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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Employee Benefit Plans | Employee Benefit Plans Officer, Management and Director Compensation Programs Officers of the Company participate in an annual non-equity incentive program pursuant to which they are eligible to earn cash payments based on a percentage of their annual base salary in effect for December of the applicable year. Under this component of our executive compensation program, officers are eligible to earn additional cash compensation generally to the extent specific performance-based metrics are achieved during the most recently completed year. The position held by each officer has a target annual incentive percentage that ranges from 35% to 140% of base salary. The more senior the position, the greater the portion of compensation that varies with performance. The percentage amount an officer may earn under the annual non-equity incentive plan is the product of the target annual incentive percentage times an “actual performance factor,” which can range from zero to 200%. Amounts under our annual non-equity incentive plan are accrued and expensed in the year earned, but are typically paid early in the following year. Certain other employees participate in a similar annual non-equity incentive program. Incentive eligibility ranges from 5% to 30% of annual base salary. These amounts are also accrued and expensed in the year earned, but are typically paid early in the following year. The Company’s officers are eligible to receive a mix of long-term equity incentive awards on or about March 1 of each year. Prior to 2018, the mix generally consisted of stock options, time-based restricted stock and total return-based restricted stock. Since 2018, the mix has consisted of time-based restricted stock and total return-based restricted stock. Time-based restricted stock grants are also made annually to directors and certain other employees. Dividends received on restricted stock are non-forfeitable and are paid at the same rate and on the same date as on shares of Common Stock, except that, with respect to shares of total return-based restricted stock issued to the Company’s chief executive officer, dividends accumulate and are payable only if and to the extent the shares vest. Dividends paid on subsequently forfeited shares are expensed. Additional shares of total return-based restricted stock may be issued at the end of the applicable measurement periods if and to the extent actual performance exceeds certain levels of performance. Such additional shares, if any, would be fully vested when issued. No expense is recorded for additional shares of total return-based restricted stock that may be issued at the end of the applicable measurement period since that possibility is reflected in the grant date fair value. The following table sets forth the number of shares of Common Stock reserved for future issuance under the Company’s long-term equity incentive plans:
| December 31,
| 2023 |  | 2022
Outstanding stock options and warrants | 527,067 |  |  | 527,067 |
Possible future issuance under equity incentive plans | 2,537,816 |  |  | 2,817,293 |
| 3,064,883 |  |  | 3,344,360 |
Of the possible future issuance under the Company’s long-term equity incentive plans as of December 31, 2023, no more than an additional 0.5 million shares can be in the form of restricted stock. During the years ended December 31, 2023, 2022 and 2021, we recognized share-based compensation expense of $7.0 million, $7.6 million and $8.6 million, respectively. Because REITs generally do not pay income taxes, we do not realize tax benefits on share-based payments. As of December 31, 2023, there was $4.0 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 2.0 years. - Stock Options Outstanding stock options vest ratably on an annual basis over four years and expire after 10 years. All stock options have an exercise price equal to the last reported stock price of our Common Stock on the New York Stock Exchange (“NYSE”) on the last trading day prior to grant. The value of all options as of the date of grant is calculated using the Black-Scholes option-pricing model and is amortized over the respective vesting period or the service period, if shorter, for employees who are or will become eligible under the Company’s retirement plan. The following table sets forth stock option activity:
| Options Outstanding
| Number of Options |  | Weighted Average Exercise Price
Stock options outstanding as of December 31, 2020 | 537,373 |  |  | $ | 46.07 |
Exercised | (25,306) |  |  | 43.76 |
Stock options outstanding as of December 31, 2021 (1) | 512,067 |  |  | 46.18 |
