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Stock-Based Compensation
 3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
The Company maintains the Cousins Properties Incorporated 2019 Omnibus Incentive Stock Plan (the "2019 Plan") under which the Company has several types of stock-based compensation — stock options, restricted stock, and restricted stock units ("RSUs").
The Company's compensation expense for the three months ended March 31, 2021 relates to restricted stock and RSUs awarded in 2021, 2020, 2019, and 2018. Compensation expense for the three months ended March 31, 2020 relates to restricted stock and RSUs awarded in 2020, 2019, 2018, and 2017. Restricted stock, the 2021 RSUs, and the 2020 RSUs are equity-classified awards (settled in shares of the Company) for which compensation expense per share is fixed. The 2019, 2018, and 2017 RSUs are liability-classified awards (settled in cash) for which the expense fluctuates from period to period dependent, in part, on the Company's stock price. For the three months ended March 31, 2021 and 2020, stock-based compensation expense, net of forfeitures, was recorded as follows (in thousands):
20212020
Equity-classified awards:
Restricted stock$632 $696 
Market based RSUs773 427 
Performance based RSUs256 161 
Director grants6 — 
Total equity-classified award expense, net of forfeitures1,667 1,284 
Liability-classified awards
Market based RSUs113 (1,019)
Performance based RSUs106 (184)
Time vested RSUs162 149 
Dividend equivalent units26 34 
Total liability-classified award expense, net of forfeitures407 (1,020)
Total stock-based compensation expense, net of forfeitures$2,074 $264 
Information on the Company's stock compensation plan, including information on the Company's equity-classified and liability-classified awards is discussed in note 16 of the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
Grants of Equity-Classified Awards
Under the 2019 Plan, in February 2021 the Company granted three types of equity-classified awards to key employees: (1) RSUs based on the Total Stockholder Return ("TSR") of the Company, as defined in the award documents, relative to that of office peers included in the SNL US Office REIT Index (the "Market-based RSUs"), (2) RSUs based on the ratio of cumulative funds from operations per share to targeted cumulative funds from operations per share (the “Performance-based RSUs”), and (3) restricted stock.
The RSU awards are equity-classified awards to be settled in stock with issuance dependent upon the attainment of required service, market, and performance criteria. For the Market-based RSUs the Company expenses an estimate of the fair value of the awards on the grant date, calculated using a Monte Carlo valuation at grant date, ratably over the vesting period, adjusting only for forfeitures when they occur. The expense of these Market-based RSUs is not adjusted for the number of awards that actually vest. For the Performance-based RSUs, the Company expenses the awards over the vesting period using the grant date fair market value of the Company's stock on the grant date. The expense is recognized ratably over the vesting period and adjusted each quarter based on the number of shares expected to vest and for forfeitures when they occur. The performance period for the Performance-based RSUs and TSR measurement period for the Market-based RSUs awarded is three years starting on January 1 of the year of issuance and ending on December 31. The ultimate settlement of these awards can range from 0% to 200% of the targeted number of units depending on the achievement of the market and performance metrics described above.
The restricted stock vests ratably over three years from the grant date. In February 2021, the Company also issued 185 shares of stock to an independent member of the board of directors reflecting the exercise by a director to receive common stock in lieu of prorated cash compensation for service as committee chair, which vested immediately on the issuance date. The Company records restricted stock in common stock and additional paid-in capital at fair value on the grant date, with the offsetting deferred compensation also recorded in additional paid-in capital. The Company records compensation expense over the vesting period.
The following table summarizes the grants of equity-classified awards made by the Company in February 2021.
Shares and Targeted Units Granted
Market-based RSUs101,791 
Performance-based RSUs43,622 
Restricted stock102,262 
Director grants185 
The Monte Carlo valuation used to determine the grant date fair value of the equity-classified Market-based RSUs included the following assumptions for those RSUs granted in February 2021:
Assumptions for RSUs Granted
Volatility(1)37.50 %
Risk-free rate(2)0.17 %
Stock beta(3)1.04 %
(1) Based on historical volatility over three years using daily stock price.
(2) Reflects the yield on three-year Treasury bonds as reported by the Federal Reserve in the H.15 release.
(3) Betas are calculated with up to three years of daily stock price data.