Stock Incentive Plans

We are authorized to issue up to 8,000,000 shares of our common stock under our 2004 Stock Option and Incentive Plan, as amended (the “Incentive Plan”), of which we have issued or committed to issue 3,480,779 shares as of December 31, 2013. In addition to these shares, additional shares of common stock could be issued in connection with the market stock unit awards and performance stock unit awards as further described below.

Restricted Stock Awards

Restricted stock awards issued to our officers and employees vest over a 3-year period from the date of the grant based on continued employment. We measure compensation expense for the restricted stock awards based upon the fair market value of our common stock at the date of grant. Compensation expense is recognized on a straight-line basis over the vesting period and is included in corporate expenses in the accompanying consolidated statements of operations. A summary of our restricted stock awards from January 1, 2011 to December 31, 2013 is as follows:



	Number of Shares		Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2011	1,548,698		$	5.49
Granted	308,486		11.54
Additional shares from dividends	18,302		9.23
Forfeited	(17,560	)	7.02
Vested	(847,799	)	6.01
Unvested balance at December 31, 2011	1,010,127		6.97
Granted	365,599		9.84
Additional shares from dividends	8,507		10.07
Forfeited	(11,563	)	10.05
Vested	(696,559	)	5.39
Unvested balance at December 31, 2012	676,111		10.10
Granted	323,526		9.33
Additional shares from dividends	1,040		9.30
Forfeited	(16,934	)	9.65
Vested	(400,722	)	9.94
Unvested balance at December 31, 2013	583,021		$	9.80

The remaining share awards are expected to vest as follows: 270,440 during 2014, 200,440 during 2015, 104,901 during 2016, and 7,240 during 2017. As of December 31, 2013, the unrecognized compensation cost related to restricted stock awards was $3.4 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 22 months. For the years ended December 31, 2013, 2012, and 2011 we recorded $3.4 million, $3.3 million and $3.6 million, respectively, of compensation expense related to restricted stock awards. The compensation expense for the year ended December 31, 2013 includes $0.7 million related to the accelerated vesting of awards in connection with the departure of our former President and Chief Operating Officer on May 1, 2013.

Market Stock Units

We have awarded our executive officers market stock units (“MSUs”). MSUs are restricted stock units that vest three years from the date of grant. Each executive officer is granted a target number of MSUs (the “Target Award”). The actual number of shares of common stock issued to each executive officer at the vesting date is equal to the Target Award plus an additional number of shares of common stock to reflect dividends that would have been paid during the Performance Period on the Target Award multiplied by the percentage of total stockholder return over the Performance Period. The total stockholder return is based on the 30-trading day average closing price of our common stock calculated on the vesting date plus dividends paid and the 30-trading day average closing price of our common stock on the date of grant. There will be no payout of shares of our common stock if the total stockholder return percentage on the vesting date is less than 50% of the target return. The maximum payout to an executive officer under an MSU award is equal to 150% of the Target Award. The fair values of the MSU awards are determined using a Monte Carlo simulation performed by a third-party valuation firm. The determination of the grant-date fair values of the awards included the following assumptions:



	Volatility		Risk-Free Rate		Fair Value at Grant Date
March 2011 Award	64.0	%	1.20	%	$	13.43
March 2012 Award	62.0	%	0.43	%	$	11.14

A summary of our MSUs from January 1, 2011 to December 31, 2013 is shown in the following table. We have not issued MSU awards since 2012.



	Number of Units		Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2011	84,854		$	9.87
Granted	72,599		13.43
Additional units from dividends	4,122		9.23
Unvested balance at December 31, 2011	161,575		11.45
Granted	89,990		11.14
Additional units from dividends	7,277		10.18
Unvested balance at December 31, 2012	258,842		11.31
Additional units from dividends	6,452		10.00
Vested	(90,620	)	9.86
Unvested balance at December 31, 2013	174,674		$	12.01

As of December 31, 2013, the unrecognized compensation cost related to the MSUs was $0.3 million and is expected to be recognized on a straight-line basis over a weighted average period of 13 months. For the years ended December 31, 2013, 2012 and 2011 we recorded $0.8 million, $0.9 million and $0.6 million, respectively, of compensation expense related to MSUs. The compensation expense for the year ended December 31, 2013 includes $0.2 million related to the accelerated vesting of awards in connection with the departure of our former President and Chief Operating Officer on May 1, 2013.

Performance Stock Units

Beginning in 2013, we awarded our executive officers performance stock units (“PSUs”). PSUs are restricted stock units that vest three years from the date of grant. Each executive officer is granted a target number of PSUs (the “PSU Target Award”). The actual number of shares of common stock issued to each executive officer is subject to the achievement of certain levels of total stockholder return relative to the total stockholder return of a peer group of publicly-traded lodging REITs over a three-year performance period. There will be no payout of shares of our common stock if our total stockholder return falls below the 30th percentile of the total stockholder returns of the peer group. The maximum number of shares of common stock issued to an executive officer is equal to 150% of the PSU Target Award and is earned if our total stockholder return is equal to or greater than the 75th percentile of the total stockholder returns of the peer group.

The fair values of the PSU awards are determined using a Monte Carlo simulation performed by a third-party valuation firm. The determination of the grant-date fair values of the awards included the following assumptions:



	Volatility		Risk-Free Rate		Fair Value at Grant Date
March 2013 Award	39.2	%	0.36	%	$	9.55
May 2013 Award	37.9	%	0.40	%	$	10.41

The simulations also considered the share performance of the Company and the peer group. A summary of our PSUs from January 1, 2013 to December 31, 2013 is as follows:



	Number of Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2013	—	$	—
Granted	217,949	9.64
Additional units from dividends	5,227	10.37
Vested	—	—
Unvested balance at December 31, 2013	223,176	$	9.66

As of December 31, 2013, the unrecognized compensation cost related to the PSUs was $1.5 million and is expected to be recognized on a straight-line basis over a period of 26 months. For the year ended December 31, 2013, we recorded approximately $0.6 million of compensation expense related to the PSUs.