XML 41 R19.htm IDEA: XBRL DOCUMENT

Equity Incentive Plan

12 Months Ended

Dec. 31, 2019

Note 11 – Equity Incentive Plan

In 2014, the Company’s shareholders 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.

Restricted Stock

Restricted common stock has been granted to certain employees and directors under the 2014 Plan.

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 shareholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. The Company granted 54,488, 57,247, and 88,466 shares of restricted stock in 2019, 2018 and 2017, respectively, to employees and directors. The restricted shares vest over a five-year period based on continued service to the Company.

The Company estimates the fair value of restricted stock grants at the date of grant and amortizes those amounts into expense on a straight line basis or amount vested, if greater, over the appropriate vesting period. During 2019, 2018 and 2017 the Company recognized $3.0 million, $2.7 million and $2.4 million, respectively, of expense relating to restricted stock grants. As of December 31, 2019, there was $7.3 million of unrecognized compensation costs related to the outstanding restricted stock, which is expected to be recognized over a weighted average period of 3.2 years. The Company used 0% for the forfeiture rate for determining the fair value of restricted stock.

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, 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	(71)	$	36.06
Restricted stock forfeited	(1)	$	48.28

Unvested restricted stock at December 31, 2018	212	$	42.74

Restricted stock granted	54	$	65.85
Restricted stock vested	(70)	$	39.55
Restricted stock forfeited	(2)	$	54.08

Unvested restricted stock at December 31, 2019	194	$	50.71

The intrinsic value of restricted shares redeemed was $1.4 million, $1.1 million and $1.1 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Performance Units and Shares

On February 23, 2019 certain executive officers received performance units. Performance units 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 constituents of the MSCI US REIT Index and a defined peer group. 50% of the award is based upon the total shareholder return percentile rank versus the MSCI US REIT index for the three-year performance period; and 50% of the award is based upon TSR percentile rank versus a specified net lease peer group for the three-year performance period. Vesting of the performance units 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, 2019.

The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model and compensation expense is amortized on an attribution method over a five-year period. The Monte Carlo simulation pricing model for the 2019 grants utilized the following assumptions: (i) expected term of 2.9 years (equal to the remaining performance measurement period at the grant date), (ii) volatility of 19.7% (based on historical volatility), (iii) dividend yield of 3.4% (based on most recently paid dividend at grant date), and (iv) risk-free rate of 2.5% (interpolated based on 2-and 3- year rates). Compensation expense related to performance units is determined at the grant date and is not adjusted throughout the measurement or vesting periods.

Equity compensation awarded February 23, 2018 for certain executive officers included performance shares. The terms of the performance shares are substantially identical to the performance units described above. 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 an attribution method

over a five-year period. Compensation expense related to performance shares is determined at the grant date and is not adjusted throughout the measurement or vesting periods.

During 2019 and 2018, the Company recognized $0.9 million and $0.3 million, respectively, of expense related to performance units and shares. There was no expense in 2017. As of December 31, 2019, there was $2.5 million of total unrecognized compensation costs related to the outstanding performance units and shares, which is expected to be recognized over a weighted average period of 3.4 years. The Company used 0% for the forfeiture rate for determining the fair value of performance shares.

Performance share and unit activity is summarized as follows:


	Target Number	Weighted Average
	of Awards	Grant Date
Performance shares at December 31, 2017	—	$	—

Performance shares granted	31	$	47.73

Performance shares at December 31, 2018	31	$	47.73

Performance units granted	30	$	65.66

Performance units and shares at December 31, 2019	61	$	56.57