Share-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

2021 Equity Incentive Plan

During the second quarter of 2021, the Company’s shareholders approved and the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan replaced the 2012 Equity Incentive Plan (the “2012 Plan”) and provides for the issuance of up to 9,544,095 Class A common shares (including shares that remained available for future awards under the 2012 Plan as of the effective date of the 2021 Plan and shares related to outstanding awards under the 2012 Plan that may become available after expiration, forfeiture or cancellation of such awards). The 2021 Plan provides for the issuance of Class A common shares through the grant of a variety of awards including stock options, stock appreciation rights, restricted share units (“RSUs”), unrestricted shares, dividend equivalent rights and performance-based awards. The 2021 Plan terminates in May 2031, unless terminated earlier by the Company’s board of trustees. When the Company issues Class A common shares under the 2021 Plan, the Operating Partnership issues an equivalent number of Class A units to AH4R.

During the nine months ended September 30, 2021 and 2020, the Human Capital and Compensation Committee granted RSUs to employees that vest over a one- to three-year service period. RSUs granted to non-management trustees vest over a one-year service period.

During the nine months ended September 30, 2021, the Human Capital and Compensation Committee granted performance-based restricted share units (“PSUs”) to certain executives that cliff vest at the end of a three-year service period. The performance conditions of the PSUs are measured over a three-year performance period beginning January 1, 2021 and ending December 31, 2023. A portion of the PSUs are based on (i) the achievement of relative total shareholder return compared to a specified peer group (the “TSR Awards”), and a portion are based on (ii) average annual growth in core funds from operations per share (the “Core FFO Awards”). The number of PSUs that may ultimately vest range from zero to 200% of the number of PSUs granted based on the level of achievement of these performance conditions. For the TSR Awards, grant date fair value was determined using a multifactor Monte Carlo model and the resulting compensation cost is amortized over the service period regardless of whether the performance condition is achieved. For the Core FFO Awards, fair value is based on the market value on the date of grant and compensation cost is recognized based on the probable achievement of the performance condition at each reporting period.

The following table summarizes stock option activity under the 2012 Plan and 2021 Plan for the nine months ended September 30, 2021 and 2020:


	For the Nine Months Ended September 30,
	2021	2020
Options outstanding at beginning of period	1,090,300	1,529,800
Granted	—	—
Exercised	(259,000)	(333,650)
Forfeited	—	(2,850)
Options outstanding at end of period	831,300	1,193,300
Options exercisable at end of period	793,800	1,049,200

The following table summarizes RSU activity under the 2012 Plan and 2021 Plan for the nine months ended September 30, 2021 and 2020:


	For the Nine Months Ended September 30,
	2021	2020
RSUs outstanding at beginning of period	651,537	599,109
Awarded	645,955	470,147
Vested	(208,574)	(207,947)
Forfeited	(28,239)	(42,565)
RSUs outstanding at end of period	1,060,679	818,744

The following table summarizes PSU activity under the 2012 Plan and 2021 Plan for the nine months ended September 30, 2021 and 2020:


	For the Nine Months Ended September 30,
	2021	2020
PSUs outstanding at beginning of period	—	—
Awarded	92,319	—
Vested	—	—
Forfeited	—	—
PSUs outstanding at end of period	92,319	—

2021 Employee Stock Purchase Plan

During the second quarter of 2021, the Company’s shareholders approved and the Company adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which provides for the issuance of 3,000,000 Class A common shares. The 2021 ESPP terminates in June 2031 or the date on which there are no longer any Class A common shares available for issuance. The 2021 ESPP allows employees to acquire the Company’s Class A common shares through payroll deductions, subject to maximum purchase limitations, during six-month purchase periods. The first purchase period commenced on July 1, 2021. The purchase price for Class A common shares will be 85% of the lower of the closing price of the Company’s Class A common shares on the first day or the last day of the applicable purchase period. When the Company issues Class A common shares under the 2021 ESPP, the Operating Partnership issues an equivalent number of Class A units to AH4R.

Share-Based Compensation Expense

The Company’s noncash share-based compensation expense relating to corporate administrative employees is included in general and administrative expense and the noncash share-based compensation expense relating to centralized and field property management employees is included in property management expenses. Noncash share-based compensation expense relating to employees involved in the purchases of single-family properties, including newly constructed properties from third-party builders, the development of single-family properties, or the disposal of certain properties or portfolios of properties is included in acquisition and

other transaction costs. The following table summarizes the activity that relates to the Company’s noncash share-based compensation expense for the three and nine months ended September 30, 2021 and 2020 (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
General and administrative expense	$	1,557	$	1,723	$	7,722	$	4,741
Property management expenses	680		447		2,278		1,327
Acquisition and other transaction costs	821		—		4,319		—
Total noncash share-based compensation expense	$	3,058	$	2,170	$	14,319	$	6,068