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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2022
Share-based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Equity Incentive Plan In May 2004, the stockholders of the Company approved the EastGroup Properties, Inc. 2004 Equity Incentive Plan (the “2004 Plan”) that authorized the issuance of up to 1,900,000 shares of common stock to employees in the form of options, stock appreciation rights, restricted stock, deferred stock units, performance shares, bonus stock or stock in lieu of cash compensation. The 2004 Plan was further amended by the Board of Directors in September 2005 and December 2006. In April 2013, the Board of Directors adopted the EastGroup Properties, Inc. 2013 Equity Incentive Plan (the “2013 Equity Plan”) upon the recommendation of the Compensation Committee; the 2013 Equity Plan was approved by the Company’s stockholders and became effective May 29, 2013. The 2013 Equity Plan was further amended by the Board of Directors in March 2017. The 2013 Equity Plan permits the grant of awards to employees and directors with respect to 2,000,000 shares of common stock. There were 1,422,437, 1,477,241 and 1,527,382 total shares available for grant under the 2013 Equity Plan as of December 31, 2022, 2021 and 2020, respectively. Typically, the Company issues new shares to fulfill stock grants. Employee Equity Awards The Company’s restricted stock program is designed to provide incentives for management to achieve goals established by the Compensation Committee of the Company’s Board of Directors (the “Committee”). The awards act as a retention device, as they vest over time, allowing participants to benefit from dividends on shares as well as potential stock appreciation. Equity awards align management’s interests with the long-term interests of shareholders. The Committee approves long-term and annual equity compensation awards for the Company’s executive officers. The vesting periods of the Company’s restricted stock plans vary, as determined by the Committee. Restricted stock is granted to executive officers subject to both continued service and the satisfaction of certain annual performance goals and multi-year market conditions as determined by the Committee. Long-term equity compensation awards The long-term compensation awards include components based on the Company’s total shareholder return over the upcoming three-year period and the employee’s continued service as of the vesting dates. The total shareholder return component 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 following table summarizes the assumptions used in the Monte Carlo simulation pricing model used to determine the grant date fair value of the multi-year market conditions component of the long-term compensation awards for 2022, 2021 and 2020:
| 2022 Award |  | 2021 Award |  | 2020 Award
Valuation date | 3/3/2022 |  | 2/25/2021 |  | 3/6/2020
Risk-free interest rate | 1.64 | % |  | 0.39 | % |  | 0.62 | %
Expected share price volatility for the Company | 30.01 | % |  | 30.51 | % |  | 16.72 | %
Expected share price volatility for peer group companies - low end of range | 26.32 | % |  | 26.87 | % |  | 14.40 | %
Expected share price volatility for peer group companies - high end of range | 50.10 | % |  | 54.25 | % |  | 49.23 | %
Expected dividend yield | 2.27 | % |  | 2.27 | % |  | 2.28 | %
Number of simulation paths | 1,000,000 |  |  | 1,000,000 |  |  | 1,000,000 |
Grant date fair value (in thousands) | $ | 2,912 |  |  | 2,941 |  |  | 2,037 |
The risk-free interest rate is based on zero coupon risk-free rates matching the three-year time period of the market performance period. The expected share price volatilities are based on a mix of the historical and implied volatilities of the Company and the peer group companies. The expected dividend yield is based on the expected annual cash dividend as of the valuation date divided by the Company’s stock price on the valuation date. These market based awards are expensed on a straight-line basis over the requisite service period (75% vests at the end of the three-year performance period and 25% vests the following year). The following table presents the total shareholder return component of the long-term compensation awards for the four years ended December 31, 2022:
| 2022 Award |  | 2021 Award |  | 2020 Award |  | 2019 Award
Grant date | 3/3/2022 |  | 2/25/2021 |  | 3/6/2020 |  | 3/7/2019
Performance period | 1/1/22 - 12/31/24 |  | 1/1/21 - 12/31/23 |  | 1/1/20 - 12/31/22 |  | 1/1/19 - 12/31/21
Range of earnable shares - low end of range | — |  |  | — |  |  | — |  |  | — |
Range of earnable shares - high end of range | 27,212 |  |  | 36,400 |  |  | 25,261 |  |  | 33,442 |
Shares determined | N/A (1) |  | N/A (1) |  | N/A (1) |  | 30,990 |
(1) The performance conditions for this award have not yet been satisfied and the number of shares have not yet been determined. The long term awards subject only to continuing employment are expensed on a straight-line basis over the requisite service period (25% vests in each of the following four years). The following table presents the service only component of the long-term compensation awards for the four years ended December 31, 2022:
| 2022 Award |  | 2021 Award |  | 2020 Award |  | 2019 Award
Grant date | 3/3/2022 |  | 2/25/2021 |  | 3/6/2020 |  | 3/7/2019
