The 2012 Long-Term Incentive Plan (“2012 LTIP”) provides for grants of awards to officers, directors, employees and consultants of the Parent or its subsidiaries. Awards can be in the form of: full value awards, stock appreciation rights, stock options (non-qualified options and incentive stock options) and cash incentive awards. Full value awards generally consist of: (i) common stock; (ii) restricted stock units (“RSUs”); (iii) OP LTIP units (“LTIP Units”) and (iv) Prologis Outperformance Plan (“POP”) OP LTIP units (“POP LTIP Units”).

The awards under the 2012 LTIP have been issued under the following components of our equity-based compensation plans and programs at December 31, 2019: (i) POP; (ii) Prologis Promote Plan (“PPP”); (iii) annual long-term incentive (“LTI”) equity award program (“Annual LTI Award”); and (iv) annual bonus exchange program. Under all of these components, certain employees may elect to receive their equity award payout either in the form of RSUs or other equity of the Parent or LTIP Units of the OP. No participant can be granted more than 1.5 million shares of common stock under the 2012 LTIP in any one calendar year. Awards may be made under the 2012 LTIP until it is terminated by the Board or until the ten-year anniversary of the effective date of the plan.

We have 27.2 million shares reserved for issuance, of which 14.9 million shares of common stock were available for future issuance at December 31, 2019. Each LTIP Unit counts as one share of common stock for purposes of calculating the limit on shares that may be issued.

We allocate participation points or a percentage of the compensation pool to participants under our POP corresponding to three-year performance periods beginning every January 1. The fair value of the awards is measured at the grant date and amortized over the period from the grant date to the date at which the awards vest, which ranges from three to ten years. The performance hurdle (“Outperformance Hurdle”) at the end of the initial three-year performance period requires our three-year compound annualized total stockholder return (“TSR”) to exceed a threshold set at the three-year compound annualized TSR for the Morgan Stanley Capital International (“MSCI”) US REIT Index for the same period plus 100 basis points. If the Outperformance Hurdle is met, a compensation pool will be formed equal to 3% of the excess value created, subject to a maximum as defined by each performance period. POP awards cannot be paid at a time when our absolute TSR is negative. If after seven years our absolute TSR has not been positive, the awards will be forfeited.

For the 2016 – 2018 and 2017 – 2019 performance periods, awards (“Initial Awards”), equaling in aggregate up to $75 million of the applicable compensation pool, were earned after the end of the initial three-year performance period as the Outperformance Hurdle was met. One-third of any compensation pool amount in excess of $75 million (up to 0.5% of our equity market capitalization) can be earned at the end of each of the three years after the Initial Awards are earned, if our performance meets or exceeds the Index at the end of each of such three years. In addition, participants will not be able to sell or transfer any equity they receive as awards until three years after the end of the initial performance period.

Beginning with the 2018 – 2020 performance period and performance periods thereafter, the plan requires an absolute maximum cap of $100 million on the compensation pool. If an award is earned at the end of the initial three-year performance period, then 20% of the POP award is paid at the end of the initial performance period and the remaining 80% is subject to additional seven-year cliff vesting. The 20% that is paid at the end of the initial three-year performance period is subject to an additional three-year holding requirement. In 2018, our Named Executive Officers (“NEOs”) adopted the vesting construct of the 2018 – 2020 performance period retroactively for the 2016 – 2018 and 2017 – 2019 performance periods. The change in vesting did not result in a remeasurement event under the accounting rules.

Each participant is eligible to receive a percentage of the total compensation pool based on the number of participation points allocated to the participant, or in the case of our NEOs, a set percentage of the compensation pool. If the performance criteria are met, the participants’ points or compensation pool percentage will be paid in the form of common stock or POP LTIP Units, as elected by the participant. Annually, a participant may exchange their participation points or compensation pool percentage for POP LTIP Units. If the performance criteria are not met, the participants’ points, compensation pool percentage and POP LTIP Units will be forfeited.

At December 31, 2019, all awards were equity classified. We use a Monte Carlo valuation model to value the participation points allocated under the POP.

The following table details the assumptions used for each grant based on the year it was granted (dollars in thousands):

	2019			2018			2017
Risk free interest rate		2.6	%		2.1	%		1.5	%
Expected volatility		20.0	%		16.5	%		22.2	%
Aggregate fair value	$	21,200		$	23,300		$	20,400

Total remaining compensation cost related to the POP at December 31, 2019, was $39.6 million, prior to adjustments for capitalized amounts due to our development activities. The remaining compensation cost will be recognized through 2028, with a weighted average period of 3.2 years.

