Share-Based Payments and Employee Benefits

12 Months Ended

Dec. 31, 2025

Share-Based Payments and Employee Benefits

Share-Based Payments and Employee Benefits

15. Share-Based Payments and Employee Benefits

JBG SMITH 2017 Omnibus Share Plan

On June 23, 2017, our Board of Trustees adopted the JBG SMITH 2017 Omnibus Share Plan (the "Plan"), effective as of July 17, 2017, and authorized the reservation of 10.3 million common shares pursuant to the Plan. In April 2021, our shareholders approved an amendment to the Plan to increase the common shares reserved for issuance under the Plan by 8.0 million common shares, and in April 2024, our shareholders approved an amendment to the Plan to increase the common shares reserved for issuance under the Plan by 7.5 million common shares to 25.8 million total common shares. As of December 31, 2025, there were 8.0 million common shares available for issuance under the Plan.

Time-Based LTIP Units and LTIP Units

During each of the three years in the period ended December 31, 2025, we granted to certain employees 739,391, 974,140 and 979,138 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") and a weighted average grant-date fair value of $13.59, $15.93 and $17.56 per unit that primarily vest ratably over four years subject to continued employment. The Time-Based LTIP Units granted in 2025 require a three-year post vesting hold for named executive officers. Compensation expense for these units is primarily being recognized over a four-year period.

During each of the three years in the period ended December 31, 2025, we granted 162,301, 209,047 and 280,342 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash bonuses related to prior service as LTIP Units. The LTIP Units had a grant-date fair value of $12.77, $14.27 and $15.90 per unit. Compensation expense totaling $2.1 million, $3.0 million and $4.5 million for these LTIP Units was recognized during each of the three years in the period ended December 31, 2024.

During each of the three years in the period ended December 31, 2025, as part of their annual compensation, we granted to non-employee trustees a total of 160,713, 141,422 and 155,523 fully vested LTIP Units with a grant-date fair value of $11.66, $12.40 and $11.30 per unit. The LTIP Units may not be sold while a trustee is serving on the Board of Trustees.

The aggregate grant-date fair value of the Time-Based LTIP Units and LTIP Units granted (collectively "Granted LTIPs")

for each of the three years in the period ended December 31, 2025 was $14.0 million, $20.3 million and $23.4 million. Holders of the Granted LTIPs have the right to convert vested units into OP Units, which are then subsequently exchangeable for our common shares. Granted LTIPs do not have redemption rights, but any OP Units into which units are converted are entitled to redemption rights. The Granted LTIPs were valued based on the closing common share price on the grant date, less a discount for post-grant restrictions. The discount was determined using Monte Carlo simulations based on the following significant assumptions:


	Year Ended December 31,
	2025	2024	2023
Expected volatility	30.0 % to 36.0%	33.0% to 35.0%	26.0% to 31.0%
Risk-free interest rate	3.9% to 4.4%	4.4% to 4.8%	3.4% to 4.9%
Post-grant restriction periods	2 to 7 years	2 to 6 years	2 to 6 years

The following table summarizes the Granted LTIPs activity:


		Weighted
	Unvested	Average Grant-
	Shares	Date Fair Value
Unvested as of December 31, 2024	2,257,476	$	20.99
Granted	1,062,405		13.17
Vested	(1,082,719)		17.72
Forfeited	(11,225)		16.69
Unvested as of December 31, 2025	2,225,937		18.87

The total-grant date fair value of the Granted LTIPs that vested for each of the three years in the period ended December 31, 2025 was $19.2 million, $16.1 million and $28.0 million.

