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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation The Company’s 2010 Incentive Plan permits the Company’s board of directors (the “Board”) to grant, among other things, restricted stock, restricted stock units, operating partnership performance units and performance-based awards. As of December 31, 2023, 6.0 million common shares were available for grant under the 2010 Plan. The calculation of shares available for grant is determined after taking into account unvested restricted stock, unvested operating partnership performance units, and unvested RSUs, assuming the maximum bonus pool eligible ultimately is earned and based on a stock price of $9.31. The Board awards restricted shares to non-employee Board members on an annual basis as part of such Board members’ annual compensation and to newly elected non-employee Board members in accordance with the Non-Employee Director Compensation Program. The time-based awards are generally issued in the second quarter, in conjunction with the director’s election to the Board and the individual share awards vest in equal annual installments over the applicable service vesting period, which is three years. Additionally, certain non-employee Board members elect to receive operating partnership performance units in lieu of their annual cash retainer fees. These awards are generally issued in the first quarter of the year subsequent to the year in which they were earned and are fully-vested upon their issuance. The Board awards time-based restricted shares or time-based operating partnership performance units to certain employees on an annual basis as part of the employees’ annual compensation. These time-based awards are generally issued in the first or fourth quarter and vest in equal annual installments over the applicable service vesting period, which is generally three years. Additionally, certain awards are subject to a mandatory holding period upon vesting if the grantee is an executive officer. Lastly, certain employees elect to receive operating partnership performance units in lieu of their annual cash bonus. These awards are generally issued in the first or fourth quarter and are fully-vested upon their issuance. For the years 2020 through 2023, the compensation committee of the Board (“Compensation Committee”) adopted an annual Hudson Pacific Properties, Inc. Performance Stock Unit Plan (“PSU Plan”). Under the PSU Plan, the Compensation Committee awards restricted stock units or performance units in the operating partnership to certain employees. Annual PSU Plan grants made prior to 2023 consist of two portions. A portion of each award, the Relative Total Shareholder Return (“TSR”) Performance Unit, is eligible to vest based on the achievement of the Company’s TSR compared to the TSR of the FTSE NAREIT All Equity REITs index over a three-year performance period, with the vesting percentage subject to certain percentage targets. The remaining portion of each award, the Operational Performance Unit, becomes eligible to vest based on the achievement of operational performance metrics over a one-year performance period and vests over three years. The number of Operational Performance Units that becomes eligible to vest based on the achievement of operational performance metrics may be adjusted based on the Company’s achievement of absolute TSR goals over a three-year performance period by applying the applicable vesting percentages. The 2023 PSU Plan grants contain only an Operational Performance Unit, which is eligible to vest based on the achievement of operational metrics over a one-year performance period and vests over three years. The number of Operational Performance Units that becomes eligible to vest based on the achievement of operational performance metrics may be adjusted based on the Company’s achievement of the Company’s TSR compared to the TSR of the FTSE NAREIT All Equity REITs index over a three-year performance period. Certain of the awards granted under the PSU Plan are subject to a two-year post-vesting restriction period, during which any awards earned may not be sold or transferred. Time-Based Awards The stock-based compensation is valued based on the quoted closing price of the Company’s common stock on the applicable grant date and discounted for any hold restrictions in accordance with ASC 718. The stock-based compensation is amortized through the final vesting period on a straight-line basis. Forfeitures of awards are recognized as they occur. Performance-Based Awards PSU Plan The following table outlines key components of the 2023 PSU Plan:
