Note 11 – Stock-Based Compensation

Stock Incentive Plan

We adopted the Trinity Place Holdings Inc. 2015 Stock Incentive Plan (the “SIP”), effective September 9, 2015. Prior to the adoption of the SIP, we granted restricted stock units (“RSUs”) to our executive officers and employees pursuant to individual agreements. The SIP, which has a ten year term, authorizes (i) stock options that do not qualify as incentive stock options under Section 422 of the Code, or NQSOs, (ii) stock appreciation rights, (iii) shares of restricted and unrestricted common stock, and (iv) RSUs. The exercise price of stock options will be determined by the compensation committee, but may not be less than 100% of the fair market value of the shares of common stock on the date of grant. The SIP authorizes the issuance of up to 800,000 shares of our common stock. Our SIP activity was as follows:

	Nine Months Ended September 30, 2017				Year Ended December 31, 2016
	Number of Shares		Weighted Average Fair Value at Grant Date		Number of Shares		Weighted Average Fair Value at Grant Date

Balance available, beginning of period		614,500				770,000
Granted to employees		(8,600)	$	9.13		(105,500)	$	5.29
Granted to non-employee directors		(18,938)	$	6.88		(50,000)	$	9.85
Deferred under non-employee director's deferral program		(5,643)	$	6.88		-
Balance available, end of period		581,319				614,500

We recognized stock-based compensation expense of approximately $42,000 and $127,000 during the three and nine months ended September 30, 2017, respectively, related to non-employee director stock grants.

Restricted Stock Units

We have typically granted RSUs to certain employees and executive officers each year as part of compensation. These grants have vesting dates ranging from immediate vest at grant date to five years, with a distribution of shares at various dates ranging from the time of vesting up to four years after vesting.

During the nine months ended September 30, 2017, we granted 8,600 RSUs to certain employees. These RSUs vest and settle over various times in a two year period, subject to each employee’s continued employment. Approximately $14,000 and $49,000 in RSU expense related to these shares was amortized for the three and nine months ended September 30, 2017, respectively, of which approximately $3,000 and $15,000 was capitalized in real estate under development for the three and nine months ended September 30, 2017, respectively.

Stock-based compensation expense recognized during the three and nine months ended September 30, 2017 totaled $277,000 and $831,000, respectively, which is net of $311,000 and $1.3 million, respectively, capitalized as part of real estate under development.

Our RSU activity for the nine months ended September 30, 2017 was as follows:

	Nine Months Ended September 30, 2017
	Number of		Weighted Average Fair
	Shares		Value at Grant Date

Non-vested at beginning of period		1,621,235	$	6.38
Granted RSUs		8,600	$	9.13
Vested		(669,917)	$	6.45
Non-vested at end of period		959,918	$	6.35

As of September 30, 2017, there was approximately $1.9 million of total unrecognized compensation cost related to unvested RSUs which is expected to be recognized through December 2020.

During the nine months ended September 30, 2017, we issued 636,355 shares of common stock to employees and executive officers to settle vested RSUs from previous RSU grants. In connection with those transactions, we repurchased 339,375 shares to provide for the employees’ withholding tax liability.

Director Deferred Compensation Program

We adopted our Non-Employee Director’s Deferral Program (the “Deferral Program”) on November 2, 2016. Under the Deferral Program, our non-employee directors may elect to defer receipt of their annual equity compensation. The non-employee directors’ annual equity compensation, and any deferred amounts, are paid under the SIP. Compensation deferred under the Deferral Program is reflected by the grant of stock units under the SIP equal to the number of shares that would have been received absent a deferral election. The stock units, which are fully vested at grant, generally will be settled for an equal number of shares of common stock within 10 days after the participant ceases to be a director. In the event that the Company distributes dividends, each participant shall receive a number of additional stock units (including fractional stock units) equal to the quotient of (i) the aggregate amount of the dividend that the participant would have received had all outstanding stock units been shares of common stock divided by (ii) the closing price of a share of common stock on the date the dividend was issued.

During the nine months ended September 30, 2017, 5,643 stock units were deferred under the Deferral Program.