Shares granted | 5,830 |  |  | 7,801 |  |  | 7,217 |  |  | 9,947 |
Grant date share price | $ | 193.54 |  |  | 138.93 |  |  | 131.36 |  |  | 105.97 |
Annual equity compensation awards The annual equity compensation awards include components based on certain annual Company performance measures and individual annual performance goals over the upcoming year. The certain Company performance measures for 2022 are: (i) funds from operations “FFO” per share, (ii) cash same property net operating income change, (iii) debt-to-EBITDAre ratio, and (iv) fixed charge coverage. The Company begins recognizing expense for its estimate of the shares that could be earned pursuant to these awards on the grant date; the expense is adjusted to estimated performance levels during the performance period and to actual upon the determination of the awards. The shares are 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 (34% vests at the end of the one-year performance period and 33% vests in each of the following two years). The following table presents the Company performance measures component of the annual equity compensation awards for the three years ended December 31, 2022:
| 2022 Award |  | 2021 Award |  | 2020 Award |  |  |  |
Grant date | 3/3/2022 |  | 2/25/2021 |  | 3/6/2020 |  |  |  |
Performance period | 1/1/22 - 12/31/22 |  | 1/1/21 - 12/31/21 |  | 1/1/20 - 12/31/20 |  |  |  |
Range of earnable shares - low end of range | — |  |  | — |  |  | — |  |  |  |  |
Range of earnable shares - high end of range | 13,289 |  |  | 19,052 |  |  | 19,282 |  |  |  |  |
Shares determined | N/A (1) |  | 18,798 |  |  | 18,380 |  |  |  |  |
Grant date share price | $ | 193.54 |  |  | 138.93 |  |  | 131.36 |  |  |  |  |
(1) The performance conditions for this award have not yet been satisfied and the number of shares have not yet been determined. Any shares issued pursuant to the individual annual performance goals are determined by the Committee in its discretion following the performance period. The Company begins recognizing the expense for the shares on the grant date and expenses on a straight-line basis over the remaining service period (34% vests at the end of the one-year performance period and 33% vests in each of the following two years). The following table presents the individual performance goals component of the annual equity compensation awards for the three years ended December 31, 2022:
| 2022 Award |  | 2021 Award |  | 2020 Award
Grant date | N/A (1) |  | 2/16/2022 |  | 2/17/2021
Performance period | 1/1/22 - 12/31/22 |  | 1/1/21 - 12/31/21 |  | 1/1/20 - 12/31/20
Range of earnable shares - low end of range | — |  |  | — |  |  | — |
Range of earnable shares - high end of range | 3,323 |  |  | 4,756 |  |  | 4,812 |
Shares determined | N/A (1) |  | 4,374 |  |  | 4,156 |
Grant date share price | N/A (1) |  | $ | 190.89 |  |  | 142.89 |
(1) The performance conditions for this award have not yet been satisfied and the grant date and number of shares have not yet been determined. Equity compensation is also awarded to the Company’s non-executive officers, which are subject to service only conditions and expensed on a straight-line basis over the requisite service period (20% vests in each of the following five years). The total compensation expense is based upon the fair market value of the shares on the grant date. The following table presents the compensation awards to non-executive officers for the three years ended December 31, 2022:
| 2022 Award |  | 2021 Award |  | 2020 Award
Grant date | 6/20/2022 |  | 7/7/2021 |  | 5/6/2020
Shares granted | 11,225 |  |  | 9,200 |  |  | 12,300 |
Grant date share price | $ | 148.48 |  |  | 168.35 |  |  | 105.30 |
The Committee has adopted an 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. Stock-based compensation cost for employees was $10,236,000, $9,136,000 and $7,605,000 for 2022, 2021 and 2020, respectively, of which $2,510,000, $2,336,000 and $1,923,000 were capitalized as part of the Company’s development costs for the respective years. As of December 31, 2022, there was $4,177,000 of unrecognized compensation cost related to unvested restricted stock compensation for employees and directors that is expected to be recognized over a weighted average period of 2.6 years. During the restricted period for awards no longer subject to contingencies, dividends are accrued based upon the number of shares expected to be awarded. As of December 31, 2022, 2021 and 2020, accrued dividends on unvested restricted stock were $1,610,000, $1,585,000 and $1,433,000, respectively. Of the shares that vested in 2022, 2021 and 2020, 34,251 shares, 30,252 shares and 36,445 shares, respectively, were withheld by the Company to satisfy the tax obligations for those employees who elected this option as permitted under the applicable equity plan. Following is a summary of the total restricted shares granted, forfeited and delivered (vested) to employees with the related weighted average grant date fair value share prices for 2022, 2021 and 2020. As of the grant dates, the aggregate fair value of shares that were granted during 2022, 2021 and 2020 was $8,655,000, $7,682,000 and $7,028,000, respectively. As of the vesting dates, the aggregate fair value of shares that vested during 2022, 2021 and 2020 was $17,124,000, $10,322,000 and $11,754,000, respectively.
