Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

A summary of share-based compensation expense included in net income is as follows:



	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Share-based compensation incurred
Grants of common shares	$	12,892		$	10,907		$	9,846
Grants of options	49			292			525
	12,941			11,199			10,371
Capitalized share-based compensation	(1,188		)	(1,024		)	(908		)
Share-based compensation expense	$	11,753		$	10,175		$	9,463

As of December 31, 2014, we have grants outstanding under two share-based compensation plans. In May 2010, our shareholders approved the 2010 Performance Incentive Plan, as amended (“the 2010 Plan”), which authorized the grant of share options, common shares and other share-based awards for up to 2,450,000 common shares of beneficial interest. Our 2001 Long Term Incentive Plan (the “2001 Plan”), which expired in May 2010, authorized the grant of share options, common shares and other share-based awards of 3,250,000 common shares of beneficial interest.

Option awards under both plans are required to have an exercise price at least equal to the closing trading price of our common shares on the date of grant. Options and restricted share awards under these plans generally vest over three to six years and option awards typically have a ten-year contractual term. We pay dividends on unvested shares. Certain options and share awards provide for accelerated vesting if there is a change in control. Additionally, the vesting on certain option and share awards can accelerate in part or in full upon retirement based on the age of the retiree or upon termination without cause.

The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities, term, dividend yields, employee exercises and estimated forfeitures are primarily based on historical data. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of each share award is determined based on the closing trading price of our common shares on the grant date. No options were granted in 2014, 2013 and 2012. The following table provides a summary of option activity for 2014:



	Shares Under Option		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
					(In years)	(In thousands)
Outstanding at December 31, 2013	375,460		$	63.00
Granted	—		—
Exercised	(29,218	)	73.38
Forfeited or expired	(2,500	)	82.15
Outstanding at December 31, 2014	343,742		$	61.55	3.4	$	24,719
Exercisable at December 31, 2014	343,599		$	61.55	3.4	$	24,709

The total cash received from options exercised during 2014, 2013 and 2012 was $2.3 million, $1.0 million and $5.7 million, respectively. The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $1.1 million, $0.7 million and $4.2 million, respectively.

The following table provides a summary of restricted share activity for 2014:



	Shares		Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2013	298,203		$	93.71
Granted	119,677		111.45
Vested	(108,882	)	94.12
Forfeited	(2,030	)	98.02
Unvested at December 31, 2014	306,968		$	100.45

The weighted-average grant-date fair value of stock awarded in 2014, 2013 and 2012 was $111.45, $106.70 and $96.35, respectively. The total vesting-date fair value of shares vested during the year ended December 31, 2014, 2013 and 2012, was $12.1 million, $10.6 million and $10.3 million, respectively.

As of December 31, 2014, there was $15.5 million of total unrecognized compensation cost related to unvested share-based compensation arrangements (i.e. options and unvested shares) granted under our plans. This cost is expected to be recognized over the next 9.4 years with a weighted-average period of 2.1 years.

Subsequent to December 31, 2014, common shares were awarded under various compensation plans as follows:



Date	Award		Vesting Term	Beneficiary
February 6, 2015	50,734	Restricted shares	2-5 years	Officers and key employees
January 2, 2015	5,059	Shares	Immediate	Trustees

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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