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FelCor Stock Based Compensation Plans
 12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
FelCor Stock Based Compensation Plans
FelCor Stock Based Compensation Plans

FelCor sponsors a restricted stock and stock option plan, or the Plan. FelCor is authorized to issue up to 6,100,000 shares of common stock under the Plan pursuant to awards granted in the form of incentive stock options, non-qualified stock options, restricted stock and restricted stock units. Stock-based grants vest subject to time-based or performance-based vesting. There were 4,085,899 shares available for grant under the Plan at December 31, 2016.

FelCor Restricted Stock and Restricted Stock Units

A summary of the status of FelCor’s restricted stock and restricted stock unit grants as of December 31, 2016, 2015 and 2014, and the changes during these years is presented below:
 
2016
 
2015
 
2014
 





Shares
 
Weighted
Average
Fair
Market
Value
at Grant
 





Shares
 
Weighted
Average
Fair
Market
Value
at Grant
 





Shares
 
Weighted
Average
Fair
Market
Value
at Grant
Shares unvested at beginning of the year
1,830,123

 
$
6.79

 
1,509,519

 
$
5.70

 
1,270,000

 
$
4.12

Granted:
 
 
 
 
 
 
 
 
 
 
 
With up to 5-year pro rata vesting
1,207,926

 
$
6.24

 
1,116,394

 
$
8.14

 
1,036,252

 
$
6.70

Forfeited
(396,148
)
 
$
6.04

 
(2,250
)
 
$
9.62

 
(2,250
)
 
$
9.62

Vested
(771,508
)
 
$
7.72

 
(793,540
)
 
$
6.61

 
(794,483
)
 
$
4.46

Shares unvested at end of the year
1,870,393

 
$
6.21

 
1,830,123

 
$
6.79

 
1,509,519

 
$
5.70




20.    FelCor Stock Based Compensation Plans - (continued)

Our executive officers were granted market based restricted stock units providing them with the potential to earn common shares based on total stockholder return relative to a group of 10 lodging REIT peers. These awards granted in 2013 through 2015 vest in three increments over four years. Market based awards granted to our executive officers in 2016 cliff vest in three years. Fair value of our market based restricted stock units estimates are based on a Monte Carlo simulation.

The assumptions used in this simulation include the following:
 
2016
 
2015
 
2014
Annual volatility(a)
45.92
%
 
48.11
%
 
53.78
%
Dividend rate(b)
$
0.05

 
$
0.04

 
$
0.02

Risk-free rate
0.93
%
 
1.32
%
 
1.13
%
(a) Based on share price history.
(b) Based on dividend rate at time of award.

Our executive officers were also granted time-based restricted stock unit awards in 2016 that vest in three equal increments over three years. Other employees have received time-based restricted stock awards that vest in equal increments over three years to five years.

Our executive officers also received financial performance based awards in 2016, however the three-year performance requirement for vesting has not yet been established. As such, these awards do not yet have a grant date and no expense has been recorded for financial statement purposes.

The fixed cost of market and time based grants is amortized over the vesting period. The unearned compensation cost of FelCor’s granted but unvested restricted stock and units was $5.1 million and $6.9 million,
as of December 31, 2016 and 2015, respectively. The weighted average period over which the December 31, 2016 cost is to be amortized is approximately one year. Amortization expense for fixed stock compensation related to FelCor’s restricted stock and units was $5.0 million, $5.1 million, and $3.7 million for the years ended December 31, 2016, 2015 and 2014, respectively.

The restricted stock unit grant also provides that to the extent any of these executive officers earn more shares than allowed under the plan upon vesting of this grant, the excess is settled in cash. To the extent there is excess likely to settle in cash, these awards are accounted for as liability awards, the fair value of which is remeasured at the end of each reporting period. We paid $3.3 million in 2016 and $1.9 million in 2015 for the excess cash settlements for vested awards. The liability accrued for these awards expected to be settled in cash was $1.0 million and $2.6 million as of December 31, 2016 and 2015, respectively. Amortization expense for our variable stock compensation was $450,000, $798,000, and $2.7 million for the years ended December 31, 2016, 2015 and 2014, respectively.