Note 11 – Equity Incentive Plan

In 2014, the Company’s stockholders approved the 2014 Omnibus Incentive Plan (the “2014 Plan”), which replaced the 2005 Equity Incentive Plan. The 2014 Plan authorizes the issuance of a maximum of 700,000 shares of common stock.

No options were granted during 2018, 2017 or 2016.

Restricted common stock has been granted to certain employees under the 2014 Plan. As of December 31, 2018, there was $6.8 million of unrecognized compensation costs related to the outstanding restricted stock, which is expected to be recognized over a weighted average period of 3.3 years. The Company used 0% for the forfeiture rate for determining the fair value of restricted stock.

The holder of a restricted share award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. The Company granted 57,247; 88,466; and 93,363 shares of restricted stock in 2018, 2017 and 2016, respectively to employees and Directors. The restricted shares vest over a five-year period based on continued service to the Company.

Restricted share activity is summarized as follows (in thousands, except per share data):


	Shares	Weighted Average
	Outstanding	Grant Date
	(in thousands)	Fair Value
Unvested restricted stock at December 31, 2015	213	$	29.07

Restricted stock granted	93	$	37.67
Restricted stock vested	(72)	$	27.07
Restricted stock forfeited	(6)	$	35.58

Unvested restricted stock at December 31, 2016	228	$	33.02

Restricted stock granted	88	$	48.59
Restricted stock vested	(78)	$	30.95
Restricted stock forfeited	(11)	$	39.68

Unvested restricted stock at December 31, 2017	227	$	39.47

Restricted stock granted	57	$	48.85
Restricted stock vested	(72)	$	36.06
Restricted stock forfeited	(1)	$	48.28

Unvested restricted stock at December 31, 2018	211	$	43.15

The intrinsic value of restricted shares redeemed was $1.1 million, $1.1 million and $0.7 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Performance Shares

Equity compensation awarded February 23, 2018 for certain executive officers consisted of both performance shares and restricted stock. Performance shares are subject to a three-year performance period, at the conclusion of which, shares awarded are to be determined by the Company’s total shareholder return compared to the MSCI US REIT Index and a defined peer group. Vesting of the performance shares following their issuance will occur ratably over a three-year period, with the initial vesting occurring immediately following the conclusion of the performance period such that all shares vest within five years of the original award date of February 23, 2018. The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model using the following assumptions: (i) expected term of 2.9 years (equal to the remaining performance measurement period at the grant date), (ii) volatility of 19.1% (based on historical volatility), (iii) dividend yield of 4.36% (based on most recently paid dividend at grant date), and (iv) risk-free rate of 2.37% (interpolated based on 2-and 3- year rates). Compensation expense is amortized on a straight-line basis over a five-year period which approximates the accelerated attribution method. Compensation expense related to performance shares is determined at the grant date and is not adjusted throughout the measurement or vesting periods.

As of December 31, 2018, there was $1.4 million of total unrecognized compensation costs related to the outstanding performance shares, which is expected to be recognized over a weighted average period of 4.2 years. The Company used 0% for the forfeiture rate for determining the fair value of performance shares.