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Stockholder's Equity
9 Months Ended
Sep. 30, 2023
Federal Home Loan Banks [Abstract]  
Stockholder's Equity
10. Stockholders’ Equity
Share Repurchase Plan
On March 9, 2020, the Company’s Board of Directors (the “Board of Directors”) approved a share repurchase plan authorizing the Company to repurchase up to $100 million of its outstanding shares of common stock. In July 2020, the Company completed the full March 2020 share repurchase plan. On August 5, 2020, the Board of Directors approved an additional share repurchase plan authorizing the Company to repurchase up to an additional aggregate amount of $50 million of its outstanding shares of common stock. In September 2022, the Company completed the full August 2020 share repurchase plan. On May 4, 2023, the Board of Directors approved an additional share repurchase plan (“Repurchase Program”) authorizing the Company to repurchase up to $50 million
o
f its outstanding shares of common stock or Series A Preferred Stock. Under the share repurchase programs, the shares may be repurchased from time to time using a variety of methods, which may include open market transactions, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements.
Repurchased shares of common stock will be classified as authorized and unissued shares. The Company recognizes the cost of shares of common stock it repurchases, including direct costs incurred, as a reduction in stockholders’ equity. Such reductions of stockholders equity due to the repurchases of shares of common stock will be applied first, to reduce common stock in the amount of the par value associated with the shares of common stock repurchased and second, to reduce additional
paid-in
capital by the amount that the purchase price for the shares of common stock repurchased exceed the par value.
 
There were
no
shares repurchased during the nine months ended September 30,
2023
. During the nine months ended September 30, 2022, the Company completed the repurchase of
4,006,897
shares of its common stock for approximately $
50.0
 million.
Common Stock and Common Unit Distributions
On September 15, 2023, the Board of Directors approved and the Company declared a cash dividend distribution of $0.10 per common share for the quarterly period ended September 30, 2023. The dividend was paid subsequent to quarter end on October 24, 2023 to common stockholders and common unitholders of record as of the close of business on October 10, 2023, resulting in an aggregate payment of $4.0 million.
Preferred Stock Distributions
On September 15, 2023, the Board of Directors approved and the Company declared a cash dividend distribution of $0.4140625 per share of the Company’s 6.625% Series A Preferred Stock (“Series A Preferred Stock”) for an aggregate amount of $1.9 million for the quarterly period ended September 30, 2023. The dividend was paid subsequent to quarter end on October 24, 2023 to the holders of record of Series A Preferred Stock as of the close of business on October 10, 2023.
Equity Incentive Plan
The Company has an equity incentive plan (“Equity Incentive Plan”) for
executive officers, directors and certain
non-executive
employees, and with approval of the Board of Directors, for subsidiaries and their respective affiliates. The Equity Incentive Plan provides for grants of restricted common stock, restricted stock units, phantom shares, stock options, dividend equivalent rights and other equity-based awards (including the grant of Operating Partnership long-term incentive plan units), subject to the total number of shares available for issuance under the plan. The Equity Incentive Plan is administered by the compensation committee of the Board of Directors (the “Compensation Committee”). The Equity Incentive Plan provides for the issuance of up to 3,763,580 shares of common stock. To the extent an award granted under the Equity Incentive Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.
On January 27, 2020, each of the Board of Directors and the Compensation Committee approved a new form of performance-based restricted unit award agreement that will
be used to grant performance-based restricted stock
 unit awards (“Performance RSU Awards”) pursuant to the Equity Incentive Plan. The Performance RSU Awards are based upon the total stockholder return (“TSR”) of the Company’s common stock over a three-year measurement period beginning January 1 of the year of grant (the “Measurement Period”) relative to the TSR of a defined peer group list of other US Office REIT companies (the “Peer Group”) as of the first trading date in the year of grant. The payouts under the Performance RSU Awards are evaluated on a sliding scale as follows: TSR below the 30th percentile of the Peer Group would result in a 50% payout; TSR at the 50th percentile of the Peer Group would result in a 100% payout; and TSR at or above the 75th percentile of the Peer Group would result in a 150% payout. Payouts are mathematically interpolated between these stated percentile targets, subject to a 150% maximum. To the extent earned, the payouts of the Performance RSU Awards are intended to be settled in the form of shares of the Company’s common stock, pursuant to the Equity Incentive Plan. Upon satisfaction of the vesting conditions, dividend equivalents in an amount equal to all regular and special dividends declared with respect to the Company’s common stock during each annual measurement period during the Measurement Period are determined and paid on a cumulative, reinvested basis over the term of the applicable Performance RSU Award, at the time such award vests and based on the number of shares of the Company’s common stock that are earned.
During the first quarter of 2023, the Performance RSU Awards granted
in
January 2020, with a January 1, 2020 through December 31, 2022 Measurement Period, were earned at 150% of the target number of shares granted based on achievement of a TSR that was at or above the 75th percentile of the 2020 Peer Group.
 
