Stock Incentive Plans

On February 17, 2016, our board of directors adopted the 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan was approved by our stockholders on May 3, 2016 and replaced the 2004 Stock Option and Incentive Plan, as amended (the "2004 Plan"). We no longer make share grants and issuances under the 2004 Plan, although awards previously made under the 2004 Plan that are outstanding will remain in effect in accordance with the terms of that plan and the applicable award agreements. Under the 2016 Plan, we are authorized to issue up to 6,082,664 shares of our common stock. We have issued or committed to issue 67,847 shares under the 2016 Plan as of December 31, 2016. In addition to these shares, additional shares of common stock could be issued in connection with the performance stock unit awards as further described below.

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 consolidated statements of operations. A summary of our restricted stock awards from January 1, 2014 to December 31, 2016 is as follows:



	Number of Shares		Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2014	583,021		$	9.80
Granted	249,311		12.39
Forfeited	(537	)	9.32
Vested	(317,376	)	10.19
Unvested balance at December 31, 2014	514,419		10.82
Granted	216,159		14.48
Forfeited	(183	)	9.08
Vested	(255,828	)	10.39
Unvested balance at December 31, 2015	474,567		12.72
Granted	461,281		8.94
Forfeited	(126,610	)	10.08
Vested	(241,698	)	11.83
Unvested balance at December 31, 2016	567,540		$	10.62

The remaining share awards are expected to vest as follows: 244,411 during 2017, 186,481 during 2018, 125,424 during 2019 and 11,224 during 2020. As of December 31, 2016, the unrecognized compensation cost related to restricted stock awards was $3.7 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 23 months. For the years ended December 31, 2016, 2015, and 2014, we recorded $2.8 million, $2.8 million and $3.2 million, respectively, of compensation expense related to restricted stock awards.

Performance Stock Units

Performance stock units ("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”). For the PSUs issued in 2014 and 2015 and vesting in 2017 and 2018, respectively, 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. For PSUs issued in 2016 and vesting in 2019, the calculation of total stockholder return relative to the total stockholder return of a peer group over a three-year performance period remained in effect for 75% of the number of PSUs to be earned in the performance period. The remaining 25% is determined based on achieving improvement in market share for each of our hotels over the three-year performance period.

We measure compensation expense for the PSUs based upon the fair market value of the award at the grant date. Compensation expense is recognized on a straight-line basis over the three-year performance period and is included in corporate expenses in the accompanying condensed consolidated statements of operations. The grant date fair value of the portion of the PSUs based on our relative total stockholder return is determined using a Monte Carlo simulation performed by a third-party valuation firm. The grant date fair value of the portion of the PSUs based on improvement in market share for each of our hotels is the closing price of our common stock on the grant date. The determination of the grant-date fair values of the awards granted 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
March 3, 2014	33.5	%	0.66	%	$	12.77
May 15, 2014	33.1	%	0.80	%	$	9.88
February 27, 2015	22.9	%	1.01	%	$	12.13
February 26, 2016	24.3	%	0.93	%	$	8.42

A summary of our PSUs from January 1, 2014 to December 31, 2016 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	12,309		12.01
Unvested balance at December 31, 2014	436,170		10.95
Granted	218,467		12.13
Additional units from dividends	21,722		13.51
Unvested balance at December 31, 2015	676,359		11.41
Granted	310,398		8.54
Additional units from dividends	38,324		9.37
Vested (1)	(242,096	)	9.85
Forfeited	(96,301	)	10.74
Unvested balance at December 31, 2016	686,684		$	10.65

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(1)	The number of shares of common stock earned for the PSUs vested in 2016 was equal to 89.5% of the PSU Target Award.

The remaining unvested target units are expected to vest as follows: 198,178 during 2017, 206,778 during 2018 and 281,728 during 2019. There will be no payout of shares of our common stock for target units vesting in 2017, as our total stockholder return fell below the 30th percentile of the total stockholder returns of the peer group over the three-year performance period. As of December 31, 2016, the unrecognized compensation cost related to the PSUs was $2.7 million and is expected to be recognized on a straight-line basis over a period of 26 months. For the years ended December 31, 2016, 2015, and 2014, we recorded approximately $2.0 million, $2.3 million, and $1.4 million, respectively, of compensation expense related to the PSUs.

The compensation expense recorded for the year ended December 31, 2016 includes the reversal of $0.4 million of previously recognized compensation expense resulting from the forfeiture of PSUs related to the resignation of our former Executive Vice President and Chief Operating Officer.