Stock Incentive Plans

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

We are authorized to issue up to 6,082,664 shares of our common stock under our 2016 Equity Incentive Plan (the “2016 Plan”), of which we have issued or committed to issue 3,054,825 shares as of December 31, 2020. 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 three-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 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, 2018 to December 31, 2020 is as follows:


	Number of Shares	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2018	630,962	$	10.66
Granted	349,091	10.19
Forfeited	(51,061)	10.44
Vested	(287,148)	11.02
Unvested balance at December 31, 2018	641,844	10.25
Granted	162,806	10.38
Forfeited	(21,534)	10.37
Vested	(310,117)	10.08
Unvested balance at December 31, 2019	472,999	10.40
Granted	344,997	9.39
Forfeited	(22,857)	7.73
Vested	(237,866)	10.54
Unvested balance at December 31, 2020	557,273	$	9.83

The remaining share awards are expected to vest as follows: 244,490 during 2021, 139,307 during 2022, and 173,476 during 2023. As of December 31, 2020, the unrecognized compensation cost related to restricted stock awards was $3.3 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 24 months. For the years ended December 31, 2020, 2019, and 2018, we recorded $2.6 million, $2.6 million and $3.1 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”). The actual number of shares of common stock issued to each executive officer is based on the Company’s performance as measured by two metrics: (1) relative total stockholder return and (2) hotel market share improvement.

The achievement of certain levels of total stockholder return relative to the total stockholder return of a peer group of publicly-traded lodging REITs is measured over a three-year performance period. There is 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 improvement in market share for each of our hotels is measured over a three-year performance period based on a report prepared for each hotel by STR Global, a well-recognized benchmarking service for the hospitality industry. There is no payout of shares of our common stock if the percentage of our hotels with market share improvements is less than 30%. 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 the percentage of our hotels with market share improvements is greater than or equal to 75%.

The ratio of total PSUs issued to executive officers is divided between the two metrics as follows:


Grant Year	Vesting Year	Total Shareholder Return			Hotel Market Share
2015	2018	100	%		—	%
2016	2019	75	%		25	%
2017	2020	50	%		50	%
2018	2021	50	%	(1)	50	%
2019	2022	50	%	(1)	50	%
2020	2023	50	%	(1)	50	%

______________________

(1)The number of PSUs to be earned is limited to target if the Company's total stockholder return is negative for the performance period.

We measure compensation expense for the PSUs based upon the fair 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 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 outstanding awards based on our relative total stockholder return included the following assumptions:


Award Grant Date	Volatility		Risk-Free Rate		Fair Value at Grant Date
March 2, 2018	26.9	%	2.40	%	$	9.52
April 2, 2018	26.9	%	2.37	%	$	9.00
March 1, 2019	24.3	%	2.54	%	$	9.68
February 25, 2020	21.4	%	1.16	%	$	8.52

A summary of our PSUs from January 1, 2018 to December 31, 2020 is as follows:


	Number of Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2018	785,797	$	10.42
Granted	293,111	9.82
Additional units from dividends	35,197	11.24
Vested (1)	(218,514)	11.98
Forfeited	(113,668)	9.86
Unvested balance at December 31, 2018	781,923	11.19
Granted	296,050	10.14
Additional units from dividends	40,662	10
Vested (2)	(251,375)	8.80
Forfeited	(70,728)	9.93
Unvested balance at December 31, 2019	796,532	11.16
Granted	352,035	9.02
Additional units from dividends	9,556	10.42
Vested (3)	(245,937)	11.00

Unvested balance at December 31, 2020	912,186	$	9.63

______________________

(1)The number of shares of common stock earned for the PSUs vested in 2018 was equal to 51.75% of the PSU Target Award

(2)The number of shares of common stock earned for the PSUs vested in 2019 was equal to 74.33% of the PSU Target Award.

(3)The number of shares of common stock earned for the PSUs vested in 2020 was equal to 123.07% of the PSU Target Award.

The remaining unvested target units are expected to vest as follows: 290,927 during 2021, 269,224 during 2022, and 352,035 in 2023. As of December 31, 2020, 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 period of 22 months. For the years ended December 31, 2020, 2019, and 2018, we recorded approximately $2.7 million, $2.4 million, and $1.9 million, respectively, of compensation expense related to the PSUs. The compensation expense recorded for the year ended December 31, 2018 includes the reversal of $1.0 million of previously recognized compensation expense resulting from the forfeiture of PSUs by our former Executive Vice President and Chief Financial Officer.

LTIP Units

LTIP units are designed to offer executives a long-term incentive comparable to restricted stock, while allowing them a more favorable income tax treatment. Each LTIP unit awarded is deemed equivalent to an award of one share of common stock reserved under the 2016 Plan. At the time of award, LTIP units do not have full economic parity with common OP units, but can achieve such parity over time upon the occurrence of specified events in accordance with partnership tax rules.

A summary of our LTIP units from January 1, 2019 to December 31, 2020 is as follows:


	Number of Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2019	—	$	—
Granted	281,925	10.65
Forfeited	(37.559)	10.65
Unvested balance at December 31, 2019	244,366	10.65
Granted	80,898	9.58
Vested	(81,455)	10.65

Unvested balance at December 31, 2020	243,809	$	10.29

The remaining unvested LTIP units are expected to vest as follows: 108,421 during 2021, 108,422 during 2022, and 26,966 during 2023. As of December 31, 2020, of the total LTIP units granted and unforfeited, 81,455 LTIP units have vested. As of December 31, 2020, the unrecognized compensation cost related to LTIP unit awards was $1.6 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 18 months. For the years ended December 31, 2020 and 2019, we recorded $1.1 million and $0.7 million, respectively, of compensation expense related to LTIP unit awards. We did not record any compensation expense related to LTIP unit awards during 2018.