregate
Intrinsic Value (1)
(in thousands)

 

Options outstanding at January 1, 2014

 
1,190,000

 

$
15.48

 
9.3

 

$
862

 

Granted

 
1,220,000

 
16.74

 

 

 

 

 

Exercised

 
(28,750

)
15.00

 

 

 
74

 

Forfeited

 
(216,250

)
15.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options outstanding at June 30, 2014

 
2,165,000

 

$
16.17

 
9.3

 

$
3,438

 

 

 

 

 

 

 

 

 

 

 

 

 

Options exercisable at June 30, 2014

 
131,250

 

$
15.00

 
8.4

 

$
362

 

 

 

 

 

 

 

 

 

 

 

Options outstanding at January 1, 2015

 
2,165,000

 

$
16.17

 
8.8

 

$
1,890

 

Granted

 
588,500

 
16.49

 

 

 

 

 

Exercised

 

—

 

—

 

 

 

—

 

Forfeited

 
(125,500

)
16.57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options outstanding at June 30, 2015

 
2,628,000

 

$
16.23

 
8.5

 

$
535

 

 

 

 

 

 

 

 

 

 

 

 

 

Options exercisable at June 30, 2015

 
661,250

 

$
15.93

 
7.7

 

$
274

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Intrinsic value for activities other than exercises is defined as the difference between the grant price and the market value on the last trading day of the period for those stock options where the market value is greater than the exercise price. For exercises, intrinsic value is defined as the difference between the grant price and the market value on the date of exercise.

 

The following table summarizes the Black-Scholes Option Pricing Model inputs used for valuation of the stock options for Class A common shares issued during the six months ended June 30, 2015 and 2014:

 

 

 

2015

 

2014

 

Weighted-average fair value

 

$
4.57 

 

$
4.89 

 

Expected term (years)

 
7.0 

 
7.0 

 

Dividend yield

 
3.0 

%
3.0 

%

Volatility

 
35.9 

%
37.3 

%

Risk-free interest rate

 
1.9 

%
2.2 

%

 

 

The following table summarizes the activity that relates to the Company’s restricted stock units under the Plan for the six months ended June 30, 2015 and 2014:

 

 

 

2015

 

2014

 

Restricted stock units at beginning of period

 
85,000

 

—

 

Units awarded

 
44,000

 
92,000

 

Units vested

 
(21,250

)

—

 

Units forfeited

 
(7,400

)
(2,000

)

 

 

 

 

 

 

Restricted stock units at end of the period

 
100,350

 
90,000

 

 

 

 

 

 

 

 

Total non-cash share-based compensation expense related to stock options and restricted stock units was $0.7 million and $0.6 million for the three months ended June 30, 2015 and 2014, respectively, and $1.4 million and $1.1 million for the six months ended June 30, 2015 and 2014, respectively.