Stockholders' Equity and Non-controlling Interests |
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Stockholders' Equity and Non-controlling Interests | Note 9—Stockholders’ Equity and Non-controlling Interests Non-controlling Interest in Operating Partnership FPI consolidates the Operating Partnership. As of December 31, 2021 and 2020, FPI owned 97.0% and 94.9% of the outstanding interests, respectively, in the Operating Partnership, and the remaining 3.0% and 5.1% interests, respectively, are included in non-controlling interests in Operating Partnership on the consolidated balance sheets. The non-controlling interests in the Operating Partnership are held in the form of Common units and Series A preferred units. On or after 12 months of becoming a holder of Common units, unless the terms of an agreement with such Common unitholder dictate otherwise, each limited partner, other than the Company, has the right, subject to the terms and conditions set forth in the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, as amended (the “Partnership Agreement”), to tender for redemption all or a portion of such Common units in exchange for cash, or in the Company’s sole discretion, for shares of the Company’s common stock on a one-for-one basis. If cash is paid in satisfaction of a redemption request, the amount will be equal to the number of tendered units multiplied by the fair market value per share of the Company’s common stock on the date of the redemption notice (determined in accordance with, and subject to adjustment under, the terms of the Partnership Agreement). Any redemption request must be satisfied by the Company on or before the close of business on the tenth business day after the Company receives a notice of redemption. During the years ended December 31, 2021 and 2020, the Company issued 281,453 and 265,000, respectively, of shares of common stock upon redemption of 281,453 and 265,000, respectively, of Common units that had been tendered for redemption. There were 1.4 million and 1.6 million outstanding Common units eligible to be tendered for redemption as of December 31, 2021 and 2020, respectively. If the Company gives the limited partners notice of its intention to make an extraordinary distribution of cash or property to its stockholders or effect a merger, a sale of all or substantially all of its assets or any other similar extraordinary transaction, each limited partner may exercise its right to tender its Common units for redemption, regardless of the length of time such limited partner has held its Common units. Regardless of the rights described above, the Operating Partnership will not have an obligation to issue cash to a unitholder upon a redemption request if the Company elects to redeem Common units for shares of common stock. When a Common unit is redeemed, non-controlling interest in the Operating Partnership is reduced, and stockholders’ equity is increased. The Operating Partnership intends to continue to make distributions on each Common unit in the same amount as those paid on each share of FPI’s common stock, with the distributions on the Common units held by FPI being utilized to pay dividends to FPI’s common stockholders.
Pursuant to the consolidation accounting standard with respect to the accounting and reporting for non-controlling interest changes and changes in ownership interest of a subsidiary, changes in parent’s ownership interest when the parent retains controlling interest in the subsidiary should be accounted for as equity transactions. The carrying amount of the non-controlling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent. Changes in the ownership percentages between the Company’s stockholders’ equity and non-controlling interest in the Operating Partnership resulted in an increase/(decrease) the non-controlling interest in the Operating Partnership by $2.7 million and ($0.7) million during the years ended December 31, 2021 and 2020 respectively, with the corresponding offsets to additional paid-in capital. Redeemable Non-controlling Interests in Operating Partnership, Series A preferred units On March 2, 2016, the sole general partner of the Operating Partnership entered into Amendment No. 1 (the “Amendment”) to the Partnership Agreement in order to provide for the issuance, and the designation of the terms and conditions, of the Series A preferred units. Pursuant to the Amendment, among other things, each Series A preferred unit has a $1,000 liquidation preference and is entitled to receive cumulative preferential cash distributions at a rate of 3.00% per annum of the $1,000 liquidation preference, which is payable annually in arrears on January 15 of each year or the next succeeding business day. The cash distributions are accrued ratably over the year and credited to redeemable non-controlling interest in Operating Partnership, preferred units on the balance sheet with the offset recorded to retained earnings. On March 2, 2016, 117,000 Series A preferred units were issued as partial consideration in the March 2, 2016 Illinois farm acquisition. Upon any voluntary or involuntary liquidation or dissolution, the Series A preferred units are entitled to a priority distribution ahead of Common units in an amount equal to the liquidation preference plus an amount equal to all distributions accumulated and unpaid to the date of such cash distribution. Total liquidation value of such preferred units as of December 31, 2021 and 2020 was $120.5 million and $120.5 million, respectively, including accrued distributions.