Restricted Stock Activity: | Years Ended December 31,
2022 |  | 2021 |  | 2020
Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
Unvested at beginning of year | 106,056 |  |  | $ | 116.37 |  |  | 113,125 |  |  | $ | 100.86 |  |  | 130,884 |  |  | $ | 82.78 |
Granted (1) (2) | 71,217 |  |  | 121.52 |  |  | 66,623 |  |  | 115.30 |  |  | 69,446 |  |  | 101.19 |
Forfeited | — |  |  | — |  |  | — |  |  | — |  |  | (440) |  |  | 112.14 |
Vested | (80,565) |  |  | 102.42 |  |  | (73,692) |  |  | 91.59 |  |  | (86,765) |  |  | 73.80 |
Unvested at end of year | 96,708 |  |  | 131.79 |  |  | 106,056 |  |  | 116.37 |  |  | 113,125 |  |  | 100.86 |
(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 2020 and 2021 for long-term performance and in 2022 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 105,485. Following is a vesting schedule of the total unvested shares for employees as of December 31, 2022:
Unvested Shares Vesting Schedule |  | Number of Shares
2023 |  | 51,937 |
2024 |  | 27,034 |
2025 |  | 9,951 |
2026 |  | 5,541 |
2027 |  | 2,245 |
Total Unvested Shares |  | 96,708 |
Directors Equity Awards The Board of Directors has adopted a policy under the 2013 Equity Plan pursuant to which awards will be made to non-employee Directors. The current policy provides that the Company shall automatically award an annual restricted share award to each non-employee Director who has been elected or re-elected as a member of the Board of Directors at the Annual Meeting. The number of shares shall be equal to $110,000 divided by the fair market value of a share on the date of such election. If a non-employee Director is elected or appointed to the Board of Directors other than at an Annual Meeting of the Company, the annual restricted share award shall be pro rated. The restricted shares vest in full on the earlier of the one-year anniversary of the date of grant or the next annual meeting of shareholders following the date of grant, subject to the non-employee director’s continued service on the Board through such vesting date, subject to certain exceptions. The shares are expensed on a straight-line basis over the service period. The policy also provides that each new non-employee Director appointed or elected will receive an automatic award of restricted shares of Common Stock on the effective date of election or appointment equal to $25,000 divided by the fair market value of the Company’s Common Stock on such date. These restricted shares will vest 25% per year over a four-year period upon the performance of future service as a Director, subject to certain exceptions. The shares are expensed on a straight-line basis over the service period. Directors were granted 5,568 shares of common stock as annual restricted share awards for 2022. Directors were issued 4,466 shares and 8,182 shares of common stock as annual retainer awards for 2021 and 2020, respectively. Stock-based compensation expense for directors was $566,000, $711,000 and $897,000 for 2022, 2021 and 2020, respectively. Following is a summary of the total restricted shares granted, forfeited and delivered (vested) to directors with the related weighted average grant date fair value share prices for 2022, 2021 and 2020. As of the vesting dates, the fair value of shares that vested during 2022, 2021 and 2020 was $8,000, $21,000 and $9,000, respectively.
Restricted Stock Activity: | Years Ended December 31,
2022 |  | 2021 |  | 2020
Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
Unvested at beginning of year | 156 |  |  | $ | 120.39 |  |  | 278 |  |  | $ | 112.45 |  |  | 140 |  |  | $ | 88.86 |
Granted | 5,696 |  |  | 159.00 |  |  | — |  |  | — |  |  | 208 |  |  | 120.39 |
Forfeited | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Vested | (52) |  |  | 120.39 |  |  | (122) |  |  | 102.30 |  |  | (70) |  |  | 88.86 |
Unvested at end of year | 5,800 |  |  | 158.31 |  |  | 156 |  |  | 120.39 |  |  | 278 |  |  | 112.45 |

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