__________ (1)There were no options granted, canceled, exercised or forfeited during the years ended December 31, 2023 and 2022. The Company had 512,067 options exercisable as of December 31, 2023, 2022 and 2021, respectively, with a weighted average exercise price of $46.18 at each date. As of December 31, 2023 and 2022, these options had a weighted average remaining life of 2.0 years and 3.0 years, respectively, and all had exercise prices higher than the market price of our common stock. No options were exercised during the years ended December 31, 2023 and 2022, respectively. Cash received or receivable from options exercised was $1.1 million for the year ended December 31, 2021. The total intrinsic value of options exercised during the year ended December 31, 2021 was $0.1 million. The total intrinsic value of options outstanding as of December 31, 2021 was $0.6 million. The Company generally does not permit the net cash settlement of exercised stock options, but does permit net share settlement so long as the shares received are held for at least a year. The Company has a practice of issuing new shares to satisfy stock option exercises. - Time-Based Restricted Stock Shares of time-based restricted stock vest ratably on an annual basis generally over four years. Beginning in 2019, shares of time-based restricted stock granted to non-employee directors vest on the first anniversary of the grant date. The value of grants of time-based restricted stock is based on the market value of Common Stock as of the date of grant and is amortized to expense over the respective vesting period or the service period, if shorter, for employees who are or will become eligible under the Company’s retirement plan. The following table sets forth time-based restricted stock activity:
| Number of Shares |  | Weighted Average Grant Date Fair Value
Restricted shares outstanding as of December 31, 2020 | 209,190 |  |  | $ | 45.34 |
Awarded and issued (1) | 103,120 |  |  | 39.99 |
Vested (2) | (89,264) |  |  | 45.90 |
Forfeited | (3,327) |  |  | 43.13 |
Restricted shares outstanding as of December 31, 2021 | 219,719 |  |  | 42.63 |
Awarded and issued (1) | 99,975 |  |  | 43.58 |
Vested (2) | (101,082) |  |  | 42.80 |
Forfeited | (779) |  |  | 42.37 |
Restricted shares outstanding as of December 31, 2022 | 217,833 |  |  | 43.00 |
Awarded and issued (1) | 155,717 |  |  | 26.42 |
Vested (2) | (95,423) |  |  | 43.57 |
Forfeited | (1,819) |  |  | 34.11 |
Restricted shares outstanding as of December 31, 2023 | 276,308 |  |  | $ | 33.51 |
__________ (1)The weighted average fair value at grant date of time-based restricted stock issued during the years ended December 31, 2023, 2022 and 2021 was $4.1 million, $4.4 million and $4.1 million, respectively. (2)The vesting date fair value of time-based restricted stock that vested during the years ended December 31, 2023, 2022 and 2021 was $2.5 million, $4.4 million and $3.6 million, respectively. Vested shares include those shares surrendered by employees to satisfy tax withholding obligations in connection with such vesting. - Total Return-Based Restricted Stock Shares of total return-based restricted stock vest to the extent the Company’s absolute total returns for certain pre-determined three-year periods exceed predetermined goals. The amount subject to vesting ranges from zero to 150%. For total return-based restricted stock issued prior to 2022, notwithstanding the Company’s absolute total return, if the Company’s total return exceeds 100% of the average peer group total return index, 100% of total return-based restricted stock issued will vest at the end of the applicable period. For total return-based restricted stock issued since 2022, notwithstanding the Company’s absolute total return, if the Company’s total return is in the 50th percentile or greater as compared to all of the companies included in the FTSE NAREIT Equity Office Index, 100% of total return-based restricted stock issued will vest at the end of the applicable period. The weighted average grant date fair value of such shares of total return-based restricted stock issued in 2023, 2022 and 2021 was determined to be $27.06, $41.94 and $36.41, respectively, and is amortized over the respective three-year period or the service period, if shorter, for employees who are or will become eligible under the Company’s retirement plan. The fair values of the total return-based restricted stock granted were determined at the grant dates using a Monte Carlo simulation model and the following assumptions:
| 2023 |  | 2022 |  | 2021
Risk free interest rate (1) | 4.4 | % |  | 1.6 | % |  | 0.3 | %
Common stock dividend yield (2) | 6.9 | % |  | 4.5 | % |  | 4.8 | %
Expected volatility (3) | 27.2 | % |  | 25.8 | % |  | 26.8 | %
__________ (1)Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the total return-based restricted stock grants. (2)The dividend yield is calculated utilizing the then current regular dividend rate for a one-year period and the average per share price of Common Stock during the three-month period preceding the date of grant. (3)Based on the historical volatility of Common Stock over a period relevant to the related total return-based restricted stock grant. The following table sets forth total return-based restricted stock activity:
| Number of Shares |  | Weighted Average Grant Date Fair Value
Restricted shares outstanding as of December 31, 2020 | 225,184 |  |  | $ | 39.53 |
Awarded and issued (1) | 81,464 |  |  | 36.41 |
Vested (2) | (55,452) |  |  | 43.01 |
Forfeited (3) | (21,904) |  |  | 42.33 |
Restricted shares outstanding as of December 31, 2021 | 229,292 |  |  | 38.00 |
Awarded and issued (1) | 81,832 |  |  | 41.94 |
Vested (2) | (62,985) |  |  | 45.90 |
Forfeited (3) | (20,995) |  |  | 45.90 |
Restricted shares outstanding as of December 31, 2022 | 227,144 |  |  | 38.93 |