| Operational Performance Unit |  |
Maximum bonus pool, in millions | $15.0 |  |
Performance period | 1/1/2023 to 12/31/2023 |  |
The following table outlines key components of the 2022 PSU Plan:
| Operational Performance Unit |  | Relative TSR Performance Unit
Maximum bonus pool, in millions | $15.0 |  | $15.0
Performance period | 1/1/2022 to 12/31/2022 |  | 1/1/2022 to 12/31/2024
The following table outlines key components of the 2021 PSU Plan:
| Operational Performance Unit |  | Relative TSR Performance Unit
Maximum bonus pool, in millions | $16.7 |  | $16.7
Performance period | 1/1/2021 to 12/31/2021 |  | 1/1/2021 to 12/31/2023
The stock-based compensation cost of the 2023, 2022 and 2021 PSU Plans was valued in accordance with ASC 718 utilizing a Monte Carlo simulation to estimate the probability of the performance vesting conditions being satisfied. The stock-based compensation is amortized through the final vesting period under a graded vesting expense recognition schedule. Forfeitures of awards are recognized as they occur. The per unit fair value of the 2023, 2022 and 2021 PSU awards granted was estimated on the date of grant using the following assumptions in the Monte Carlo simulation:
| 2023 | 2022 | 2021
Expected price volatility for the Company | 40.00% | 43.00% | 41.00%
Expected price volatility for the particular REIT index | 27.00% | 33.00% | 31.00%
Risk-free rate | 3.44% | 1.72% | 0.17%
Dividend yield | 5.40% | 3.60% | 3.50%
Summary of Unvested Share Activity The following table summarizes the activity and status of all unvested stock awards:
|  | 2023 |  | 2022 |  | 2021
|  | Shares |  | Weighted-Average Grant-Date Fair Value |  | Shares |  | Weighted-Average Grant-Date Fair Value |  | Shares |  | Weighted-Average Grant-Date Fair Value
Unvested at January 1 |  | 309,837 |  |  | $ | 23.14 |  |  | 507,534 |  |  | $ | 25.17 |  |  | 442,645 |  |  | $ | 27.44 |
Granted |  | 618,316 |  |  | 7.54 |  |  | 50,915 |  |  | 20.15 |  |  | 276,800 |  |  | 23.90 |
Vested |  | (35,888) |  |  | 7.83 |  |  | (234,741) |  |  | 26.81 |  |  | (203,329) |  |  | 28.33 |
Canceled |  | (198,430) |  |  | 23.61 |  |  | (13,871) |  |  | 24.42 |  |  | (8,582) |  |  | 26.21 |
Unvested at December 31 |  | 693,835 |  |  | $ | 9.89 |  |  | 309,837 |  |  | $ | 23.14 |  |  | 507,534 |  |  | $ | 25.17 |
The following table summarizes the activity and status of all unvested time-based restricted operating partnership performance units:
| 2023 |  | 2022 |  | 2021
| Units |  | Weighted-Average Grant-Date Fair Value |  | Units |  | Weighted-Average Grant-Date Fair Value |  | Units |  | Weighted-Average Grant-Date Fair Value
Unvested at January 1 | 357,656 |  |  | $ | 22.53 |  |  | 681,394 |  |  | $ | 24.91 |  |  | 771,432 |  |  | $ | 27.08 |
Granted | 1,422,893 |  |  | 8.16 |  |  | 25,206 |  |  | 11.98 |  |  | 355,551 |  |  | 24.68 |
Vested | (508,650) |  |  | 14.11 |  |  | (348,944) |  |  | 26.42 |  |  | (349,804) |  |  | 29.85 |
Canceled | — |  |  | — |  |  | — |  |  | — |  |  | (95,785) |  |  | 23.49 |
Unvested at December 31 | 1,271,899 |  |  | $ | 9.82 |  |  | 357,656 |  |  | $ | 22.53 |  |  | 681,394 |  |  | $ | 24.91 |
Share-based Compensation Recorded The following table presents the classification and amount recognized for stock-based compensation related to the Company’s awards:
| For the Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Expensed stock compensation(1) | $ | 23,863 |  |  | $ | 24,296 |  |  | $ | 21,163 |
Capitalized stock compensation(2) | 3,021 |  |  | 3,354 |  |  | 3,524 |
Total stock compensation(3) | $ | 26,884 |  |  | $ | 27,650 |  |  | $ | 24,687 |
_________________ 1.Amounts are recorded in general and administrative expenses, office operating expenses and studio operating expenses on the Consolidated Statements of Operations. 2.Amounts are recorded in investment in real estate, at cost on the Consolidated Balance Sheets. 3.Amounts are recorded in additional paid-in capital and non-controlling interest—units in the operating partnership on the Consolidated Balance Sheets. As of December 31, 2023, total unrecognized compensation cost related to unvested share-based payments was $24.9 million. It is expected to be recognized over a weighted-average period of two years.

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