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SHARE BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2024
Share-Based Payment Arrangement [Abstract] |
SHARE BASED COMPENSATION | SHARE-BASED COMPENSATION Share-based awards are provided to officers, non-officer employees, and trustees under the 2015 Incentive Plan approved by shareholders on September 15, 2015, as amended and restated on May 18, 2021 (the “2015 Incentive Plan”), which allows for awards in the form of cash, unrestricted and restricted common shares, stock options, stock appreciation rights, and restricted stock units (“RSUs”) up to an aggregate of 775,000 shares over the ten-year period in which the plan is in effect. Under the 2015 Incentive Plan, officers and non-officer employees may earn share awards under a long-term incentive plan (“LTIP”), which is a forward-looking program that measures long-term performance over the stated performance period. These awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year. Through December 31, 2024, awards under the 2015 Incentive Plan consisted of restricted and unrestricted common shares, RSUs, and stock options. The Company accounts for forfeitures of restricted and unrestricted common shares, RSUs, and stock options when they occur instead of estimating the forfeitures. Year Ended December 31, 2024 LTIP Awards Awards granted to employees on January 1, 2024 consisted of an aggregate of 21,059 time-based RSU awards and 18,876 performance RSUs based on total shareholder return (“TSR”). The time-based RSUs vest as to one-third of the shares on each of January 1, 2025, January 1, 2026, and January 1, 2027. The performance RSUs are earned based on the Company’s TSR as compared to the FTSE Nareit Equity Index over a forward looking three-year period. The maximum number of RSUs eligible to be earned is 37,752 RSUs, which is 200% of the RSUs granted. Earned awards (if any) will fully vest as of the last day of the measurement period. These awards have market conditions in addition to service conditions that must be met for the awards to vest. Compensation expense is recognized ratably based on the grant date fair value, as determined using the Monte Carlo valuation model, regardless of whether the market conditions are achieved and the awards ultimately vest. Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved. The Company based the expected volatility on a weighted average of the historical volatility of the Company’s daily closing share price, the risk-free interest rate on the interest rates on U.S. treasury bonds with a maturity equal to the remaining performance period of the award, and the expected term on the performance period of the award. The assumptions used to value the TSR performance RSUs were an expected volatility of 27.21%, a risk-free interest rate of 4.01%, and an expected life of 3 years. The share price at the grant date, January 1, 2024, was $58.20 per share. Share-Based Compensation Expense Total share-based compensation expense recognized in the Consolidated Financial Statements for the years ended December 31, 2024, 2023, and 2022 for all share-based awards was as follows:
|  | (in thousands)
|  | Year Ended December 31,
|  | 2024 | 2023 | 2022
Share-based compensation expense |  | $ | 3,014 |  | $ | 3,295 |  | $ | 2,615 |
On March 31, 2023, the Company accelerated the vesting of all unvested time-based RSUs and stock options in connection with the Separation Agreement with our former CEO. This resulted in the acceleration of share-based compensation expense for those awards resulting in an additional $737,000 in expense during the year ended December 31, 2023. Any performance-based RSUs were prorated, in accordance with the award agreement, and will vest at the end of performance period based on actual performance. The remaining performance-based RSUs were forfeited. The former CEO exercised stock options prior to their expiration on June 30, 2023 in a cashless exercise with a net 425 shares issued. Restricted Stock Units During the year ended December 31, 2024, the Company issued 21,125 time-based RSUs to employees and 10,192 to trustees. The RSUs to employees generally vest over a three-year period and the RSUs to trustees generally vest over a one-year period. The fair value of the time-based RSUs granted during the years ended December 31, 2024, 2023, and 2022 was $1.9 million, $1.8 million, and $1.5 million, respectively. The fair value of share awards at grant date for non-employee trustees was approximately $689,000, $545,000, and $618,000 for the years ended December 31, 2024, 2023, and 2022, respectively. All of these awards are classified as equity awards. The Company recognizes compensation expense associated with the time-based awards ratably over the requisite service period. The total compensation cost related to non-vested time-based RSUs not yet recognized is $966,000, which the Company expects to recognize over a weighted average period of 1.4 years. The unamortized value of RSUs with market conditions as of December 31, 2024, 2023, and 2022 was approximately $1.4 million, $1.0 million, and $1.7 million, respectively. The activity for the years ended December 31, 2024, 2023, and 2022 related to RSUs was as follows:
|  | RSUs with Service Conditions |  | RSUs with Market Conditions
|  |  | Wtd Avg Grant- |  |  | Wtd Avg Grant-
|  | Shares | Date Fair Value |  | Shares | Date Fair Value
Unvested at December 31, 2021 |  | 20,974 |  | $ | 69.97 |  |  | 19,224 |  | $ | 87.04 |
Granted |  | 15,359 |  | 96.29 |  |  | 13,559 |  | 131.05 |
Vested |  | (13,357) |  | 69.24 |  |  | — |  | — |
Forfeited |  | (1,562) |  | 76.49 |  |  | (2,741) |  | 87.04 |
Unvested at December 31, 2022 |  | 21,414 |  | $ | 88.83 |  |  | 30,042 |  | $ | 106.90 |
Granted |  | 31,999 |  | 57.21 |  |  | 20,497 |  | 82.63 |
Vested |  | (22,036) |  | 78.74 |  |  | (13,820) |  | 87.04 |
Forfeited |  | (383) |  | 73.85 |  |  | (14,653) |  | 96.05 |
Unvested at December 31, 2023 |  | 30,994 |  | $ | 65.54 |  |  | 22,066 |  | $ | 104.01 |
Granted |  | 31,317 |  | 61.28 |  |  | 18,876 |  | 80.60 |
Vested |  | (15,626) |  | 66.15 |  |  | (9,771) |  | 130.91 |
Forfeited |  | (192) |  | 58.42 |  |  | — |  | — |
Unvested at December 31, 2024 |  | 46,493 |  | $ | 61.16 |  |  | 31,171 |  | $ | 81.40 |
Stock Options During the year ended December 31, 2024, Centerspace did not issue any stock options to employees. Previously issued stock options vest over a four-year period. The total compensation costs related to non-vested stock options not yet recognized is $77,000, which the Company expects to recognize over a weighted average period of 1.78 years. The stock option activity for the years ended December 31, 2024, 2023, and 2022 was as follows:
|  | Number of Shares | Weighted Average Exercise Price
Outstanding at December 31, 2021 |  | 182,677 |  | $ | 67.38 |
Exercisable at December 31, 2021 |  | 34,758 |  | 66.36 |
Granted |  | 30,245 |  | 110.67 |
Exercised |  | — |  | — |
Forfeited |  | (16,299) |  | 67.59 |
Outstanding at December 31, 2022 |  | 196,623 |  | $ | 74.02 |
Exercisable at December 31, 2022 |  | 80,421 |  | 66.94 |
Granted |  | 45,955 |  | 58.67 |
Exercised |  | (20,061) |  | 58.67 |
Expired |  | (103,768) |  | 73.03 |
Forfeited |  | (1,739) |  | 80.66 |
Outstanding at December 31, 2023 |  | 117,010 |  | $ | 71.41 |
Exercisable at December 31, 2023 |  | 59,477 |  | 70.06 |
Outstanding at December 31, 2024 |  | 117,010 |  | $ | 71.41 |
Exercisable at December 31, 2024 |  | 85,433 |  | $ | 70.64 |
The intrinsic value of a stock option represents the amount by which the current price of the underlying stock exceeds the exercise price of the option. As of December 31, 2024, stock options outstanding had $48,000 aggregate intrinsic value with a weighted average remaining contractual term of 5.2 years years.

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