Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

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


	Year Ended December 31,
	2021		2020		2019
	(In thousands)

Grants of common shares and options	$	14,434	$	13,243	$	13,330
Capitalized share-based compensation	(1,425)		(1,319)		(1,054)
Share-based compensation expense	$	13,009	$	11,924	$	12,276

As of December 31, 2021, we have grants outstanding under two share-based compensation plans. In May 2020, our shareholders approved the 2020 Performance Incentive Plan ("the 2020 Plan"), which authorized the grant of share options, common shares, and other share-based awards for up to 1,750,000 common shares of beneficial interest. Our 2010 Long Term Incentive Plan, as amended (the "2010 Plan”), which expired in May 2020, authorized the grant of share options, common shares and other share-based awards for up to 2,450,000 common shares of beneficial interest.

Option awards under the 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 the plan generally vest over three to seven 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 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 2020 and 2019.

The following table provides a summary of the assumptions used to value options granted in 2021:


	Year Ended December 31,
	2021
Volatility	29.3	%
Expected dividend yield	4.1	%
Expected term (in years)	7.5
Risk free interest rate	0.9	%

The weighted-average grant-date fair value of options granted in 2021 was $16.40 per share. The following table provides a summary of option activity for 2021:


	Shares Under Option	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
				(In years)	(In thousands)
Outstanding at December 31, 2020	682	$	152.34
Granted	3,658	95.77
Exercised	—	—
Forfeited or expired	(682)	152.34
Outstanding at December 31, 2021	3,658	$	95.77	9.1	$	148
Exercisable at December 31, 2021	—	$	—	—	$	—

The following table provides a summary of restricted share activity for 2021:


	Shares	Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2020	233,178	$	127.32
Granted	166,746	97.46
Vested	(108,735)	121.77
Forfeited	(2,193)	112.05
Unvested at December 31, 2021	288,996	$	112.29

The weighted-average grant-date fair value of stock awarded in 2021, 2020 and 2019 was $97.46, $124.55 and $133.30, respectively. The total vesting-date fair value of shares vested during the year ended December 31, 2021, 2020 and 2019, was $11.0 million, $12.4 million and $13.0 million, respectively.

On February 10, 2021, 10,441 restricted stock units were awarded to an officer that vest at the end of four years. The final awards earned are based on meeting certain market based performance criteria, and may vary from 0% to 200% of the original award. The weighted-average grant-date fair value of stock awarded in 2021 was $97.01. The following table provides a summary of restricted stock unit activity for 2021:


	Shares	Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2020	—	$	—
Granted	10,441	97.01
Vested	—	—
Forfeited	—	—
Unvested at December 31, 2021	10,441	$	97.01

As of December 31, 2021, there was $20.0 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 4.6 years with a weighted-average period of 2.3 years.

Subsequent to December 31, 2021, common shares were awarded under various compensation plans as follows:

Date

Award

Vesting Term

Beneficiary

January 3, 2022

5,135

Immediate

Trustees

February 9, 2022

103,463

Restricted Shares

3-5 years

Officers and key employees