The following table summarizes the activity of the awards under the Equity Incentive Plan for the three and nine months ended September 30, 2023:
 
    
Number of

RSUs
    
Number of
Performance
RSUs
 
Outstanding at December 31, 2022
     428,320        307,500  
Granted
     198,022        214,888  
Issuance of dividend equivalents
     9,485        —   
Vested
     (216,520      (97,500
    
 
 
    
 
 
 
Outstanding at March 31, 2023
     419,307        424,888  
Issuance of dividend equivalents
     14,356        —   
    
 
 
    
 
 
 
Outstanding at June 30, 2023
     433,663        424,888  
Issuance of dividend equivalents
     7,844        —   
    
 
 
    
 
 
 
Outstanding at September 30, 2023
     441,507        424,888  
The following table summarizes the activity of the awards under the Equity Incentive Plan for the three and nine months ended September 30, 2022:
 
    
Number of

RSUs
    
Number of
Performance
RSUs
 
Outstanding at December 31, 2021
     342,159        217,500  
Granted
     237,986        90,000  
Issuance of dividend equivalents
     3,902        —   
    
 
 
    
 
 
 
Outstanding at March 31, 2022
     584,047        307,500  
Issuance of dividend equivalents
     7,451        —   
Vested
     (177,812      —   
    
 
 
    
 
 
 
Outstanding at June 30, 2022
     413,686        307,500  
Issuance of dividend equivalents
     6,185        —   
    
 
 
    
 
 
 
Outstanding at September 30, 2022
     419,871        307,500  
During the nine months ended September 30, 2023 and September 30, 2022, the Company granted the following restricted stock units (“RSUs”) and Performance RSU Awards to directors, executive officers and certain
non-executive
employees:
 
 
  
Units Granted
 
  
Fair Value

(in thousands)
 
  
Weighted Average
Grant Fair Value
Per Share
 
 
  
RSUs
 
  
Performance
RSUs
 
2023
     198,022        214,888      $ 3,729      $ 9.03  
2022
     237,986        90,000        5,753        17.54  
The RSU Awards will
 vest in three equal, annual installments on each of the first three anniversaries of the grant date. The Performance RSU Awards will vest on the last day of the three-year measurement period.
During the three months ended September 30, 2023 and September 30, 2022, the Company recognized net compensation expense for the RSUs and Performance RSU Awards as follows (in thousands):
 
 
  
RSUs
 
 
Performance
RSUs
 
 
Total
 
2023
   $          633     $    391     $       1,024  
2022
     652       340       992  
During the nine months ended September 30, 2023 and September 30, 2022, the Company recognized net compensation expense for the RSUs and Performance RSU Awards as follows (in thousands):
 
 
  
RSUs
 
  
Performance
RSUs
 
  
Total
 
2023
   $       1,910      $    1,161      $       3,071  
2022
     1,902        985        2,887