STOCK BASED COMPENSATION

3 Months Ended

Mar. 31, 2021

Compensation Related Costs [Abstract]

STOCK BASED COMPENSATION

NOTE 7 – STOCK BASED COMPENSATION

The Company accounts for awards of stock options and restricted stock in accordance with ASC 718-10, “Compensation-Stock Compensation.” ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of restricted stock awards is equal to the fair value of the Company’s stock on the grant date. Compensation costs of $750,000 and $574,000 have been recognized for the three months ended March 31, 2021 and 2020, respectively.

On January 13, 2021, the Company awarded a total of 25,000 shares of restricted stock to five employees. The grant date fair value of these restricted stock grants was $370,000. These grants vest ratably over 5 years.

On January 13, 2021, the Company awarded a total of 16,500 shares of common stock to the members of our Board of Directors. The grant date fair value of these awards was $244,000.

On January 29, 2021, the Company awarded special restricted stock grants totaling 146,572 shares to five employees for their successful efforts on the August 2020 groundbreaking Federal National Mortgage Association (“Fannie Mae”) financing at 2.62%, the proceeds of which were used to redeem our 8% Series B Cumulative Redeemable Preferred Stock, Liquidation Preference $25.00 per share. The grant date fair value of these restricted stock grants was $2.2 million, which will be expensed over the vesting period. Vesting of these grants is subject to both time and performance-based vesting criteria as follows:

Vesting Date	Performance Goal to be Met (1)	Percent of Shares Vested
June 30, 2023	Growth in cumulative Normalized Funds from Operations (“Normalized FFO”) over the past 3 years is 2% or greater	100%
June 30, 2023	Growth in cumulative Normalized FFO over the past 3 years is 5% or greater	Bonus of 50% of the Restricted Stock (total of 150%)
June 30, 2023	Growth in cumulative Normalized FFO over the past 3 years is 20% or greater	Bonus of 100% of the Restricted Stock (total of 200%)

(1) Growth in cumulative Normalized FFO is measured as the trailing 12-month Normalized FFO per share at June 30, 2023 divided by the trailing 12-month Normalized FFO per share at June 30, 2020, which amount is $0.64/share at June 30, 2020.

On March 18, 2021, the Company awarded a total of 108,500 shares of restricted stock to four employees. The grant date fair value of these restricted stock grants was $2.1 million. These grants vest ratably over 5 years.

On March 18, 2021, the Company granted options to purchase 159,400 shares of common stock to forty-two participants in the Company’s Amended and Restated 2013 Incentive Award Plan. The grant date fair value of these options amounted to $327,000. These grants vest ratably over five years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants during the three months ended March 31, 2021:

	2021
Dividend yield		5.42	%
Expected volatility		24.27	%
Risk-free interest rate		1.71	%
Expected lives		10
Estimated forfeitures		0

During the three months ended March 31, 2021, twenty-three participants exercised options to purchase a total of 215,000 shares of common stock at a weighted-average exercise price of $12.06 per share for total proceeds of $2.6 million. The aggregate intrinsic value of options exercised was $1.3 million.

As of March 31, 2021, there were options outstanding to purchase 3.2 million shares, with an aggregate intrinsic value of $21.7 million. There were 2,228 shares available for grant under the Amended and Restated 2013 Incentive Award Plan.