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STOCK-BASED COMPENSATION | 3 Months Ended
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Mar. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation | STOCK-BASED COMPENSATION EastGroup applies the provisions of ASC 718, Compensation - Stock Compensation, to account for its stock-based compensation awards. ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements and that the cost be measured on the fair value of the equity or liability instruments issued. Stock-based compensation cost for employees was $2,144,000 for the three months ended March 31, 2021, of which $550,000 was capitalized as part of the Company’s development costs. For the three months ended March 31, 2020, stock-based compensation cost for employees was $1,779,000, of which $555,000 was capitalized as part of the Company’s development costs. Stock-based compensation expense for directors was $3,000 and $2,000 for the three months ended March 31, 2021 and 2020, respectively. In the second quarter of 2018, the Compensation Committee of the Company’s Board of Directors (the “Committee”) approved a long-term equity compensation award (the “2018 Long-Term Grant”) for the Company’s executive officers that included one component based on total shareholder return and one component based only on continued service as of the vesting dates. The component of the 2018 Long-Term Grant based on total shareholder return is subject to bright-line tests that compare the Company’s total shareholder return to the Nareit Equity Index and to the member companies of the Nareit industrial index. The award measured the bright-line tests over the three-year period ended December 31, 2020. During the first quarter of 2021, the Committee measured the Company’s performance for the three-year period against bright-line tests established by the Committee on the grant date of June 1, 2018. The number of shares determined on the measurement date was 27,086. These shares vested 75% on February 17, 2021, the date the earned shares were determined, and will vest 25% on January 1, 2022. On the grant date of June 1, 2018, the Company began recognizing expense for this award based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award. The component of the 2018 Long-Term Grant based only on continued service as of the vesting dates was awarded on June 1, 2018. On that date, 7,884 shares were granted to the Company’s executive officers subject only to continued service as of the vesting dates. These shares, which have a grant date fair value of $95.19, vested 25% in the first quarter of each of 2019, 2020 and 2021, and will vest 25% on January 1, 2022. The shares are being expensed on a straight-line basis over the remaining service period. In the first quarter of 2019, the Committee approved a long-term equity compensation award (the “2019 Long-Term Grant”) for the Company’s executive officers that included one component based on total shareholder return and one component based only on continued service as of the vesting dates. The component of the 2019 Long-Term Grant based on total shareholder return is subject to bright-line tests that will compare the Company’s total shareholder return to the Nareit Equity Index and to the member companies of the Nareit industrial index. The award will measure the bright-line tests over the three-year period ending December 31, 2021. During the first quarter of 2022, the Committee will measure the Company’s performance for the three-year period against bright-line tests established by the Committee on the grant date of March 7, 2019. The aggregate number of shares to be earned on the measurement date could range from zero to 33,442. These shares would vest 75% on the date the earned shares are determined in the first quarter of 2022 and 25% on January 1, 2023. On the grant date of March 7, 2019, the Company began recognizing expense for this award based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award. The component of the 2019 Long-Term Grant based only on continued service as of the vesting dates was awarded on March 7, 2019. On that date, an aggregate of 9,947 shares were granted to the Company’s executive officers subject only to continued service as of the vesting dates. These shares, which have a grant date fair value of $105.97, vested 25% in the first quarter of 2020, 25% on January 1, 2021 and will vest 25% on each January 1 in years 2022 and 2023. The shares are being expensed on a straight-line basis over the remaining service period. In the first quarter of 2020, the Committee approved an equity compensation award (the “2020 Annual Grant”) for the Company’s executive officers based upon certain annual performance measures for 2020; the award is comprised of two components. The first component of the 2020 Annual Grant is based upon the following Company performance measures for 2020: (i) FFO per share, (ii) same property net operating income change, (iii) debt-to EBITDAre ratio, and (iv) fixed charge coverage. On February 17, 2021, the Committee measured the Company’s performance for 2020 against bright-line tests established by the Committee on the grant date of March 6, 2020 and determined that 18,380 shares were earned. These shares, which have a grant date fair value of $131.36, vested 34% on the date shares were determined and will vest 33% per year on each January 1 in years 2022 and 2023. On the grant date of March 6, 2020, the Company began recognizing expense for its estimate of the shares that could be earned pursuant to these awards; the expense was adjusted to actual upon the determination of the awards. The shares are being expensed using the graded vesting attribution method which recognizes each separate vesting portion of the award as a separate award on a straight-line basis over the requisite service period. The second component of the 2020 Annual Grant is based upon the achievement of individual goals for each of the officers included in the award. On February 17, 2021, the Committee evaluated the performance of the officers and, in its discretion, awarded 4,156 shares with a grant date fair value of $142.89. These shares vested 34% on the date shares were determined and awarded and will vest 33% per year on each January 1 in years 2022 and 2023. The Company began recognizing the expense for the shares awarded on the grant date of February 17, 2021, and the shares will be expensed on a straight-line basis over the remaining service period. Also in the first quarter of 2020, the Committee approved a long-term equity compensation award (the “2020 Long-Term Grant”) for the Company’s executive officers that included one component based on total shareholder return and one component based only on continued service as of the vesting dates. The component of the 2020 Long-Term Grant based on total shareholder return is subject to bright-line tests that will compare the Company’s total shareholder return to the Nareit Equity Index and to the member companies of the Nareit industrial index. The award will measure the bright-line tests over the three-year period ending December 