STOCK BASED AND OTHER COMPENSATION PLANS

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

STOCK BASED AND OTHER COMPENSATION PLANS

13. STOCK BASED AND OTHER COMPENSATION PLANS

The following table summarizes the impact on the consolidated statement of operations of the various stock based compensation plans described in Note 14, Stock Based and Other Compensation Plans included within the Company’s Annual Report ($ in thousands):



	Three Months Ended March 31,
	2020			2019

Stock Based Compensation Expense	$	14,026		$	11,292
Phantom Equity Investment Plan	2,138			802
Stock Options Exercised	(270		)	—
Bonus Expense	30			6,785
Total	$	15,924		$	18,879

Summary of Stock and Shares/Options Nonvested/Outstanding

A summary of the grants is presented below:



	Three Months Ended March 31,
	2020			2019
	Number of Shares/Options	Weighted Average Fair Value Per Share		Number of Shares	Weighted Average Fair Value Per Share

Grants - Class A Common Stock	1,466,337	$	18.72	1,541,001	$	17.56
Grants - Class A Common Stock dividends	—	—		11,113	16.61
Stock Options	—	—		12,073	—

The table below presents the number of unvested shares and outstanding stock options at March 31, 2020 and changes during 2020 of the Class A Common stock and Stock Options of Ladder Capital Corp granted under the 2014 Omnibus Incentive Plan:



	Restricted Stock		Stock Options

Nonvested/Outstanding at December 31, 2019	1,436,683		994,208
Granted	1,466,337		—
Exercised			(83,845	)
Vested	(1,161,118	)
Forfeited	(5,803	)	—
Expired			—
Nonvested/Outstanding at March 31, 2020	1,736,099		910,363

Exercisable at March 31, 2020			910,363

At March 31, 2020 there was $24.7 million of total unrecognized compensation cost related to certain share-based compensation awards that is expected to be recognized over a period of up to 29.5 months, with a weighted-average remaining vesting period of 35 months.

2014 Omnibus Incentive Plan

In connection with the IPO Transactions, the 2014 Ladder Capital Corp Omnibus Incentive Equity Plan (the “2014 Omnibus Incentive Plan”) was adopted by the board of directors on February 11, 2014, and provides certain members of management, employees and directors of the Company or its affiliates with additional incentives including grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards.

Annual Incentive Awards Granted in 2020 with Respect to 2019 Performance

For 2019 performance, certain employees received stock-based incentive equity. Fair value for all restricted and unrestricted stock grants was calculated using the closing stock price on the grant date. Compensation expense for unrestricted stock grants will be expensed immediately. The Company has elected to recognize the compensation expense related to the time-based vesting of the annual restricted stock awards for the entire award on a straight-line basis over the requisite service period for the entire award. Restricted stock subject to performance criteria is eligible to vest in three equal installments upon the compensation committee’s confirmation that the Company achieves a return on equity, based on core earnings divided by the Company’s average book value of equity, equal to or greater than 8% for such year (the “Performance Target”) for the years ended December 31, 2020, 2021 and 2022, respectively. If the Company misses the Performance Target during either the first or second calendar year but meets the Performance Target for a subsequent year during the three year performance period and the Company’s return on equity for such subsequent year and any years for which it missed its Performance Target equals or exceeds the compounded return on equity of 8%, based on core earnings divided by the Company’s average book value of equity, the performance-vesting restricted stock which failed to vest because the Company previously missed its Performance Target will vest subject to continued employment on the applicable vesting date (the “Catch-Up Provision”). Accruals of compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Therefore, compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved.

On February 18, 2020, in connection with 2019 compensation, annual stock and restricted stock awards were granted to management grantees, other than Ms. Porcella, with an aggregate fair value of $12.5 million which represents 667,201 shares of restricted Class A common stock. The grant to Ms. Porcella is subject to the same time-based and performance-based vesting described below for non-management grantees and her shares are included in that total. The grant to Mr. Harris, and 50% of the grants to Mr. Fox, Ms. McCormack and Mr. Perelman, were unrestricted. The other 50% of incentive equity granted to Mr. Fox, Ms. McCormack and Mr. Perelman is restricted stock subject to performance criteria as described above.

On February 18, 2020, in connection with 2019 compensation, stock awards were granted to Ms. Porcella and non-management employees (“Non-Management Grantees”) with an aggregate value of $14.5 million which represents 775,100 shares of mostly restricted Class A common stock. Fifty percent of most stock awards is subject to time-based vesting criteria, and the remaining 50% of these stock awards is subject to attainment of the Performance Target for the applicable years. The time-vesting restricted stock will vest in three installments on February 18 of each of 2021, 2022 and 2023 subject to continued employment on the applicable vesting dates. The performance-vesting restricted stock will vest in three equal installments upon the compensation committee’s confirmation that the Company achieves the Performance Target for the years ended December 31, 2020, 2021 and 2022, respectively. The Catch-Up Provision applies to the performance vesting portion of this award. The compensation expense related to the performance-based restricted stock granted on February 18, 2020 shall be recognized 1/3 for the period February 18, 2020 through February 18, 2021, 1/3 for the period February 19, 2021 through February 18, 2022 and 1/3 for the period February 19, 2022 through February 18, 2023.

In the event Ms. Porcella or a Non-Management Grantee is terminated by the Company without cause within six months of certain changes in control, all unvested time shares shall vest on the termination date and all unvested performance shares shall remain outstanding and be eligible to vest (and be forfeited) in accordance with the performance conditions.

Upon a change in control (as defined in the respective award agreements), restricted stock awards to Mr. Fox, Ms. McCormack and Mr. Perelman will become fully vested if (1) such management grantee continues to be employed through the closing of the change in control or (2) after the signing of definitive documentation related to the change in control, but prior to its closing, such management grantee’s employment is terminated without cause or due to death or disability or the management grantee resigns for Good Reason. The compensation committee retains the right, in its sole discretion, to provide for the accelerated vesting (in whole or in part) of the restricted stock and option awards granted.

2020 Restricted Stock Awards

On February 18, 2020, certain members of the board of directors each received Annual Restricted Stock Awards with a grant date fair value of $0.4 million, representing 24,036 shares of restricted Class A common stock, which will vest in full on the first anniversary of the date of grant, subject to continued service on the board of directors. Compensation expense related to the time-based vesting criteria of the award shall be recognized on a straight-line basis over the one year vesting period. On March 26, 2020, 4,006 shares of restricted Class A common stock were forfeited when a member resigned from the board of directors.

Bonus Payments

On February 6, 2020, the board of directors of Ladder Capital Corp approved the 2019 bonus payments to employees, including officers, totaling $55.2 million, which included $27.0 million of equity based compensation. The bonuses were accrued for as of December 31, 2019 and paid to employees in full on February 14, 2020. On February 7, 2019, the board of directors of Ladder Capital Corp approved the 2018 bonus payments to employees, including officers, totaling $61.4 million, which included $26.6 million of equity based compensation. The bonuses were accrued for as of December 31, 2018 and paid to employees in full on February 15, 2019. During the three months ended March 31, 2020, the Company recorded no compensation expense related to bonuses due to the significant market disruption caused by the COVID-19 pandemic and the substantial economic uncertainty present in the commercial real estate market and overall economy. During the three months ended March 31, 2019, the Company recorded compensation expense of $6.8 million related to bonuses.