Equity Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Equity Based Compensation

Equity Based Compensation

Equity Incentive Plan

In 2018, the Company adopted an equity incentive plan (the “Equity Incentive Plan”), which provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, RSAs, RSUs, other stock awards, performance awards and LTIP units. Officers, employees, non-employee directors, consultants, independent contractors and agents who provide services to the Company or to any subsidiary of the Company are eligible to receive such awards. A maximum of 3,550,000 shares may be issued under the Equity Incentive Plan, subject to certain conditions.

The following table presents information about the Company’s RSAs and RSUs during the three months ended March 31, 2023 and 2022:

	Restricted Stock Awards			Restricted Stock Units
	Shares	Wtd. Avg. Grant Date Fair Value		Units	Wtd. Avg. Grant Date Fair Value
Unvested, January 1, 2022	18,904	$	14.12	454,692	$	29.39
Granted	—	—		568,706	27.31
Vested	(9,865)	14.12		(200,427)	24.46
Forfeited	—	—		—	—
Unvested, March 31, 2022	9,039	$	14.12	822,971	$	29.15
Unvested, January 1, 2023	9,039	$	14.12	817,380	$	30.26
Granted	—	—		351,663	32.85
Vested	(9,039)	14.12		(324,360)	27.00
Forfeited	—	—		(6,786)	24.65
Unvested, March 31, 2023	—	$	—	837,897	$	32.65

Restricted Stock Awards

In January 2019, RSAs relating to an aggregate of 46,368 shares of unvested restricted common stock were granted to the Company’s executive officers, other employees and an external consultant under the Equity Incentive Plan. These RSAs vest over periods ranging from one year to four years from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting dates. The Company estimates the grant date fair value of RSAs granted under the Equity Incentive Plan using the average market price of the Company’s common stock on the date of grant.

The following table presents information about the Company’s RSAs for the periods presented:

	Three months ended March 31,
(in thousands)	2023		2022
Compensation cost recognized in general and administrative expense	$	2	$	32
Dividends declared on unvested RSAs and charged directly to distributions in excess of cumulative earnings	—		2
Fair value of shares vested during the period	128		139

The following table presents information about the Company’s RSAs as of the dates presented:

(Dollars in thousands)	March 31, 2023		December 31, 2022
Total unrecognized compensation cost	$	—	$	2
Weighted average period over which compensation cost will be recognized (in years)	—		0.1

Restricted Stock Units

In 2019, 2020, 2021, 2022 and 2023, the Company issued target grants of 119,085, 84,684, 126,353, 149,699 and 147,587 performance-based RSUs, respectively, to the Company’s senior management team under the Equity Incentive Plan. Of these awards, 75% are non-vested RSUs for which vesting percentages and the ultimate number of units vesting is calculated based on the total shareholder return (“TSR”) of the Company's common stock as compared to the TSR of peer companies identified in the grant agreements. The payout schedule can produce vesting percentages ranging from 0% to 250% of target. TSR is calculated over the performance period for each award based upon the average closing price for the 20-trading day period ending December 31st of the year prior to grant divided by the average closing price for the 20-trading day period ending December 31st of the third year following the grant. The target number of units is based on achieving a TSR equal to the 50th percentile of the peer group. The Company records expense on these TSR RSUs based on achieving the target.

The grant date fair value of the TSR RSUs was measured using a Monte Carlo simulation model based on the following assumptions:

	Grant Year
	2023	2022
Volatility	37%	54%
Risk free rate	4.36%	1.68%

The remaining 25% of these performance-based RSUs vest based on the Compensation Committee's subjective evaluation of the individual recipient’s achievement of certain strategic objectives over the performance period of the award. In January 2022 and February 2023, the Compensation Committee identified specific performance targets and completed its subjective evaluation in relation to the performance-based RSUs granted in 2019 and 2020 and concluded that 78,801 and 50,598 RSUs, respectively, should be awarded. 50% of these RSUs vested immediately upon the Compensation Committee's certification and the remaining 50% vested on December 31, 2022 or will vest on December 31, 2023, subject to the recipient's continued provision of service to the Company through such date. During the three months ended March 31, 2023 and 2022, the Company recorded $0.7 million and $1.3 million, respectively, of compensation expense with respect to these subjective performance-based RSUs granted in 2019 and 2020. As of March 31, 2023, the Compensation Committee had not identified specific performance targets relating to the individual recipients' achievement of strategic objectives for the subjective awards granted in 2021, 2022 and 2023. As such, these awards do not have either a service inception or a grant date for GAAP accounting purposes and the Company recorded no compensation expense with respect to this portion of the performance-based RSUs during the three months ended March 31, 2023 and 2022.

In 2020, 2021, 2022 and 2023, the Company issued an aggregate of 184,760, 135,686, 199,793 and 128,526 RSUs, respectively, to the Company’s executive officers, other employees and directors under the Equity Incentive Plan. These awards vest over a period of up to five years from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting dates.

In January 2022, the Company issued 69,372 performance-based RSUs (at target) to an executive officer under the Equity Incentive Plan. These RSUs vest based on the compound annual growth rate of the Company's adjusted funds from operations ("AFFO CAGR") over a five year performance period, and the payout schedule can produce vesting percentages ranging from 0% to 200% of target. To the extent the performance goal is achieved, these performance-based RSUs will vest in 50% increments on each of the four-year and five-year anniversary of the grant date, subject to the recipient's continued provision of service to the Company through the applicable vesting dates. As of March 31, 2023 and 2022, based on its AFFO CAGR forecasts, the Company believes it is probable that the maximum performance level will be achieved and recorded $0.2 million of compensation expense based off of this estimate during the three months ended March 31, 2023 and 2022.

A portion of the RSUs that vested in 2023 and 2022 were net share settled such that the Company withheld shares with a value equal to the relevant employee's income and employment tax obligations with respect to the vesting and remitted a cash payment to the appropriate taxing authority.

The following table presents information about the Company’s RSUs for the periods presented:

	Three months ended March 31,
(in thousands)	2023		2022
Compensation cost recognized in general and administrative expense	$	2,719	$	2,804
Dividend equivalents declared and charged directly to distributions in excess of cumulative earnings	101		88
Fair value of units vested during the period	8,759		4,903

The following table presents information about the Company’s RSUs as of the dates presented:

(Dollars in thousands)	March 31, 2023		December 31, 2022
Total unrecognized compensation cost	$	20,056	$	13,761
Weighted average period over which compensation cost will be recognized (in years)	2.7		2.8