Share-based Compensation

Incentive Compensation. During the second quarter of 2011, our Board of Trust Managers adopted, and on May 11, 2011 our shareholders approved, the 2011 Share Incentive Plan of Camden Property Trust (the "2011 Share Plan"). Under the 2011 Share Plan, we may issue up to a total of approximately 9.1 million fungible units (the "Fungible Pool Limit"), which is comprised of approximately 5.8 million new fungible units plus approximately 3.3 million fungible units previously available for issuance under our 2002 share incentive plan based on a 3.45 to 1.0 fungible unit-to full value award conversion ratio. Fungible units represent the baseline for the number of shares available for issuance under the 2011 Share Plan. Different types of awards are counted differently against the Fungible Pool Limit, as follows:

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Each share issued or to be issued in connection with an award, other than an option, right or other award which does not deliver the full value at grant of the underlying shares, will be counted against the Fungible Pool Limit as 3.45 fungible pool units;

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Options and other awards which do not deliver the full value at grant of the underlying shares and which expire more than five years from date of grant will be counted against the Fungible Pool Limit as one fungible pool unit; and

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Options, rights and other awards which do not deliver the full value at date of grant and expire five years or less from the date of grant will be counted against the Fungible Pool Limit as 0.83 of a fungible pool unit.

The fungible units represent approximately 2.7 million common shares which could be granted pursuant to full value awards based on the 3.45 to 1.0 fungible unit-to-full value award conversion ratio.

Awards which may be granted under the 2011 Share Plan include incentive share options, non-qualified share options (which may be granted separately or in connection with an option), share awards, dividends and dividend equivalents and other equity based awards. Persons eligible to receive awards under the 2011 Share Plan are trust managers, directors of our affiliates, executive and other officers, key employees and consultants, as determined by the Compensation Committee of our Board of Trust Managers. The 2011 Share Plan will expire on May 11, 2021.

Options. During the six months ended June 30, 2011, approximately 0.3 million options were exercised at prices ranging from $30.06 to $48.02 per option. The total intrinsic value of options exercised during the six months ended June 30, 2011 was approximately $5.0 million. There were 0.1 million options exercised, with intrinsic value of $1.3 million during the six months ended June 30, 2010. As of June 30, 2011, there was approximately $1.8 million of total unrecognized compensation cost related to unvested options, which is expected to be amortized over the next three years. At June 30, 2011, outstanding options and exercisable options had a weighted average remaining life of approximately 4.7 years and 3.5 years respectively.

The following table summarizes outstanding share options and exercisable options at June 30, 2011:


	Outstanding Options (1)				Exercisable Options (1)
Range of Exercise Prices	Number		Weighted Average Price		Number		Weighted Average Price
$30.06-$41.91		550,956	$	33.04		257,251	$	36.43
$42.90-$44.00		342,063		43.53		304,800		43.48
$45.53-$73.32		617,517		49.85		464,366		50.45

Total options		1,510,536	$	42.29		1,026,417	$	44.87

(1)

The aggregate intrinsic values of outstanding options and exercisable options at June 30, 2011 were $32.4 million and $19.4 million, respectively. The aggregate intrinsic values were calculated as the excess, if any, between our closing share price of $63.62 per share on June 30, 2011 and the strike price of the underlying award.

Valuation Assumptions. Options generally have a vesting period of three to five years. We estimate the fair values of each option award on the date of grant using the Black-Scholes option pricing model. No new options have been granted in 2011.

Share Awards and Vesting. Share awards generally have a vesting period of five years. The compensation cost for share awards is based on the market value of the shares on the date of grant and is amortized over the vesting period. To estimate forfeitures, we use actual forfeiture history. At June 30, 2011, the unamortized value of previously issued unvested share awards was approximately $34.0 million which is expected to be amortized over the next five years. The total fair value of shares vested during the six months ended June 30, 2011 and 2010 was approximately $11.0 million and $10.1 million, respectively, and approximately 2.6 million vested share awards were outstanding at June 30, 2011 with a weighted average issuance price of $39.43 per share.

Total compensation cost for option and share awards charged against income was approximately $3.2 million and $2.9 million for the three months ended June 30, 2011 and 2010, respectively, and approximately $6.2 million for each of the six months ended June 30, 2011 and 2010. Total capitalized compensation cost for option and share awards was approximately $0.3 million and $0.2 million for the three months ended June 30, 2011 and 2010, respectively, and approximately $0.6 million and $0.5 million for the six months ended June 30, 2011 and 2010, respectively.

The following table summarizes activity under our share incentive plans for the six months ended June 30, 2011:


	Options Outstanding			Weighted Average Exercise / Grant Price		Nonvested Share Awards Outstanding			Weighted Average Exercise / Grant Price
Total options and nonvested share awards outstanding at December 31, 2010		1,837,990		$	42.39		741,505		$	42.16
Granted		—			—		339,143			56.92
Exercised/vested		(327,454	)		42.89		(235,083	)		46.74
Forfeited		—			—		(11,626	)		42.76

Net activity		(327,454	)				92,434
Total options and nonvested share awards outstanding at June 30, 2011		1,510,536		$	42.29		833,939		$	46.86