The performance criteria were met for the 2017 – 2019, 2016 – 2018 and 2015 – 2017 performance periods at the end of the initial three-year performance period, which resulted in awards being earned in January 2020, 2019 and 2018, respectively, in the form of common stock and POP LTIP Units. See below for details on these performance periods (dollars and units in thousands, except average price):

	2017 – 2019		2016 – 2018 ⁽¹⁾		2015 – 2017
Performance pool	$	75,000	$	88,317	$	110,230
Common stock shares		266		423		582
POP LTIP Units and LTIP Units		548		924		1,170
Average price used to determine number of awards	$	92.21	$	65.57	$	62.65

Awards may be issued in the form of RSUs or LTIP Units at the participants’ elections under the following equity-based compensation plans and programs. RSUs and LTIP Units are valued based on the market price of the Parent’s common stock on the date the award is granted and the grant date value is charged to compensation expense over the service period. Beginning with the February 2018 grants, the service period was lengthened from three to four years, except for awards under the annual bonus exchange program. Dividends and distributions are paid with respect to both RSUs and LTIP Units during the vesting period, and therefore they are considered participating securities. We do not allocate undistributed earnings to participating securities as our net earnings per share or unit would not be materially different. The value of the dividend is charged to retained earnings for RSUs and the distribution is charged to Net Income Attributable to Noncontrolling Interests in the OP for LTIP Units in the Consolidated Financial Statements of the Parent.

Under the PPP, we establish a compensation pool for certain employees up to 40% of the third-party portion of promotes earned by Prologis from the co-investment ventures. The awards may be settled in some combination of cash and full value awards, at our election.

The Annual LTI Award provides for grants to certain employees subject to our performance against benchmark indices that relate to the most recent year’s performance.

Under our bonus exchange program, generally all our employees may elect to receive all or a portion of their annual cash bonus in equity. Equity awards granted through the bonus exchange are generally valued at a premium to the cash bonus exchanged and vest over three years, excluding the NEOs. As our NEOs do not receive a bonus exchange premium for participating in the bonus exchange program, the equity they receive upon exchange for their cash bonuses does not have a vesting period.

Each RSU represents the right to receive one share of common stock of the Parent.

The following table summarizes the activity for RSUs for the year ended December 31, 2019 (units in thousands):

	Unvested RSUs			Weighted Average Grant Date Fair Value
Balance at January 1, 2019		1,255		$	54.48
Granted		648			74.58
Vested and distributed		(681	)		51.82
Forfeited		(57	)		62.93
Balance at December 31, 2019		1,165		$	68.44

The fair value of stock awards granted and vested was $46.6 million and $35.7 million for 2018, respectively, and $38.5 million and $32.9 million for 2017, respectively, based on the weighted average grant date fair value per unit.

Total remaining compensation cost related to RSUs outstanding at December 31, 2019, was $46.0 million, prior to adjustments for capitalized amounts due to our development activities. The remaining compensation cost will be recognized through 2023, with a weighted average period of 1.3 years.

An LTIP Unit represents a partnership interest in the OP. After vesting and the satisfaction of certain conditions, an LTIP Unit may be exchangeable for a common limited partnership unit in the OP and then redeemable for a share of common stock (or cash at our option).

The following table summarizes the activity for LTIP Units for the year ended December 31, 2019 (units in thousands):

	Vested LTIP Units			Unvested LTIP Units			Unvested Weighted Average Grant Date Fair Value
Balance at January 1, 2019		3,293			2,177		$	56.05
Granted		-			1,223			75.84
Forfeited		-			(21	)		66.77
Vested LTIP Units		1,134			(1,134	)		54.41
Vested POP LTIP Units⁽¹⁾		391			-		N/A
Unvested POP LTIP Units ⁽¹⁾		-			433			21.17
Conversion to common limited partnership units		(1,104	)		-		N/A
Balance at December 31, 2019		3,714			2,678		$	60.06

The fair value of stock awards granted and vested, excluding POP awards, was $82.6 million and $41.2 million for 2018, respectively, and $53.2 million and $28.3 million for 2017, respectively, based on the weighted average grant date fair value per unit.

Total remaining compensation cost related to LTIP Units, excluding POP, at December 31, 2019, was $101.2 million, prior to adjustments for capitalized amounts due to our development activities. The remaining compensation cost will be recognized through 2023, with a weighted average period of 1.4 years.

We have 0.1 million stock options outstanding and exercisable at December 31, 2019, with a weighted average exercise price of $30.85 and a weighted average life of 0.9 years. The aggregate intrinsic value of exercised options was $11.8 million, $13.8 million, and $28.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. No stock options were granted in the three-year period ended December 31, 2019.

The Prologis 401(k) Plan (the “401(k) Plan”) provides for matching employer contributions of $0.50 for every dollar contributed by an employee, up to 6% of the employee’s annual compensation (within the statutory compensation limit). In the 401(k) Plan, vesting in the matching employer contributions is based on the employee’s years of service, with 100% vesting at the completion of one year of service. Our contributions under the matching provisions were $3.0 million, $2.9 million and $2.8 million for the years ended December 31, 2019, 2018 and 2017, respectively. In January 2020, the 401(k) Plan was amended to provide for a new matching employer contribution of $0.50 for every dollar contributed by an employee, up to 12% of the employee’s annual compensation (within the statutory compensation limit).

We have a non-qualified savings plan that allows highly compensated employees the opportunity to defer the receipt and income taxation of a certain portion of their compensation in excess of the amount permitted under the 401(k) Plan. There has been no employer matching within this plan in the three-year period ended December 31, 2019.