Stock Based Compensation

9 Months Ended

Sep. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The Compensation Committee of Piedmont's Board of Directors has periodically granted deferred stock award units 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 management employees' long-term equity incentive program is split equally between the time-vested award units 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 long-term equity incentives for these certain employees, as well as 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. The fair values of the multi-year performance share awards are estimated using a Monte Carlo valuation method.

A rollforward of Piedmont's equity based award activity for the nine months ended September 30, 2019 is as follows:


	Shares		Weighted-Average Grant Date Fair Value
Unvested and Potential Stock Awards as of December 31, 2018	1,227,483		$	23.14
Deferred Stock Awards Granted	354,057		$	21.02
Increase in Estimated Potential Share Award based on Performance	260,205		$	28.31
Performance Stock Awards Vested	(352,404)	⁽¹⁾	$	25.83
Deferred Stock Awards Vested	(440,450)	⁽¹⁾	$	19.66
Deferred Stock Awards Forfeited	(14,518)		$	19.16
Unvested and Potential Stock Awards as of September 30, 2019	1,034,373		$	25.10

⁽¹⁾Includes performance share and deferred stock awards that were settled in cash in July 2019 in conjunction with the senior management transition that occurred on June 30, 2019.

The following table provides additional information regarding stock award activity during the three and nine months ended September 30, 2019 and 2018, respectively (in thousands, except per share amounts):


	Three Months Ended						Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Weighted-Average Grant Date Fair Value of Deferred Stock Granted During the Period	$	—	$	—	$	21.02	$	17.84
Total Grant Date Fair Value of Deferred Stock Vested During the Period	$	—	$	16	$	8,658	$	6,378
Share-based Liability Awards Paid During the Period (1)	$	3,444	$	—	$	6,683	$	2,947

⁽¹⁾Amounts reflect the issuance of performance share awards related to the 2016-18 and 2015-17 Performance Share Plans during the nine months ended September 30, 2019 and 2018, respectively, as well as performance share award liabilities settled in cash in July 2019 for retirement and separation associated with the senior management transition on June 30, 2019.

A detail of Piedmont’s outstanding stock awards as of September 30, 2019 is as follows:


Date of grant	Type of Award	Net Shares Granted ⁽¹⁾	Grant Date Fair Value		Vesting Schedule	Unvested Shares
















May 18, 2017	Deferred Stock Award	196,036	$	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.	40,942
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.	153,368	⁽²⁾

May 17, 2018	Deferred Stock Award	271,169	$	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.	108,255
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.	200,674	⁽²⁾
May 15, 2019	Deferred Stock Award-Board of Directors	25,974	$	20.79	Of the shares granted, 100% will vest by May 15, 2020.	25,974
May 3, 2019	Deferred Stock Award	300,825	$	21.04	Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 3, 2020, 2021, and 2022, respectively.	195,119
May 3, 2019	Fiscal Year 2019-2021 Performance Share Program	—	$	29.43	Shares awarded, if any, will vest immediately upon determination of award in 2022.	310,041	⁽²⁾
Total						1,034,373

⁽¹⁾Amounts reflect the total original grant to employees and independent directors, net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations through September 30, 2019.

⁽²⁾Estimated based on Piedmont's cumulative TSR for the respective performance period through September 30, 2019. Share estimates are subject to change in future periods based upon Piedmont's relative performance compared to its peer group of office REITs' TSR.

During the three months ended September 30, 2019 and 2018, Piedmont recognized approximately $3.8 million and $1.7 million, respectively, of compensation expense related to stock awards all of which is related to the amortization of unvested deferred shares and the fair value adjustment to performance shares. During the nine months ended September 30, 2019 and 2018, Piedmont recognized approximately $12.0 million and $6.7 million, respectively, of compensation expense related to stock awards of which $10.5 million and $5.6 million is related to the amortization of unvested deferred shares and the fair value adjustment to performance shares. During the nine months ended September 30, 2019, a net total of 292,675 shares were issued to employees. As of September 30, 2019, approximately $4.5 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.