31, 2022. During the first quarter of 2023, the Committee will measure the Company’s performance for the three-year period against bright-line tests established by the Committee on the grant date of March 6, 2020. The aggregate number of shares to be earned on the measurement date could range from zero to 25,261. These shares would vest 75% on the date the earned shares are determined in the first quarter of 2023 and 25% on January 1, 2024. On the grant date of March 6, 2020, the Company began recognizing expense for this award based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award. The component of the 2020 Long-Term Grant based only on continued service as of the vesting dates was awarded on March 6, 2020. On that date, an aggregate of 7,217 shares were granted to the Company’s executive officers subject only to continued service as of the vesting dates. These shares, which have a grant date fair value of $131.36, vested 25% in the first quarter of 2021 and will vest 25% on each January 1 in years 2022, 2023 and 2024. The shares are being expensed on a straight-line basis over the remaining service period. In the first quarter of 2021, the Committee approved an equity compensation award (the “2021 Annual Grant”) for the Company’s executive officers based upon certain annual performance measures for 2021; the award is comprised of two components. The first component of the 2021 Annual Grant is based upon the following Company performance measures for 2021: (i) FFO per share, (ii) cash same property net operating income change, (iii) debt-to EBITDAre ratio, and (iv) fixed charge coverage. During the first quarter of 2022, the Committee will measure the Company’s performance for 2021 against bright-line tests established by the Committee on the grant date of February 25, 2021. The number of shares that may be earned for the achievement of the annual performance measures could range from zero to 19,052. These shares, which have a grant date fair value of $138.93, would vest 34% on the date shares are determined and 33% per year on each January 1 in years 2023 and 2024. On the grant date of February 25, 2021, the Company began recognizing expense for its estimate of the shares that may be earned pursuant to these awards; the shares are being expensed using the graded vesting attribution method which recognizes each separate vesting portion of the award as a separate award on a straight-line basis over the requisite service period. The second component of the 2021 Annual Grant is based upon the achievement of individual goals for each of the officers included in the award. Any shares issued pursuant to the individual goals in this compensation award will be determined by the Committee in its discretion and issued in the first quarter of 2022. The number of shares to be issued on the grant date for the achievement of individual goals could range from zero to 4,756. These shares would vest 34% on the date shares are determined and awarded and 33% per year on each January 1 in years 2023 and 2024. The Company will begin recognizing the expense for any shares awarded on the grant date in the first quarter of 2022, and the shares will be expensed on a straight-line basis over the remaining service period. Also in the first quarter of 2021, the Committee approved a long-term equity compensation award (the “2021 Long-Term Grant”) for the Company’s executive officers that includes one component based on total shareholder return and one component based only on continued service as of the vesting dates. The component of the 2021 Long-Term Grant based on total shareholder return is subject to bright-line tests that will compare the Company’s total shareholder return to the Nareit Equity Index and to the member companies of the Nareit industrial index. The award will measure the bright-line tests over the three-year period ending December 31, 2023. During the first quarter of 2024, the Committee will measure the Company’s performance for the three-year period against bright-line tests established by the Committee on the grant date of February 25, 2021. The aggregate number of shares to be earned on the measurement date could range from zero to 36,400. These shares would vest 75% on the date the earned shares are determined in the first quarter of 2024 and 25% on January 1, 2025. On the grant date of February 25, 2021, the Company began recognizing expense for this award based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award. The component of the 2021 Long-Term Grant based only on continued service as of the vesting dates was awarded on February 25, 2021. On that date, an aggregate of 7,801 shares were granted to the Company’s executive officers subject only to continued service as of the vesting dates. These shares, which have a grant date fair value of $138.93, will vest 25% in the first quarter of 2022 and 25% on each January 1 for the subsequent three years. The shares are being expensed on a straight-line basis over the remaining service period. During the fourth quarter of 2019, the Committee adopted the Equity Award Retirement Policy (the “retirement policy”) which allows for accelerated vesting of unvested shares for retirement-eligible employees (defined as employees who meet certain age and years of service requirements). In order to qualify for accelerated vesting upon retirement, the eligible employees must provide required notification under the retirement policy and must retire from the Company. The Company has adjusted its stock-based compensation expense to accelerate the recognition of expense for retirement-eligible employees. Following is a summary of the total restricted shares granted, forfeited and delivered (vested) to participants with the related weighted average grant date fair value share prices. Of the shares that vested in the three months ended March 31, 2021, the Company withheld 30,252 shares to satisfy the tax obligations for those participants who elected this option as permitted under the applicable equity plan. As of the vesting dates, the aggregate fair value of shares that vested during the three months ended March 31, 2021, was $10,322,000.
|  |  | Three Months Ended
Award Activity: |  |  | March 31, 2021
|  |  |  |  | Shares |  | Weighted Average Grant Date Fair Value
Unvested at beginning of period |  |  |  |  | 113,403 |  |  | $ | 100.89 |
Granted (1) (2) |  |  |  |  | 57,423 |  |  | 106.80 |
Forfeited |  |  |  |  | — |  |  | — |
Vested |  |  |  |  | (73,692) |  |  | 91.59 |
Unvested at end of period |  |  |  |  | 97,134 |  |  | $ | 111.44 |
(1) Includes shares granted in prior years for which performance conditions have been satisfied and the number of shares have been determined. (2) Does not include the restricted shares that may be earned if the performance goals established in 2019 and 2020 for long-term performance and in 2021 for annual and long-term performance are achieved. Depending on the actual level of achievement of the goals at the end of the open performance periods, the number of shares earned could range from zero to 118,911.

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