Awarded and issued (1) | 126,736 |  |  | 27.06 |
Vested (2) | (65,140) |  |  | 44.88 |
Forfeited (3) | (2,148) |  |  | 35.83 |
Restricted shares outstanding as of December 31, 2023 | 286,592 |  |  | $ | 34.03 |
__________ (1)The fair value at grant date of total return-based restricted stock issued during the years ended December 31, 2023, 2022 and 2021 was $3.4 million, $3.4 million and $2.9 million, respectively, at target. (2)The vesting date fair value of total return-based restricted stock that vested during the years ended December 31, 2023, 2022 and 2021 was $1.7 million, $2.7 million and $2.2 million, respectively, based on the performance of the specific plans. Vested shares include those shares surrendered by employees to satisfy tax withholding obligations in connection with such vesting. (3)The 2022 and 2021 amounts include 20,995 and 18,484 shares, respectively, that were forfeited at the end of the applicable measurement period because the applicable total return did not meet targeted levels. No shares were forfeited in 2023. 401(k) Retirement Savings Plan We have a 401(k) Retirement Savings Plan covering substantially all employees who meet certain age and employment criteria. We contribute amounts for each participant at a rate of 75% of the employee’s contribution (up to 6% of each employee’s bi-weekly salary and cash incentives, subject to statutory limits). During the years ended December 31, 2023, 2022 and 2021, we contributed $1.4 million, $1.4 million and $1.3 million, respectively, to the 401(k) savings plan. The assets of this qualified plan are not included in our Consolidated Financial Statements since the assets are not owned by us. Retirement Plan The Company has a retirement plan for employees with at least 30 years of continuous service or are at least 55 years old with at least 10 years of continuous service. Subject to advance written notice and a non-compete agreement, eligible retirees would be entitled to receive a pro rata amount of any annual non-equity incentive compensation earned during the year of retirement and stock options and time-based restricted stock would be non-forfeitable and vest according to the terms of their original grants. Eligible retirees would also be entitled to retain any total return-based restricted stock that subsequently vests after the retirement date according to the terms of their original grants. For employees who meet the age and service eligibility requirements, 100% of their annual grants are expensed at the grant date as if fully vested. For employees who will meet the age and service eligibility requirements within the normal vesting periods, the grants are amortized over the shorter service period. Deferred Compensation Prior to 2010, officers could elect to defer all or a portion of their cash compensation, which was then invested in unrelated mutual funds under a non-qualified deferred compensation plan. These investments are recorded at fair value, which aggregated $2.3 million and $2.6 million as of December 31, 2023 and 2022, respectively, and are included in prepaid expenses and other assets, with an offsetting deferred compensation liability recorded in accounts payable, accrued expenses and other liabilities. Deferred amounts ultimately payable to the participants are based on the value of the related mutual fund investments. Accordingly, changes in the value of the unrelated mutual funds are recorded in interest and other income and the corresponding offsetting changes in the deferred compensation liability are recorded in general and administrative expense. As a result, there is no effect on our net income. The following table sets forth our deferred compensation liability:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Beginning deferred compensation liability | $ | 2,564 |  |  | $ | 2,866 |  |  | $ | 2,573 |
Mark-to-market adjustment to deferred compensation (in general and administrative expenses) | 243 |  |  | (302) |  |  | 293 |
Distributions from deferred compensation plans | (513) |  |  | — |  |  | — |
Total deferred compensation liability | $ | 2,294 |  |  | $ | 2,564 |  |  | $ | 2,866 |
Employee Stock Purchase Plan The Company has an Employee Stock Purchase Plan (“ESPP”) pursuant to which employees may contribute up to 25% of their cash compensation for the purchase of Common Stock. At the end of each quarter, each participant’s account balance, which includes accumulated dividends, is applied to acquire shares of Common Stock at a cost that is calculated at 85% of the average closing price on the NYSE on the five consecutive days preceding the last day of the quarter. In the years ended December 31, 2023, 2022 and 2021, the Company issued 77,086, 46,656 and 38,460 shares, respectively, of Common Stock under the ESPP. The 15% discount on newly issued shares, which is taxable income to the participants and is recorded by us as additional compensation expense, aggregated $0.3 million, $0.2 million and $0.2 million in the years ended December 31, 2023, 2022 and 2021, respectively. Generally, shares purchased under the ESPP must be held for at least one year. The Company satisfies its ESPP obligations by issuing additional shares of Common Stock.

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