Appreciation-Only LTIP Units ("AO LTIP Units")

During each of the three years in the period ended December 31, 2025, we granted to certain employees 549,292, 1.9 million and 1.7 million performance-based AO LTIP Units with a weighted average grant-date fair value of $2.69, $3.79 and $3.73 per unit. The AO LTIP Units provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the participation threshold of $16.98, $18.93 and $20.83 for each of the three years in the period ended December 31, 2025. The AO LTIP Units are subject to a total shareholder return ("TSR") modifier whereby the number of AO LTIP Units that will ultimately be earned will be increased or reduced by as much as 25%. The AO LTIP Units have a three-year performance period with 50% of the AO LTIP Units earned vesting at the end of the three-year performance period and the remaining 50% vesting on the fourth anniversary of the grant date, subject to continued employment. The AO LTIP Units granted in 2025 expire on the fifth anniversary of their grant date, and the AO LTIP Units granted in 2024 and 2023 expire on the tenth anniversary of their grant date.

The aggregate grant-date fair value of the AO LTIP Units granted for each of the three years in the period ended December 31, 2025 was $1.5 million, $7.1 million and $6.4 million, valued using Monte Carlo simulations based on the following significant assumptions:


		Year Ended December 31,
		2025		2024		2023
Expected volatility		32.0%		32.0%		30.0%
Dividend yield		3.9%		3.2%		3.2%
Risk-free interest rate		4.4%		4.1%		4.1%

The following table summarizes the AO LTIP Units activity:


				Weighted
		Unvested		Average Grant-
		Shares		Date Fair Value
Unvested as of December 31, 2024		4,969,647		$	3.96
Granted		549,292			2.69
Vested		(691,849)			4.44
Forfeited		(398,328)			4.26
Unvested as of December 31, 2025		4,428,762			3.70

The total-grant date fair value of the AO LTIP Units that vested for the year ended December 31, 2025 was $3.1 million.

Performance-Based LTIP Units

In January 2025, we issued 957,000 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") to certain employees. The Performance-Based LTIP Units vest at the end of a three-year performance period contingent on our achievement of net operating income ("NOI") targets. Achievement of NOI targets, set and measured annually by the Compensation Committee, may earn based on threshold (25%), target (50%), and maximum (100%) performance levels, based on the average of the performance achieved during the three-year performance period. While the targets are set and measured annually, the related compensation expense is expected to be recognized beginning in 2027, and the awards vest at the end of the performance period in February 2028 subject to Compensation Committee approval and continued employment. As the performance goals for subsequent years were not set at the time of issuance, the awards are not considered granted for accounting purposes and, therefore, do not have a grant-date fair value. Accordingly, the total unrecognized compensation expense related to unvested share-based payment arrangements disclosed below excludes the Performance-Based LTIP Units issued in 2025.

Performance-Based LTIP Units granted in 2021 and 2020 are performance-based equity compensation pursuant to which participants have the opportunity to earn LTIP Units based on the relative performance of the TSR of our common shares compared to the companies in the FTSE Nareit Equity Office Index, over the defined performance period beginning on the grant date, inclusive of dividends and stock price appreciation.

Our Performance-Based LTIP Units granted in July 2021 have a six-year performance and seven-year service period. Compensation expense for these units is being recognized over a seven-year period. Our Performance-Based LTIP Units granted in January 2020 had a three-year performance and a four-year service period. The Performance-Based LTIP Units did not achieve a positive absolute TSR at the end of the performance period, but achieved at least the threshold level of the relative performance criteria. Therefore, 50% of the units were forfeited, and the remaining units will vest if and when we achieve a positive TSR during the succeeding seven years, measured at the end of each quarter. Compensation expense for these units was recognized over a four-year period through January 2024.

The following table summarizes the Performance-Based LTIP Units activity, excluding the Performance-Based LTIP Units issued in 2025:


				Weighted
		Unvested		Average Grant-
		Shares		Date Fair Value
Unvested as of December 31, 2024		705,754		$	22.54
Forfeited		(26,545)			23.08
Unvested as of December 31, 2025		679,209			22.52

RSUs

During each of the three years in the period ended December 31, 2025, we granted to certain non-executive employees 98,029, 74,842 and 78,681 time-based RSUs with a weighted average grant-date fair value of $15.44, $17.21 and $18.94

per unit. Vesting requirements and compensation expense recognition for the RSUs are primarily consistent to those of the Time-Based LTIP Units granted during each of the three years in the period ended December 31, 2025.

