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Equity-Based Compensation | 12 Months Ended
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Dec. 31, 2018
Tanger Factory Outlet Centers, Inc. [Member] |
Equity-Based Compensation | Equity-Based Compensation When a common share is issued by the Company, the Operating Partnership issues one corresponding unit of partnership interest to the Company's wholly-owned subsidiaries. Therefore, when the Company grants an equity based award, the Operating Partnership treats each award as having been granted by the Operating Partnership. In the discussion below, the term "we" refers to the Company and the Operating Partnership together and the term "shares" is meant to also include corresponding units of the Operating Partnership. We may issue up to 15.4 million common shares under the Plan. Shares remaining available for future issuance totaled approximately 849,000 common shares. The amount and terms of the awards granted under the Plan were determined by the Board of Directors (or the Compensation Committee of the Board of Directors). We recorded equity-based compensation expense in general and administrative expenses in the consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016, respectively, as follows (in thousands):
|  | 2018 |  | 2017 |  | 2016
Restricted common shares |  | $ | 9,870 |  |  | $ | 9,395 |  |  | $ | 10,976 |
Notional unit performance awards |  | 4,356 |  |  | 3,913 |  |  | 3,967 |
Options |  | 443 |  |  | 277 |  |  | 376 |
Total equity-based compensation |  | $ | 14,669 |  |  | $ | 13,585 |  |  | $ | 15,319 |
Equity-based compensation expense capitalized as a part of rental property and deferred lease costs were as follows (in thousands):
|  | 2018 |  | 2017 |  | 2016
Equity-based compensation expense capitalized |  | $ | 1,131 |  |  | $ | 1,044 |  |  | $ | 985 |
As of December 31, 2018, there was $22.1 million of total unrecognized compensation cost related to unvested common equity-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 2.1 years. Restricted Common Share and Restricted Share Unit Awards During 2018, 2017 and 2016, the Company granted approximately 407,000, 253,000 and 287,000 restricted common shares and restricted share units, respectively, to the independent directors and the senior executive officers. The non-employee directors' restricted common shares generally vest ratably over a three year period and the senior executive officers' restricted common shares (other than our chief executive officer's) generally vest ratably over periods ranging from three to five years. For the restricted shares and units issued to our chief executive officer during 2018, 2017 and 2016, the award agreements generally require him to hold the shares or units issued to him for a minimum of three years following each applicable vesting date or the share issuance date, as applicable. Compensation expense related to the amortization of the deferred compensation is being recognized in accordance with the vesting schedule of the restricted shares and units. For all of the restricted common share and unit awards described above, the grant date fair value of the awards were determined based upon the closing market price of the Company's common shares on the day prior to the grant date. The following table summarizes information related to unvested restricted common shares and restricted share units outstanding for the years ended December 31, 2018, 2017, and 2016:
Unvested Restricted Common Shares and Units |  | Number of shares |  | Weighted average grant date fair value
Outstanding at December 31, 2015 |  | 1,085,995 |  |  | $ | 31.84 |
Granted |  | 286,524 |  |  | 29.64 |
Vested |  | (388,851 | ) |  | 31.30 |
Forfeited |  | (104,400 | ) |  | 34.13 |
Outstanding at December 31, 2016 |  | 879,268 |  |  | $ | 31.09 |
Granted |  | 253,431 |  |  | 33.07 |
Vested |  | (368,043 | ) |  | 29.87 |
Forfeited |  | (14,750 | ) |  | 34.39 |
Outstanding at December 31, 2017 |  | 749,906 |  |  | $ | 32.30 |
Granted (1) |  | 407,156 |  |  | 21.13 |
Vested |  | (314,982 | ) |  | 31.43 |
Forfeited |  | — |  |  | — |
Outstanding at December 31, 2018 |  | 842,080 |  |  | $ | 27.56 |
(1) | Includes 44,452 restricted share units.
