Stock-Based Compensation and Equity

3 Months Ended

Mar. 31, 2020

Stock-Based Compensation

We maintain several stock-based compensation plans, which are more fully described in the 2019 Annual Report. There have been no significant changes to the terms and conditions of any of our stock-based compensation plans or arrangements during the three months ended March 31, 2020. We recorded stock-based compensation expense of $2.7 million and $4.2 million during the three months ended March 31, 2020 and 2019, respectively, which was included in Stock-based compensation expense in the consolidated financial statements.

Restricted and Conditional Awards

Nonvested restricted share awards (“RSAs”), restricted share units (“RSUs”), and performance share units (“PSUs”) at March 31, 2020 and changes during the three months ended March 31, 2020 were as follows:



	RSA and RSU Awards				PSU Awards
	Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2020	283,977		$	68.51	331,242		$	80.90
Granted ^(a)	123,944		83.26		90,518		104.65
Vested ^(b)	(127,879	)	65.67		(156,838	)	80.42
Forfeited	(4,430	)	69.87		(6,432	)	88.89
Adjustment ^(c)	—		—		21,611		91.84
Nonvested at March 31, 2020 ^(d)	275,612		$	76.44	280,101		$	87.90

__________

(a)

The grant date fair value of RSAs and RSUs reflect our stock price on the date of grant on a one-for-one basis. The grant date fair value of PSUs was determined utilizing (i) a Monte Carlo simulation model to generate an estimate of our future stock price over the three-year performance period and (ii) future financial performance projections. To estimate the fair value of PSUs granted during the three months ended March 31, 2020, we used a risk-free interest rate of 1.6%, an expected volatility rate of 15.2%, and assumed a dividend yield of zero.

(b)

The grant date fair value of shares vested during the three months ended March 31, 2020 was $21.0 million. Employees have the option to take immediate delivery of the shares upon vesting or defer receipt to a future date pursuant to previously made deferral elections. At March 31, 2020 and December 31, 2019, we had an obligation to issue 995,380 and 893,713 shares, respectively, of our common stock underlying such deferred awards, which is recorded within Total stockholders’ equity as a Deferred compensation obligation of $42.3 million and $37.3 million, respectively.

(c)

Vesting and payment of the PSUs is conditioned upon certain company and/or market performance goals being met during the relevant three-year performance period. The ultimate number of PSUs to be vested will depend on the extent to which the performance goals are met and can range from zero to three times the original awards. As a result, we recorded adjustments at March 31, 2020 to reflect the number of shares expected to be issued when the PSUs vest.


(d)	At March 31, 2020, total unrecognized compensation expense related to these awards was approximately $32.4 million, with an aggregate weighted-average remaining term of 2.2 years.

Earnings Per Share

Under current authoritative guidance for determining earnings per share, all nonvested share-based payment awards that contain non-forfeitable rights to dividends are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. During the prior year period, certain of our nonvested RSUs contained rights to receive non-forfeitable dividend equivalents or dividends, respectively, and therefore we apply the two-class method of computing earnings per share. The calculation of earnings per share below excludes the income attributable to the nonvested participating RSUs from the numerator and such nonvested shares in the denominator. The following table summarizes basic and diluted earnings (in thousands, except share amounts):



	Three Months Ended March 31,
	2020		2019
Net income attributable to W. P. Carey	$	66,090	$	68,494
Net income attributable to nonvested participating RSUs	—		(19		)
Net income — basic and diluted	$	66,090	$	68,475

Weighted-average shares outstanding — basic	173,249,236		167,234,121
Effect of dilutive securities	210,817		200,619
Weighted-average shares outstanding — diluted	173,460,053		167,434,740

For the three months ended March 31, 2020 and 2019, there were no potentially dilutive securities excluded from the computation of diluted earnings per share.

ATM Program

During the three months ended March 31, 2020, we did not issue any shares of our common stock under our ATM Program, which is discussed in the 2019 Annual Report. During the three months ended March 31, 2019, we issued 4,053,623 shares of our common stock under our former ATM Program at a weighted-average price of $76.17 per share for net proceeds of $303.8 million. As of March 31, 2020, $616.6 million remained available for issuance under our current ATM Program.

Reclassifications Out of Accumulated Other Comprehensive Loss

The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands):



	Three Months Ended March 31, 2020
	Gains and (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and (Losses) on Investments		Total
Beginning balance	$	13,048		$	(268,715	)	$	—	$	(255,667	)
Other comprehensive loss before reclassifications	16,394			(52,200		)	—		(35,806		)
Amounts reclassified from accumulated other comprehensive loss to:
Other gains and (losses)	(3,783		)	—			—		(3,783		)
Interest expense	238			—			—		238
Total	(3,545		)	—			—		(3,545		)
Net current period other comprehensive loss	12,849			(52,200		)	—		(39,351		)
Ending balance	$	25,897		$	(320,915	)	$	—	$	(295,018	)



	Three Months Ended March 31, 2019
	Gains and (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and (Losses) on Investments			Total
Beginning balance	$	14,102		$	(269,091	)	$	(7	)	$	(254,996	)
Other comprehensive income before reclassifications	5,404			(173		)	537			5,768
Amounts reclassified from accumulated other comprehensive loss to:
Other gains and (losses)	(3,522		)	—			—			(3,522		)
Interest expense	67			—			—			67
Total	(3,455		)	—			—			(3,455		)
Net current period other comprehensive income	1,949			(173		)	537			2,313
Ending balance	$	16,051		$	(269,264	)	$	530		$	(252,683	)

See Note 9 for additional information on our derivatives activity recognized within Other comprehensive (loss) income for the periods presented.

Dividends Declared

During the first quarter of 2020, our Board declared a quarterly dividend of $1.04 per share, which was paid on April 15, 2020 to stockholders of record as of March 31, 2020.