The aggregate grant-date fair value of the RSUs granted during each of the three years in the period ended December 31, 2025 was $1.5 million, $1.3 million and $1.5 million. The RSUs were valued based on the closing common share price on the grant date.

The following table summarizes the RSUs activity:


				Weighted
		Unvested		Average Grant-
		Shares		Date Fair Value
Unvested as of December 31, 2024		105,203		$	19.30
Granted		98,029			15.44
Vested		(48,296)			19.79
Forfeited		(13,117)			17.20
Unvested as of December 31, 2025		141,819			16.66

The aggregate total-grant date fair value of the RSUs that vested for each of the three years in the period ended December 31, 2025 was $956,000, $796,000, and $1.1 million.

ESPP

The ESPP authorized the issuance of up to 2.1 million common shares. The ESPP provides eligible employees an option to contribute up to $25,000 in any calendar year, through payroll deductions, toward the purchase of our common shares at a discount of 15.0% of the closing price of a common share on relevant determination dates. As of December 31, 2025, there were 1.6 million common shares available for issuance under the ESPP.

Pursuant to the ESPP, employees purchased 57,951, 71,221 and 84,673 common shares for $801,000, $945,000 and $1.1 million during each of the three years in the period ended December 31, 2025, valued using the Black Scholes model based on the following significant assumptions:


	Year Ended December 31,
	2025	2024	2023
Expected volatility	32.0% to 37.0%	26.0% to 48.0%	30.0% to 37.0%
Dividend yield	4.1% to 4.7%	4.2% to 4.6%	2.4% to 6.3%
Risk-free interest rate	4.4%	5.3% to 5.6%	4.7% to 5.4%
Expected life	3 months	3 months	6 months

Share-Based Compensation Expense

The following table summarizes share-based compensation expense:


		Year Ended December 31,
		2025			2024			2023

		(In thousands)
Time-Based LTIP Units		$	14,628		$	16,826		$	16,822
AO LTIP Units and Performance-Based LTIP Units			4,658			8,598			10,647
LTIP Units			900			1,552			1,000
Other equity awards ⁽¹⁾			5,752			4,475			5,394
Share-based compensation expense - other			25,938			31,451			33,863
Share-based compensation related to Formation Transaction and special equity awards ⁽²⁾			—			—			549
Total share-based compensation expense			25,938			31,451			34,412
Less: amount capitalized			(1,082)			(1,927)			(2,312)
Share-based compensation expense		$	24,856		$	29,524		$	32,100

(1)	Primarily comprising compensation expense for: (i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash bonuses earned, (ii) RSUs and (iii) shares issued under our ESPP.

(2)

Included in "General and administrative expense: Share-based compensation related to Formation Transaction and special equity awards" in our consolidated statement of operations. Includes share-based compensation expense for awards issued in connection with the Formation Transaction and with our successful pursuit of Amazon.com, Inc's headquarters in National Landing all of which were fully expensed as of December 31, 2023.

As of December 31, 2025, we had $13.5 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 1.7 years.

Employee Benefits

We have a 401(k) defined contribution plan covering substantially all of our officers and employees which permits participants to defer compensation up to the maximum amount permitted by law. We provide a discretionary matching contribution. Employer contributions vest after one year of service. Our contributions for each of the three years in the period ended December 31, 2025 were $1.8 million, $1.9 million and $2.3 million.

2026 Grants

In 2026, through the date of this filing, we granted (i) 603,614 AO LTIP Units, (ii) 1.2 million Time-Based LTIP Units, (iii) 95,302 RSUs and (iv) 1.5 million Performance-Based LTIP Units to certain employees. Additionally, we granted 237,995 fully vested LTIP Units to certain employees who elected to receive all or a portion of their cash bonus earned related to 2025 service as LTIP Units.