The table above excludes restricted common shares earned under the 2014 Outperformance Plan. In connection with the 2014 Outperformance Plan, we issued approximately 184,000 restricted common shares in January 2017, with approximately 94,000 vesting immediately and the remaining 90,000 vesting in January 2018, contingent upon continued employment with the Company through the vesting date (unless terminated prior thereto (a) by the Company without cause, (b) by participant for good reason or (c) due to death or disability). The total value of restricted common shares vested during the years ended 2018, 2017 and 2016 was $9.2 million, $12.4 million and $12.7 million, respectively. During 2018, 2017 and 2016, we withheld shares with value equivalent to the employees' minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total number of shares withheld were approximately 89,000, 70,000 and 67,000 for 2018, 2017 and 2016, respectively, and were based on the value of the restricted common shares on the vesting date as determined by our closing share price on the day prior to the vesting date. Total amounts paid for the employees' tax obligation to taxing authorities were $2.1 million, $2.4 million and $2.2 million for 2018, 2017 and 2016, respectively, which are reflected as a financing activity within the consolidated statements of cash flows. Notional Unit Performance Awards Outperformance Plan Each year, the Compensation Committee of Tanger Factory Outlet Centers, Inc. approves the terms and the number of awards to be granted under the Tanger Factory Outlet Centers, Inc. Outperformance Plan (the “OPP"). The OPP is a long-term incentive compensation plan. Recipients may earn units which may convert, subject to the achievement of the goals described below, into restricted common shares of the Company based on the Company’s absolute share price appreciation (or absolute total shareholder return) and its share price appreciation relative to its peer group (or relative total shareholder return) over a three-year measurement period. For all recipients (other than our chief executive officer), any shares earned at the end of the three-year measurement period are subject to a time-based vesting schedule, with 50% of the shares vesting immediately following the measurement period, and the remaining 50% vesting one year thereafter, contingent upon continued employment with the Company through the vesting date (unless terminated prior thereto (a) by the Company without cause, (b) by participant for good reason or (c) due to death or disability. For our chief executive officer, any shares earned at the end of the three-year measurement period remain subject to a time-based vesting schedule and are issued following vesting, with 50% of the shares vesting immediately following issuance, and the remaining 50% vesting one year thereafter, contingent upon continued employment with the Company through the vesting dates (unless terminated prior thereto (a) by the Company without cause, (b) by participant for good reason or due to retirement or (c) due to death or disability). The following table sets forth OPP performance targets and other relevant information about each plan:
|  | 2018 OPP(1) |  | 2017 OPP(2) |  | 2016 OPP(2) |  | 2015 OPP(2),(3) |  | 2014 OPP(2),(4)
Performance targets |  |  |  |  |  |  |  |  |  |
Absolute portion of award: |  |  |  |  |  |  |  |  |  |
Percent of total award |  | 33% |  | 50% |  | 50% |  | 60% |  | 70%
Absolute total shareholder return range |  | 19.1% - 29.5% |  | 18% - 35% |  | 18% - 35% |  | 25% - 35% |  | 25% - 35%
Percentage of units to be earned |  | 20%-100% |  | 20%-100% |  | 20%-100% |  | 33%-100% |  | 33%-100%
Relative portion of award: |  |  |  |  |  |  |  |  |  |
Percent of total award |  | 67% |  | 50% |  | 50% |  | 40% |  | 30%
Percentile rank of peer group range |  | 30th - 80th |  | 40th - 70th |  | 40th - 70th |  | 50th - 70th |  | 50th - 70th
Percentage of units to be earned |  | 20%-100% |  | 20%-100% |  | 20%-100% |  | 33%-100% |  | 33%-100%
Maximum number of restricted common shares that may be earned |  | 409,972 |  |  | 296,400 |  |  | 321,900 |  |  | 306,600 |  |  | 329,700 |
Grant date fair value per share |  | $ | 12.42 |  |  | $ | 16.60 |  |  | $ | 15.10 |  |  | $ | 15.85 |  |  | $ | 14.71 |
(1) | The number of restricted common shares received under the 2018 OPP will be determined on a pro-rata basis by linear interpolation between total shareholder return thresholds, both for absolute total shareholder return and for relative total shareholder return amongst the Company's peer group. The peer group is based on companies included in the FTSE NAREIT Retail Index.
(2) | The performance shares for the 2017, 2016, 2015 and 2014 OPP will convert on a pro-rata basis by linear interpolation between share price appreciation thresholds, both for absolute total shareholder return and for relative total shareholder return. The share price for the purposes of calculation of share price appreciation will be adjusted on a penny-for-penny basis with respect to any dividend payments made during the measurement period. The peer group is based on companies included in the SNL Equity REIT index.
(3) | On December 31, 2017, the measurement period for the 2015 OPP expired and neither of the Company’s absolute nor relative total shareholder returns were sufficient for employees to earn, and therefore become eligible to vest in, any restricted shares under the plan. Accordingly, all 2015 OPP performance awards were automatically forfeited.
(4) | On December 31, 2016, the measurement period for the 2014 OPP expired. Based on the Company’s absolute total shareholder return over the three-year measurement period, we issued 184,000 restricted common shares in January 2017, with 94,000 vesting immediately and the remaining 90,000 vesting in January one year thereafter, contingent upon continued employment with the Company through the vesting date (unless terminated prior thereto (a) by the Company without cause, (b) by participant for good reason or (c) due to death or disability). Our relative total shareholder return for the 2014 OPP did not meet the minimum share price appreciation and no shares were earned under this component of the 2014 OPP.
The fair values of the OPP awards granted during the years ended December 31, 2018, 2017, and 2016 were determined at the grant dates using a Monte Carlo simulation pricing model and the following assumptions:
|  | 2018 |  | 2017 |  | 2016
Risk free interest rate (1) |  | 2.40 | % |  | 1.52 | % |  | 1.05 | %
Expected dividend yield (2) |  | 4.8 | % |  | 3.4 | % |  | 3.1 | %
Expected volatility (3) |  | 27 | % |  | 19 | % |  | 21 | %
(1) | Represents the interest rate as of the grant date on U.S. treasury bonds having the same life as the estimated life of the restricted unit grants.
(2) | The dividend yield is calculated utilizing the dividends paid for the previous five-year period.
(3) | Based on a mix of historical and implied volatility for our common shares and the common shares of our peer index companies over the measurement period.
