Stock Incentive Plans

12 Months Ended

Dec. 31, 2021

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 4,409,225 shares as of December 31, 2021. 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 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, 2019 to December 31, 2021 is as follows:


	Number of Shares	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2019	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
Granted	1,177,537	9.37
Forfeited	(47,025)	9.21
Vested	(244,490)	9.94
Unvested balance at December 31, 2021	1,443,295	$	9.46

In March 2021, our board of directors granted 691,490 restricted shares of common stock as special retention awards (the “Special Retention Awards”) to certain executives, including our named executive officers. The Special Retention Awards generally vest over a five-year period from the date of their grant based on continued employment. Vesting occurs on the following schedule:

•0% for the first three years,

•25% on the third anniversary of the grant,

•25% on the fourth anniversary of the grant, and

•50% on the fifth anniversary of the grant.

The remaining share awards are expected to vest as follows: 268,882 during 2022, 306,183 during 2023, 381,527 during 2024, 162,234 during 2025, and 324,469 during 2026. As of December 31, 2021, the unrecognized compensation cost related to restricted stock awards was $10.0 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 37 months. For the years ended December 31, 2021, 2020, and 2019, we recorded $3.9 million, $2.6 million and $2.6 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 achievement of certain performance targets. Under this framework, 50% of the PSUs are based on relative total stockholder return and 50% on 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 number of PSUs earned is limited to 100% of the PSU Target Award if the Company's total stockholder return is negative for the three-year performance period. 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%. For the PSUs granted on March 2, 2021, the improvement in market share for each of our hotels will be measured over a two-year performance period starting on January 1, 2022, which is when we anticipate most major hotels will be open within our competitive sets.

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
March 2, 2021	68.8	%	0.26	%	$	9.28

A summary of our PSUs from January 1, 2019 to December 31, 2021 is as follows:


	Number of Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2019	781,923	$	11.19
Granted	296,050	10.14
Additional units from dividends	40,662	10
Vested (1)	(251,375)	8.8
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 (2)	(245,937)	11.00

Unvested balance at December 31, 2020	912,186	9.63
Granted	347,981	9.34

Vested (3)	(290,927)	9.90

Unvested balance at December 31, 2021	969,240	$	9.45

______________________

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

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

(3)The number of shares of common stock earned for the PSUs vested in 2021 was equal to 100.00% of the PSU Target Award.

The remaining unvested target units are expected to vest as follows: 269,224 during 2022, 352,035 during 2023, and 347,981 in 2024. As of December 31, 2021, the unrecognized compensation cost related to the PSUs was $3.7 million and is expected to be recognized on a straight-line basis over a period of 21 months. For the years ended December 31, 2021, 2020, and 2019, we recorded approximately $3.0 million, $2.7 million, and $2.4 million, respectively, of compensation expense related to the PSUs.

LTIP Units

LTIP units are designed to offer executives a long-term incentive comparable to restricted stock, while potentially 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, 2021 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

Vested	(108,421)	10.38
Unvested balance at December 31, 2021	135,388	$	10.22

The remaining unvested LTIP units are expected to vest as follows: 108,422 during 2022 and 26,966 during 2023. As of December 31, 2021, the unrecognized compensation cost related to LTIP unit awards was $0.4 million and the weighted-

average period over which the unrecognized compensation expense will be recorded is approximately 13 months. For the years ended December 31, 2021, 2020, and 2019, we recorded $1.1 million, $1.1 million, and $0.7 million, respectively, of compensation expense related to LTIP unit awards.