On or after February 10, 2026 (the “Conversion Right Date”), holders of the Series A preferred units have the right to convert each Series A preferred unit into a number of Common units equal to (i) the $1,000 liquidation preference plus all accrued and unpaid distributions, divided by (ii) the volume-weighted average price per share of the Company’s common stock for the 20 trading days immediately preceding the applicable conversion date. All Common units received upon conversion may be immediately tendered for redemption for cash or, at the Company’s option, for shares of common stock on a one-for-one basis, subject to the terms and conditions set forth in the Partnership Agreement. Prior to the Conversion Right Date, the Series A preferred units may not be tendered for redemption by the Holder.
On or after February 10, 2021, but prior to the Conversion Right Date, the Operating Partnership has the right to redeem some or all of the Series A preferred units, at any time and from time to time, for cash in an amount per unit equal to the $1,000 liquidation preference plus all accrued and unpaid distributions. In the event of a Termination Transaction (as defined in the Partnership Agreement) prior to conversion, holders of the Series A preferred units generally have the right to receive the same consideration as holders of Common units and common stock, on an as-converted basis.
Holders of the Series A preferred units have no voting rights except with respect to (i) the issuance of partnership units of the Operating Partnership senior to the Series A preferred units as to the right to receive distributions and upon liquidation, dissolution or winding up of the Operating Partnership, (ii) the issuance of additional Series A preferred units, and (iii) amendments to the Partnership Agreement that materially and adversely affect the rights or benefits of the holders of the Series A preferred units. The Series A preferred units are accounted for as mezzanine equity on the consolidated balance sheet as the units are convertible and redeemable for shares at a determinable price and date at the option of the holder upon the occurrence of an event not solely within the control of the Company. The following table summarizes the changes in our redeemable non-controlling interest in the Operating Partnership for the years ended December 31, 2021 and 2020:
Series B Participating Preferred Stock On August 17, 2017, the Company entered into an underwriting agreement with Raymond James & Associates, Inc. and Jefferies LLC, as representatives of the underwriters, pursuant to which the Company sold 6,037,500 shares of its newly designated Series B Participating Preferred Stock, at a public offering price of $25.00 per share. The shares of Series B Participating Preferred Stock are accounted for as mezzanine equity on the consolidated balance sheet, as the Series B Participating Preferred Stock was convertible and redeemable for common shares at a determinable price and date at the option of the Company and upon the occurrence of an event not solely within the control of the Company. The balance recorded in mezzanine equity relating to the Series B Participating Preferred Stock as of December 31, 2021 and 2020 was $0.0 million and $139.8 million, respectively. On October 4, 2021, the Company converted all 5,806,797 shares of the outstanding Series B Participating Preferred Stock into shares of common stock. Each share of Series B Participating Preferred Stock was converted into 2.0871798 shares of common stock, or 12,119,829 shares of common stock in total, less any fractional shares. Holders of the Series B Participating Preferred Stock received cash in lieu of fractional shares. As a result of the conversion, the Company recorded a $5.7 million deemed dividend to the Series B Participating Preferred stockholders, which represents the conversion value as of the conversion date less the carrying value as of October 4, 2021. Distributions The Company’s board of directors declared and paid the following distributions to common stockholders and holders of Common units for the years ended December 31, 2021 and 2020:
Additionally, in connection with the 3.00% cumulative preferential distribution on the Series A preferred units, the Company has accrued $3.5 million in distributions payable as of December 31, 2021. The distributions are payable annually in arrears on January 15 of each year. In general, common stock cash dividends declared by the Company will be considered ordinary income to stockholders for income tax purposes. From time to time, a portion of the Company’s dividends may be characterized as qualified dividends, capital gains or return of capital. Share Repurchase Program On March 15, 2017, the Company’s Board of Directors approved a program to repurchase up to $25 million in shares of the Company’s common stock. In November 2017, the Board of Directors approved repurchases of the Company’s Series B Participating Preferred Stock from time to time under the share repurchase program. Subsequently on August 1, 2018, the Board of Directors increased the authority under the share repurchase program by an aggregate of $30 million. On November 7, 2019, the Board of Directors increased the authority under the program by an additional $50 million. Repurchases under this program may be made from time to time, in amounts and prices as the Company deems appropriate. Repurchases may be made in open market or privately negotiated transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors. This share repurchase program does not obligate the Company to acquire any particular amount of common stock and it may be modified or suspended at any time at the Company’s discretion. The Company funds repurchases under the program using cash on its balance sheet. During the year ended December 31, 2021, the Company repurchased no shares of its common stock and 25,073 shares of its Series B Participating Preferred Stock for $0.7 million at an average price of $25.92 per share. As of December 31, 2021, the Company had approximately $40.5 million in shares that it can repurchase under the