The following table sets forth OPP activity for the years ended December 31, 2018, 2017, and 2016:
Unvested OPP Awards |  | Number of units |  | Weighted average grant date fair value
Outstanding as of December 31, 2015 |  | 544,300 |  |  | $ | 15.26 |
Awarded |  | 321,900 |  |  | 15.10 |
Forfeited |  | (107,024 | ) |  | 14.77 |
Outstanding as of December 31, 2016 |  | 759,176 |  |  | $ | 15.36 |
Awarded |  | 296,400 |  |  | 16.60 |
Earned (1) |  | (184,455 | ) |  | 14.71 |
Forfeited |  | (267,710 | ) |  | 15.84 |
Outstanding as of December 31, 2017 |  | 603,411 |  |  | $ | 15.83 |
Awarded |  | 409,972 |  |  | 12.42 |
Earned |  | — |  |  | — |
Forfeited |  | — |  |  | — |
Outstanding as of December 31, 2018 |  | 1,013,383 |  |  | $ | 14.44 |
(1) | Represents the units under the 2014 OPP that are no longer outstanding and have been settled in restricted common shares.
Option Awards Options outstanding at December 31, 2018 had the following weighted average exercise prices and weighted average remaining contractual lives:
|  | Options Outstanding |  | Options Exercisable
Exercise prices |  | Options |  | Weighted average exercise price |  | Weighted remaining contractual life in years |  | Options |  | Weighted average exercise price
$ | 21.94 |  |  | 306,000 |  |  | $ | 21.94 |  |  | 9.20 |  | — |  |  | $ | — |
$ | 26.06 |  |  | 61,700 |  |  | 26.06 |  |  | 2.15 |  | 61,700 |  |  | 26.06 |
$ | 32.02 |  |  | 166,800 |  |  | 32.02 |  |  | 5.00 |  | 128,100 |  |  | 32.02 |
|  | 534,500 |  |  | $ | 25.56 |  |  | 7.08 |  | 189,800 |  |  | $ | 30.08 |
A summary of option activity under the Plan for the years ended December 31, 2018, 2017, and 2016 (aggregate intrinsic value amount in thousands):
Options |  | Shares |  | Weighted-average exercise price |  | Weighted-average remaining contractual life in years |  | Aggregate intrinsic value
Outstanding as of December 31, 2015 |  | 318,400 |  |  | $ | 30.32 |  |  |  |  |
Granted |  | — |  |  | — |  |  |  |  |
Exercised |  | (59,700 | ) |  | 29.31 |  |  |  |  |
Forfeited |  | (16,500 | ) |  | 31.86 |  |  |  |  |
Outstanding as of December 31, 2016 |  | 242,200 |  |  | $ | 30.46 |  |  | 6.26 |  | $ | 1,287 |
Granted |  | — |  |  | — |  |  |  |  |
Exercised |  | (1,800 | ) |  | 29.70 |  |  |  |  |
Forfeited |  | (9,200 | ) |  | 31.83 |  |  |  |  |
Outstanding as of December 31, 2017 |  | 231,200 |  |  | $ | 30.42 |  |  | 5.24 |  | $ | 28 |
Granted |  | 331,000 |  |  | 21.94 |  |  |  |  |
Exercised |  | — |  |  | — |  |  |  |  |
Forfeited |  | (27,700 | ) |  | 22.62 |  |  |  |  |
Outstanding as of December 31, 2018 |  | 534,500 |  |  | $ | 25.56 |  |  | 7.08 |  | $ | — |
Vested and Expected to Vest as of |  |  |  |  |  |  |  |
December 31, 2018 |  | 492,889 |  |  | $ | 25.87 |  |  | 6.90 |  | $ | — |
Exercisable as of December 31, 2018 |  | 189,800 |  |  | $ | 30.08 |  |  | 4.08 |  | $ | — |
During February 2018, the Company granted 331,000 options to non-executive employees of the Company. The exercise price of the options granted during the first quarter of 2018 was $21.94 per share which equaled the closing market price of the Company's common shares on the day prior to the grant date. The options expire 10 years from the date of grant and 20% of the options become exercisable in each of the first five years commencing one year from the date of grant. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, which resulted in a weighted average grant date fair value per share of $3.62 and included the following weighted-average assumptions: expected dividend yield 6.24%; expected life of 7.1 years; expected volatility of 32.47%; a risk-free rate of 2.8%; and forfeiture rates of 3.0% to 10.0% dependent upon the employee's position within the Company. There were no options exercised in 2018. The total intrinsic value of options exercised during the years ended December 31, 2017 and 2016 was $8,000 and $469,000, respectively. 401(k) Retirement Savings Plan We have a 401(k) Retirement Savings Plan covering substantially all employees who meet certain age and employment criteria. An employee may invest pretax earnings in the 401(k) plan up to the maximum legal limits (as defined by Federal regulations). This plan allows participants to defer a portion of their compensation and to receive matching contributions for a portion of the deferred amounts. During the years ended December 31, 2018, 2017 and 2016, we contributed approximately $872,000, $862,000 and $828,000, respectively, to the 401(k) Retirement Savings Plan.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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