Stock Incentive Plans

We are authorized to issue up to 8 million 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 3,691,272 shares as of June 30, 2014. 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. On May 15, 2014, we issued (i) 19,671 shares of common stock and (ii) 19,671 deferred stock units to our board of directors having an aggregate value of $465,000, based on the closing stock price for our common stock on such day.

Restricted Stock Awards

Restricted stock awards issued to our officers and employees generally 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 condensed consolidated statements of operations. A summary of our restricted stock awards from January 1, 2014 to June 30, 2014 is as follows:



	Number of Shares		Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2014	583,021		$	9.80
Granted	246,621		12.37
Vested	(270,440	)	10.10
Unvested balance at June 30, 2014	559,202		$	10.79

The remaining share awards are expected to vest as follows: 280,532 during 2015, 184,993 during 2016, 87,331 during 2017, and 6,346 during 2018. As of June 30, 2014, the unrecognized compensation cost related to restricted stock awards was $5.1 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 26 months. We recorded $0.7 million of compensation expense related to restricted stock awards for each of the three months ended June 30, 2014 and June 30, 2013. We recorded $1.4 million and $2.0 million, respectively, of compensation expenses related to restricted stock awards for each of the six months ended June 30, 2014 and June 30, 2013. The compensation expense for the three and six months ended June 30, 2013 includes $0.7 million related to the accelerated vesting of awards in connection with the departure of our former Chief Operating Officer in 2013.

Market Stock Units

From 2010 to 2012, we awarded our executive officers market stock units (“MSUs”). MSUs are restricted stock units that vest three years from the date of grant. As of June 30, 2014, there are 96,755 MSUs outstanding, which represent awards granted in 2012. The unrecognized compensation cost related to the MSUs was $0.2 million as of June 30, 2014 and is expected to be recognized on a straight-line basis over a weighted average period of 8 months. For the three months ended June 30, 2014 and June 30, 2013, we recorded approximately $0.1 million of compensation expense related to the MSUs. For the six months ended June 30, 2014 and June 30, 2013, we recorded approximately $0.2 million and $0.5 million, respectively, of compensation expense related to the MSUs.

Performance Stock Units

Beginning in 2013, we have 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:



Award Grant Date	Volatility		Risk-Free Rate		Fair Value at Grant Date
March 3, 2013	39.2	%	0.36	%	$	9.55
May 15, 2013	37.9	%	0.40	%	$	10.41
March 3, 2014	33.5	%	0.66	%	$	12.77
May 15, 2014	33.1	%	0.80	%	$	9.88

The simulations also considered the share performance of the Company and the peer group. A summary of our PSUs from January 1, 2014 to June 30, 2014 is as follows:



	Number of Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2014	223,176	$	9.66
Granted	200,685	12.33
Additional units from dividends	5,095	11.67
Unvested balance at June 30, 2014	428,956	$	10.93

As of June 30, 2014, the unrecognized compensation cost related to the PSUs was $3.4 million and is expected to be recognized on a straight-line basis over a weighted average period of 28 months. For the three months ended June 30, 2014 and June 30, 2013, we recorded approximately $0.4 million and $0.2 million, respectively, of compensation expense related to the PSUs. For the six months ended June 30, 2014 and June 30, 2013, we recorded approximately $0.6 million and $0.2 million, respectively, of compensation expense related to the PSUs.