Stock Based Compensation |
Stock Based Compensation The Compensation Committee of Piedmont's Board of Directors has periodically granted deferred stock awards to all of Piedmont's employees and independent directors. Employee awards typically vest ratably over a multi-year period and independent director awards vest over one year. Certain employees' long-term equity incentive program is split equally between the time-vested awards described above and a multi-year performance share program whereby the actual awards are contingent upon Piedmont's total stockholder return ("TSR") relative to a peer group of office REITs' TSR. The peer group is predetermined by the Board of Directors, advised by an outside compensation consultant. Any shares earned are awarded at the end of the multi-year performance period and vest upon award.
A rollforward of Piedmont's equity based award activity for the nine months ended September 30, 2018 is as follows:
| | | | | | | | | Shares | | Weighted-Average Grant Date Fair Value | Unvested and Potential Stock Awards as of December 31, 2017 | 868,437 |
| | $ | 21.69 |
| Deferred Stock Awards Granted | 354,236 |
| | $ | 17.84 |
| Increase in Estimated Potential Share Award | 313,827 |
| | $ | 23.80 |
| Performance Stock Awards Vested | (161,005 | ) | | $ | 18.47 |
| Deferred Stock Awards Vested | (332,019 | ) | | $ | 19.21 |
| Deferred Stock Awards Forfeited | (8,481 | ) | | $ | 19.77 |
| Unvested and Potential Stock Awards as of September 30, 2018 | 1,034,995 |
| | $ | 22.36 |
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The following table provides additional information regarding stock award activity during the three and nine months ended September 30, 2018 and 2017, respectively (in thousands, except per share amounts):
| | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, 2018 | | September 30, 2017 | | September 30, 2018 | | September 30, 2017 | Weighted-Average Grant Date Fair Value of Deferred Stock Granted During the Period | $ | — |
| | $ | — |
| | $ | 17.84 |
| | $ | 21.38 |
| Total Grant Date Fair Value of Deferred Stock Vested During the Period | $ | 16 |
| | $ | 11 |
| | $ | 6,378 |
| | $ | 5,852 |
| Share-based Liability Awards Paid During the Period(1) | $ | — |
| | $ | — |
| | $ | 2,947 |
| | $ | 2,877 |
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| | (1) | Amounts reflect the issuance of performance share awards related to the 2014-16 and 2015-17 Performance Share Plans during the nine months ended September 30, 2018 and 2017, respectively. |
A detail of Piedmont’s outstanding stock awards as of September 30, 2018 is as follows:
| | | | | | | | | | | | | | | | | Date of grant | | Type of Award | | Net Shares Granted (1) | | Grant Date Fair Value | | Vesting Schedule | | Unvested Shares | | January 3, 2014 | | Deferred Stock Award | | 72,969 |
| | $ | 16.45 |
| | Of the shares granted, 20% vested or will vest on January 3, 2015, 2016, 2017, 2018, and 2019, respectively. | | 16,416 |
| | May 24, 2016 | | Deferred Stock Award | | 208,003 |
| | $ | 19.91 |
| | Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 24, 2017, 2018, and 2019, respectively. | | 60,591 |
| | May 24, 2016 | | Fiscal Year 2016-2018 Performance Share Program | | — |
| | $ | 23.02 |
| | Shares awarded, if any, will vest immediately upon determination of award in 2019. | | 99,337 |
| (2) | May 18, 2017 | | Deferred Stock Award | | 219,863 |
| | $ | 21.38 |
| | Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 18, 2018, 2019, and 2020, respectively. | | 123,507 |
| | May 18, 2017 | | Fiscal Year 2017-2019 Performance Share Program | | — |
| | $ | 30.45 |
| | Shares awarded, if any, will vest immediately upon determination of award in 2020. | | 143,335 |
| (2) | May 17, 2018 | | Deferred Stock Award-Board of Directors | | 31,388 |
| | $ | 17.84 |
| | Of the shares granted, 100% will vest by May 17, 2019. | | 31,388 |
| | May 17, 2018 | | Deferred Stock Award | | 302,706 |
| | $ | 17.84 |
| | Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 17, 2019, 2020, and 2021, respectively. | | 239,777 |
| | May 17, 2018 | | Fiscal Year 2018-2020 Performance Share Program | | — |
| | $ | 23.52 |
| | Shares awarded, if any, will vest immediately upon determination of award in 2021. | | 320,644 |
| (2) | Total | | | | | | | | | | 1,034,995 |
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| | (1) | Amounts reflect the total grant to employees and independent directors, net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations through September 30, 2018. |
| | (2) | Estimated based on Piedmont's cumulative TSR for the respective performance period through September 30, 2018. Share estimates are subject to change in future periods based upon Piedmont's relative performance compared to its peer group of office REITs' total stockholder return. |
During the three months ended September 30, 2018 and 2017, Piedmont recognized approximately $1.7 million and $1.3 million of compensation expense related to stock awards all of which is related to the amortization of unvested shares. During the nine months ended September 30, 2018 and 2017, Piedmont recognized approximately $6.7 million and $7.0 million of compensation expense related to stock awards, of which $5.6 million and $5.4 million is related to the amortization of unvested shares, respectively. During the nine months ended September 30, 2018, a net total of 355,055 shares were issued to employees. As of September 30, 2018, approximately $5.1 million of unrecognized compensation cost related to unvested deferred stock awards remained, which Piedmont will record in its consolidated statements of income over a weighted-average vesting period of approximately one year.
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