stock repurchase plan. Equity Incentive Plan On May 7, 2021, the Company’s stockholders approved the Third Amended and Restated 2014 Equity Incentive Plan (as amended and restated, the “Plan”), which increased the aggregate number of shares of the Company’s common stock reserved for issuance under the Plan to approximately 1.9 million shares. As of December 31, 2021, there were 0.8 million shares available for future grants under the Plan. The Company may issue equity-based awards to officers, non-employee directors, employees, independent contractors and other eligible persons under the Plan. The Plan provides for the grant of stock options, share awards (including restricted stock and restricted stock units), stock appreciation rights, dividend equivalent rights, performance awards, annual incentive cash awards and other equity- based awards, including LTIP units, which are convertible on a one-for-one basis into Common units. The terms of each grant are determined by the compensation committee of the Board of Directors. From time to time, the Company may award restricted shares of its common stock under the Plan, as compensation to officers, employees, non-employee directors and non-employee consultants. The shares of restricted stock vest over a period of time as determined by the compensation committee of the Company’s Board of Directors at the date of grant. The Company recognizes compensation expense for awards issued to officers, employees and non-employee directors for restricted shares of common stock on a straight-line basis over the vesting period based upon the fair market value of the shares on the date of issuance, adjusted for forfeitures. The Company recognizes compensation expense for awards issued to non-employee consultants in the same period and in the same manner as if the Company paid cash for the underlying services. A summary of the non-vested restricted shares as of December 31, 2021 and 2020 is as follows:
The Company recognized stock-based compensation expense related to restricted stock awards of $1.3 million and $1.1 million, for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, there were $1.6 million and $1.1 million, respectively, of total unrecognized compensation costs related to nonvested stock awards, which are expected to be recognized over a weighted-average period of 1.5 years. The change in fair value of the shares issued to non-employees to be issued upon vesting is remeasured at the end of each reporting period and is recorded in general and administrative expenses on the consolidated statements of operations. At-the-Market Offering Program (the “ATM Program”) On October 29, 2021, the Company entered into equity distribution agreements under which the Company may issue and sell from time to time, through sales agents, shares of its common stock having an aggregate gross sales price of up to $75 million (the "$75 million ATM Program”). In connection with its entry into the distribution agreements, the Company terminated the equity distribution agreements, each dated as of May 14, 2021, for its prior ATM Program (the "$50 million ATM Program"). During the year ended December 31, 2021, the Company sold 1,959,512 shares and generated $25.7 million in gross proceeds and $25.4 million in net proceeds under the $50 million ATM Program, and sold 153,261 shares and generated $1.9 million in gross and net proceeds under the $75 million ATM Program for totals of 2,112,773 shares and $27.6 million and $27.3 million in gross and net proceeds, respectively. Earnings per Share The computation of basic and diluted earnings (loss) per share is as follows:
Numerator: Unvested shares of the Company’s restricted common stock are considered participating securities, which requires the use of the two-class method for the computation of basic and diluted earnings per share. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Accordingly, distributed and undistributed earnings attributable to unvested restricted shares (participating securities) have been subtracted, as applicable, from net income or loss attributable to common stockholders utilized in the basic and diluted earnings per share calculations. Distributions on preferred interests in the Operating Partnership have been subtracted from net income or loss attributable to common stockholders. Denominator: Any anti-dilutive shares have been excluded from the diluted earnings per share calculation. The outstanding Series A preferred units are non-participating securities and thus are included in the computation of diluted earnings per share on an as-if converted basis, if they are dilutive. For the years ended December 31, 2021 and 2020, these shares were not included in the diluted earnings per share calculation as they would be anti-dilutive. The outstanding shares of Series B Participating Preferred Stock are non-participating securities and thus are included in the computation of diluted earnings per share on an as-if converted basis, if they are dilutive. For the years ended December 31, 2021 and 2020, these shares were not included in the diluted earnings per share calculation as they would be anti-dilutive. For the years ended December 31, 2021 and 2020, diluted weighted average common shares do not include the impact of 0.5 million and 0.3 million, respectively, unvested compensation-related shares as they would have been anti-dilutive. The limited partners’ outstanding Common units, or the non-controlling interests, (which may be redeemed for shares of common stock) have not been included in the diluted earnings per share calculation as there would be no effect on the amounts since the limited partners’ share of income would also be added back to net income, therefore increasing both net income and shares. The weighted average number of Common units held by the non-controlling interest was 1.5 million and 1.8 million for the years ended December 31, 2021 and 2020, respectively. Outstanding Equity Awards and Units The following equity awards and units were outstanding as of December 31, 2021 and 2020, respectively.
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