Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock-Based Compensation

Note 11 – Stock-Based Compensation

Restricted Stock Units

During the nine months ended September 30, 2016, we granted 75,500 Restricted Stock Units (“RSUs”) to certain employees. The RSUs vest and settle over two years, subject to each employee’s continued employment. The weighted average fair market value at grant date for these shares was approximately $0.4 million, and we incurred approximately $74,000 and $223,000 of RSU expense for the three and nine months ended September 30, 2016, respectively, of which $40,000 and $121,000 was capitalized in real estate under development for the three and nine months ended September 30, 2016, respectively.

During the nine months ended September 30, 2016, we granted 1,184,167 RSUs to our President and Chief Executive Officer (the “CEO”), pursuant to his employment agreement. The RSUs have vesting periods ranging over five years, subject to the CEO’s continued employment, and settle in shares ranging over an eight-year period. Until shares are issued with respect to the RSUs, the CEO will not have any rights as a shareholder with respect to the RSUs and will not receive dividends or be able to vote the shares represented by the RSUs. We use the fair-market value of our common stock on the date an award is granted to value the grant. The weighted average fair market value at grant date for these shares were approximately $7.1 million, and we incurred approximately $0.8 million and $3.7 million of RSU expense for the three and nine months ended September 30, 2016, respectively, of which $0.6 million and $2.6 million was capitalized in real estate under development for the three and nine months ended September 30, 2016, respectively.

In April, 2015, we issued 238,095 shares of common stock to the CEO to settle vested RSUs from previous RSU grants. In connection with that transaction, we repurchased/withheld (from the 238,095 shares issued) 132,904 shares to provide for the CEO’s withholding tax liability. In accordance with ASC Topic 718, Compensation-Stock Compensation, the repurchase or withholding of immature shares (i.e. shares held for less than six months) by us upon the vesting of a restricted share would ordinarily result in liability accounting. ASC 718 provides an exception, if the fair value of the shares repurchased or withheld is equal or less than the employer’s minimum statutory withholding requirements. The aggregate fair value of the shares repurchased/withheld (valued at the then current fair value of $8.00 per share) was in excess of the minimum statutory tax withholding requirements and as such we are required to account for the restricted stock awards as a liability. At each reporting period in fiscal 2015, we re-measured the liability, until settled, with changes in the fair value being recorded as stock compensation expense in the statement of operations. As of January 1, 2016, we have elected to early adopt ASU 2016-09 (see Note 2 – Summary of Significant Accounting Policies - Recent Accounting Pronouncements) and the adoption has resulted in a reduction in real estate, net, of $0.5 million, a reduction in liability related to stock-based compensation of $5.1 million, an increase in additional paid-in capital of $4.4 million and an increase in retained earnings of $0.2 million.

 

Our RSU activity for the nine months ended September 30, 2016 was as follows:

	Nine Months Ended  September 30, 2016
	(unaudited)
	Number of Shares		Weighted  Average Fair  Value at Grant Date
Non-vested at beginning of period		1,220,097	$	6.65
Granted RSUs		1,259,667	$	5.94
Vested		(635,290)	$	6.33
Non-vested at end of period		1,844,474	$	6.27

As of September 30, 2016, there was approximately $5.1 million of total unrecognized compensation cost related to RSUs which is expected to be recognized through December 2020.

During the nine months ended September 30, 2016, we issued 530,796 shares of common stock to the CEO and to other employees to settle vested RSUs from previous RSU grants. In connection with those transactions, we repurchased/withheld (from the 530,796 shares issued) 278,153 shares to provide for the CEO’s and other employees’ withholding tax liability at the minimum statutory withholding rates.