NOTE 10—STOCKHOLDERS' EQUITY

Stock Based Compensation

The Company's 2012 Incentive Plan, approved by the Company's stockholders in June 2012, permits the Company to grant, among other things, stock options, restricted stock, restricted stock units, performance share awards and any one or more of the foregoing to its employees, officers, directors and consultants. A maximum of 600,000 shares of the Company's common stock is authorized for issuance pursuant to this Plan, of which 228,950 shares of restricted stock are outstanding at December 31, 2014. An aggregate of 452,000 shares of restricted stock and restricted stock units outstanding under the Company's 2003 and 2009 equity incentive plans (collectively, the "Prior Plans") have not yet vested. No additional awards may be granted under the Prior Plans.

The restricted stock grants are charged to general and administrative expense over the respective vesting periods based on the market value of the common stock on the grant date. Substantially all restricted stock awards made to date provide for vesting upon the fifth anniversary of the date of grant and under certain circumstances may vest earlier. For accounting purposes, the restricted stock is not included in the shares shown as outstanding on the balance sheet until they vest; however dividends are paid on the unvested shares.

On September 14, 2010, the Board of Directors approved a Pay-For-Performance Program under the Company's 2009 Incentive Plan and awarded 200,000 performance share awards in the form of restricted stock units (the "Units"), half of which were awarded to full time employees of the Company. The other half were awarded to part time officers of the Company who are compensated through the compensation and services agreement, some of whom are also officers of Majestic. The holders of Units are not entitled to dividends or to vote the underlying shares until the Units vest and shares are issued. Accordingly, for financial statement purposes, the shares underlying the Units are not included in the shares shown as outstanding on the balance sheet. If the defined performance criteria are satisfied in full at June 30, 2017, one share of the Company's common stock will vest and be issued for each Unit outstanding and a pro-rata portion of the Units will vest and be issued if the performance criteria fall between defined ranges. In the event that the performance criteria are not satisfied in whole or in part at June 30, 2017, the unvested Units will be forfeited and no shares of the Company's common stock will be issued for those Units. For the awards which vest based on total stockholder return, a third party appraiser prepared a Monte Carlo simulation pricing model to determine the fair value. For the awards which vest based on return on capital, the fair value is based on the market value on the date of grant. Expense is not recognized on the Units which the Company does not expect to vest as a result of service conditions or the Company's performance expectations. The average per Unit grant price of the 200,000 units granted is $11.74. The total amount recorded as deferred compensation is $808,000 and is being charged to general and administrative expense over the approximate seven year vesting period. The deferred compensation expense to be recognized is net of certain forfeiture and performance assumptions (which are re-evaluated quarterly). No Units were forfeited or vested during 2014, 2013 and 2012.

As of December 31, 2014, 2013 and 2012 there were no options outstanding under the Company's equity incentive plans.

The following is a summary of the activity of the equity incentive plans (excluding, except as otherwise noted, the 200,000 Units):

	Years Ended December 31,
	2014			2013			2012
Restricted share grants		118,850			112,650			109,450
Average per share grant price	$	20.54		$	21.59		$	16.77
Deferred compensation to be recognized over vesting period	$	2,441,000		$	2,432,000		$	1,835,000
Non-vested shares:
Non-vested beginning of period		470,015			407,460			348,385
Grants		118,850			112,650			109,450
Vested during period		(101,300	)		(50,095	)		(49,325	)
Forfeitures		(6,570	)		—			(1,050	)

Non-vested end of period		480,995			470,015			407,460


Average per share value of non-vested shares (based on grant price)	$	14.55		$	14.22		$	12.59


Value of shares vested during the year (based on grant price)	$	621,000		$	876,000		$	1,208,000


Average value of shares forfeited (based on grant price)	$	15.49		$	—		$	13.65

The total charge to operations for all incentive plans, including the 200,000 Units, is as follows:

Outstanding restricted stock grants	$	1,701,000	$	1,341,000	$	1,050,000
Outstanding restricted stock units		132,000		99,000		173,000

Total charge to operations	$	1,833,000	$	1,440,000	$	1,223,000

As of December 31, 2014, there were approximately $4,856,000 of total compensation costs related to non-vested awards that have not yet been recognized, including $297,000 related to the Pay-for-Performance Program (net of forfeiture and performance assumptions which are re-evaluated quarterly). These compensation costs will be charged to general and administrative expense over the remaining respective vesting periods. The weighted average vesting period is approximately 2.4 years.

Common Stock Dividend Distributions

In 2014, 2013 and 2012, the Company declared an aggregate $1.50, $1.42 and $1.34 per share in cash distributions, respectively.

Distribution Reinvestment Plan

The Company's Dividend Reinvestment Plan (the "DRP") provides stockholders with the opportunity to reinvest all, or a portion of, their cash dividends paid on the Company's common stock in additional shares of its common stock, at a discount of up to 5% from the market price. The discount is determined in the Company's sole discretion. The Company is currently offering up to a 5% discount from market. The Company issued 227,000, 210,000 and 215,000 common shares under the DRP during 2014, 2013 and 2012, respectively.

Shares Issued Through Equity Offering Program

On March 20, 2014, the Company entered into an amended and restated equity offering sales agreement to sell shares of the Company's common stock from time to time with an aggregate sales price of up to approximately $38,360,000, through an "at the market" equity offering program. During 2014, the Company sold 179,051 shares for proceeds of $3,889,700, net of commissions of $39,000, and incurred offering costs, primarily professional fees, of $122,000. During 2013, the Company sold 363,463 shares for proceeds of $9,227,800, net of commissions of $93,000 and incurring offering costs, primarily professional fees, of $63,000.