SHARE BASED AND DEFERRED COMPENSATION

Stock Options

At June 30, 2013, options exercisable for 2,868,838 common shares were outstanding under the Parent Company's shareholder approved equity incentive plan. There were 184,429 options unvested as of June 30, 2013 and $0.3 million of unrecognized compensation expense associated with these options to be recognized over a weighted average term of 0.7 years. During the three and six-month periods ended June 30, 2013 the Company recognized compensation expense related to unvested options of $0.2 million and $0.4 million, of which a nominal amount and $0.1 million, respectively, were capitalized. During the three and six-month periods ended June 30, 2012 the Company recognized compensation expense related to unvested options of $0.4 million and $0.7 million, of which $0.1 million and $0.2 million, respectively, were capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation.

Option activity as of June 30, 2013 and changes during the six months ended June 30, 2013 were as follows:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2013	3,337,549		$	14.50	7.20	$	—
Granted	—		—		—	—
Exercised	(166,620	)	$	10.26	—	—
Canceled	(117,662	)	$	18.61
Outstanding at June 30, 2013	3,053,267		$	15.35	5.68	$	—
Vested/Exerciseable at June 30, 2013	2,868,838		$	15.58	5.56	$	—

Restricted Share Awards

As of June 30, 2013, 563,713 restricted shares were outstanding under the 1997 Plan and vest over three to seven years from the initial grant date. At June 30, 2013, approximately $3.3 million of compensation expense remained to be recognized and is expected to be recognized over a weighted average remaining vesting period of 1.6 years. The Company recognized compensation expense related to outstanding restricted shares of $0.9 million and $1.8 million during the three and six-month periods ended June 30, 2013, of which $0.1 million and $0.3 million, respectively, were capitalized as part of the Company’s policies for capitalizing eligible portions of employee compensation. The Company recognized compensation expense related to outstanding restricted shares of $0.8 million and $1.5 million during the three and six-month periods ended June 30, 2012, of which $0.2 million and $0.3 million, respectively, were capitalized. The expensed amounts are included in general and administrative expense on the Company’s consolidated statement of operations in the respective periods.

The following table summarizes the Company’s restricted share activity for the six months ended June 30, 2013:



	Shares		Weighted Average Grant Date Fair value
Non-vested at January 1, 2013	597,708		$	9.46
Granted	182,576		13.13
Vested	(208,306	)	13.13
Forfeited	(8,265	)	11.41
Non-vested at June 30, 2013	563,713		$	12.56

On February 25, 2013, the Compensation Committee of the Company’s Board of Trustees awarded 157,208 restricted shares to the Company’s executives. The restricted shares will cliff vest after three years from the grant date. The vesting of the restricted shares is also subject to acceleration upon a change in control or if the recipient of the award were to die, become disabled or retire in a qualifying retirement. In the case of two of the Company's executives who have employment agreements with the Company, the vesting of the restricted shares is also subject to acceleration if either executive were to be terminated without cause or resign for good reason. Qualifying retirement means the recipient’s voluntary termination of employment after reaching at least age 57 and accumulating at least 15 years of service with the Company. In accordance with the accounting standard for stock-based compensation, the Company amortizes stock-based compensation costs through the qualifying retirement dates for those executives who meet the conditions for qualifying retirement during the scheduled vesting period.

Restricted Performance Share Units Plan

On each of February 25, 2013, March 1, 2012 and March 2, 2011, the Compensation Committee of the Parent Company’s Board of Trustees awarded an aggregate of 231,093, 242,122, and 113,256 share-based awards, respectively, to its executives. These awards are referred to as Restricted Performance Share Units, or RPSUs. The RPSUs represent the right to earn common shares. The number of common shares, if any, deliverable to award recipients depends on the Company’s performance based on its total return to shareholders during the three-year measurement period that commenced on January 1, 2013 (in the case of the February 25, 2013 awards), January 1, 2012 (in the case of the March 1, 2012 awards), and January 1, 2011 (in the case of the March 2, 2011 awards), and that ends on December 31, 2015, December 31, 2014 or December 31, 2013 (as applicable) or, if earlier, the date of a change of control. In the case of the awards made on February 25, 2013 and March 1, 2012, our performance is compared to the shareholder return of REITs within an index over the measurement period for 50% of the RPSUs awarded on that date, with the remaining 50% being compared to the total shareholder return of REITs within our proxy peer group over such period. In the case of the awards made on March 2, 2011, our performance is compared to the total shareholder return of REITs within an index over the performance period. The vesting of RPSUs is contingent upon the continued employment of the participants through the performance periods (with exceptions for death, disability and qualifying retirement). Dividends are deemed credited to the performance units accounts and are applied to “acquire” additional RPSUs for the account of the unit holder at the price per common share on the dividend payment date. If earned, RPSUs will be settled in common shares in an amount that reflects both the number of RPSUs in the holder’s account at the end of the applicable measurement period and the Company’s total return to shareholders during the applicable three year measurement period relative to the total shareholder returns of the REITs within the index or peer group, as applicable.

On the date of each grant, the RPSUs were valued using a Monte Carlo simulation. The fair values of the 2013, 2012 and 2011 awards on the grant dates were $4.1 million, $4.2 million and $2.0 million, respectively. The fair values of each award are being amortized over the three-year cliff vesting period. The vesting of RPSUs is subject to acceleration upon a change in control or if the recipient of the award were to die, become disabled or retire in a qualifying retirement prior to the vesting date. In the case of two of the Company's executives who have employment agreements with the Company, the vesting of the restricted shares is also subject to acceleration if either executive were to be terminated without cause or resign for good reason. Qualifying retirement means the recipient’s voluntary termination of employment after reaching age 57 and accumulating at least 15 years of service with the Company. In accordance with the accounting standard for stock-based compensation, the Company amortizes stock-based compensation costs through the qualifying retirement date for those executives who meet the conditions for qualifying retirement.

For the three and six-month periods ended June 30, 2013, the Company recognized total compensation expense for the 2013, 2012 and 2011 awards of $1.3 million and $2.5 million, of which $0.2 million and $0.4 million, respectively, were capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation. For the three and six-month periods ended June 30, 2012, the Company recognized total compensation expense for the 2012, 2011 and 2010 awards of $0.7 million and $1.3 million, of which $0.2 million and $0.4 million, respectively, were capitalized.

A total of 372,102 common shares vested on December 31, 2012 (the end of the three-year measurement period for the linked RPSUs) and were delivered to holders of the RPSUs on March 1, 2013 in settlement of the RPSUs. Holders of these RPSUs also received cash dividend equivalents to the cash dividends paid on common shares on February 8, 2013.