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Common Stock Incentive Plan
6 Months Ended
Jun. 30, 2013
Common Stock Incentive Plan  
Common Stock Incentive Plan

20.     Common Stock Incentive Plan

 

In 2012, our Board of Directors adopted and stockholders approved the Realty Income Corporation 2012 Incentive Award Plan, or the 2012 Plan, to enable us to motivate, attract and retain the services of directors, employees and consultants considered essential to our long-term success. The 2012 Plan offers our directors, employees and consultants an opportunity to own stock in Realty Income or rights that will reflect our growth, development and financial success.  Under the terms of the 2012 Plan, the aggregate number of shares of our common stock subject to options, restricted stock, stock appreciation rights, restricted stock units and other awards, will be no more than 3,985,734 shares.  The 2012 Plan has a term of 10 years from the date it was adopted by the Board of Directors.

 

The amount of share-based compensation costs recognized in general and administrative expense on our consolidated statements of income was $3.7 million during the second quarter of 2013, $2.6 million during the second quarter of 2012, $7.5 million during the first six months of 2013, and $5.6 million during the first six months of 2012.

 

The following table summarizes our common stock grant activity under the 2012 Plan and the previous 2003 Incentive Award Plan of Realty Income Corporation, or the 2003 Plan. Our common stock grants vest over periods ranging from immediately to 10 years.

 

 

 

For the six months ended

 

For the year ended

 

 

 

June 30, 2013

 

December 31, 2012

 

 

 

 

 

Weighted

 

 

 

Weighted

 

 

 

Number of

 

average

 

Number of

 

average

 

 

 

shares

 

price(1)

 

shares

 

price(1)

 

Outstanding nonvested shares, beginning of year

 

895,550

 

$

19.94

 

925,526

 

$

20.21

 

Shares granted

 

272,787

 

42.89

 

261,811

 

35.06

 

Shares vested

 

(324,625

)

32.14

 

(290,877

)

27.47

 

Shares forfeited

 

(2,143

)

35.84

 

(910

)

31.67

 

Outstanding nonvested shares, end of each period

 

841,569

 

$

26.12

 

895,550

 

$

19.94

 

 

(1) Grant date fair value.

 

During the first six months of 2013, we issued 272,787 shares of common stock under the 2012 Plan. These shares vest over the following service periods: 25,662 vested immediately, 62,989 vest over a service period of one year, 12,000 vest over a service period of three years, and 172,136 vest over a service period of five years.

 

As of June 30, 2013, the remaining unamortized share-based compensation expense totaled $22.0 million, which is being amortized on a straight-line basis over the service period of each applicable award.

 

Due to a historically low turnover rate, we do not estimate a forfeiture rate for our nonvested shares. Accordingly, unexpected forfeitures will lower share-based compensation expense during the applicable period. Under the terms of our 2012 and 2003 Plans, we pay non-refundable dividends to the holders of our nonvested shares. Applicable accounting guidance requires that the dividends paid to holders of these nonvested shares be charged as compensation expense to the extent that they relate to nonvested shares that do not or are not expected to vest. However, since we do not estimate forfeitures given our historical trends, we did not record any compensation expense related to dividends paid in the first six months of 2013 or 2012.