14. SHARE BASED COMPENSATION, 401(k) PLAN AND DEFERRED COMPENSATION

Stock Options

At December 31, 2015, options exercisable for 2,624,067 common shares were outstanding under the Parent Company’s shareholder approved equity incentive plan (referred to as the “Equity Incentive Plan”). During the year ended December 31, 2015, the Company did not recognize any compensation expense related to unvested options. During the year ended December 31, 2014, the Company recognized compensation expense related to unvested options that was nominal. For the year ended 2013, the Company recognized compensation expense related to unvested options of $0.7 million. During the year ended December 31, 2015, the Company did not capitalize any compensation expense related to stock options as part of the Company’s review of employee salaries eligible for capitalization. For the years ended December 31, 2014 and 2013, the Company capitalized a nominal amount and $0.1 million, respectively.

Option activity as of December 31, 2015 and changes during the year-ended December 31, 2015 were as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2015		2,684,795		$	15.55		4.10
Exercised		(10,728	)	$	11.89			$	18,989
Forfeited/Expired		(50,000	)	$	20.61
Outstanding at December 31, 2015		2,624,067		$	15.47	3.12		-
Vested/Exercisable at December 31, 2015		2,624,067		$	15.47	3.12		-

401(k) Plan

The Company sponsors a 401(k) defined contribution plan for its employees. Each employee may contribute up to 100% of annual compensation, subject to specific limitations under the Internal Revenue Code. At its discretion, the Company can make matching contributions equal to a percentage of the employee’s elective contribution and profit sharing contributions. Employees automatically vest in employer contributions. Beginning in 2016, the Company will begin funding its 401(k) contributions annually and plan participants must be employed as of December 31^st in order to receive contributions, except for employees eligible for qualifying retirement, as defined under the Internal Revenue Code. Retiring employees will receive contributions at the time of their retirement. The Company contributions were $0.4 million in each of 2015, 2014 and 2013.

Restricted Share Awards

As of December 31, 2015, 506,147 restricted shares were outstanding under the Equity Incentive Plan and vest over three years from the initial grant dates. The remaining compensation expense to be recognized at December 31, 2015 was approximately $2.4 million, and is expected to be recognized over a weighted average remaining vesting period of 1.6 years. During 2015, the Company recognized compensation expense related to outstanding restricted shares of $2.4 million, of which $0.7 million was capitalized as part of the Company’s review of employee salaries eligible for capitalization. For the years ended December 31, 2014 and 2013, the Company recognized $2.7 million (of which $0.6 million was capitalized) and $3.2 million (of which $0.6 million was capitalized), respectively, of compensation expense included in general and administrative expense in the respective periods related to outstanding restricted shares.

The following table summarizes the Company’s restricted share activity during the year-ended December 31, 2015:

	Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Non-vested at January 1, 2015		540,066		$	12.21
Granted		186,791			15.67	$	2,927,538
Vested		(219,312	)		11.78	$	3,272,381
Forfeited		(1,398	)		14.33
Non-vested at December 31, 2015		506,147		$	14.50	$	6,913,968

On February 23, 2015 and March 10, 2015, the Compensation Committee of the Parent Company’s Board of Trustees awarded restricted shares, of which 119,136 cliff vest after three years from the grant date and 33,649 vest ratably over two years. On May 28, 2015, the Compensation Committee of the Parent Company’s Board of Trustees awarded 34,006 restricted shares which vest ratably over three years. Restricted shares that cliff vest are subject to acceleration upon a change in control or if the recipient of the award were to die, become disabled or, in certain cases, retire in a qualifying retirement. Qualifying retirement generally 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

The Compensation Committee of the Parent Company’s Board of Trustees has granted performance share-based awards (referred to as Restricted Performance Share Units, or RPSUs) to officers of the Parent Company. The RPSUs are settled in common shares, with the number of common shares issuable in settlement determined based on the Company’s total shareholder return over specified measurement periods compared to total shareholder returns of comparative groups over the measurement periods. The table below presents certain information as to unvested RPSU awards.

	RPSU Grant
	2/25/2013			3/11/2014			3/12/2014		2/23/2015			Total

(Amounts below in shares, unless otherwise noted)
Non-vested at January 1, 2015		199,577			130,717			61,720		-			392,014
Units Granted		-			-			-		186,395			186,395
Units Accelerated for Qualifying Retirement		(8,255	)		(7,562	)		-		(7,003	)		(22,820	)
Non-vested at December 31, 2015		191,322			123,155			61,720		179,392			555,589

Measurement Period Commencement Date	1/1/2013			1/1/2014			1/1/2014		1/1/2015
Measurement Period End Date	12/31/2015			12/31/2016			12/31/2016		12/31/2017
Units Granted		231,093			134,284			61,720		186,395
Fair Value of Units on Grant Date (in thousands)	$	4,137		$	2,624		$	1,225	$	3,933

The Company values each RPSU on its grant date using a Monte Carlo simulation. 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 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 during the schedule vesting period.

For the year ended December 31, 2015, the Company recognized total compensation expense for the 2015, 2014 and 2013 RPSU awards of $4.2 million, of which $1.2 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation. For the year ended December 31, 2014, the Company recognized total compensation expense for the 2014, 2013 and 2012 RPSU awards of $3.2 million, of which $1.1 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation. For the year ended December 31, 2013, the Company recognized total compensation expense for the 2013, 2012 and 2011 RPSU awards of $4.4 million, of which $0.8 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation.

The remaining compensation expense to be recognized at December 31, 2015 was approximately $2.0 million, and is expected to be recognized over a weighted average remaining vesting period of 1.0 year.

The Company issued 486,056 common shares on February 1, 2015 in settlement of RPSUs that had been awarded on March 1, 2012 (with a three-year measurement period ended December 31, 2014). Holders of these RPSUs also received a cash dividend of $0.15 per share for these common shares on February 6, 2015.

Employee Share Purchase Plan

The Parent Company’s shareholders approved the 2007 Non-Qualified Employee Share Purchase Plan (the “ESPP”), which is intended to provide eligible employees with a convenient means to purchase common shares of the Parent Company through payroll deductions and voluntary cash purchases at an amount equal to 85% of the average closing price per share for a specified period. Under the plan document, the maximum participant contribution for the 2015 plan year is limited to the lesser of 20% of compensation or $50,000. The ESPP allows the Parent Company to make open market purchases, which reflects all purchases made under the plan to date. In addition, the number of shares separately reserved for issuance under the ESPP is 1.25 million. During the year ended December 31, 2015, employees made purchases under the ESPP of $0.5 million and the Company recognized $0.1 million of compensation expense related to the ESPP. During the years ended December 31, 2014 and 2013, employees made purchases under the ESPP of $0.4 million and the Company recognized $0.1 million of compensation expense related to the ESPP. Compensation expense represents the 15% discount on the purchase price. The Board of Trustees of the Parent Company may terminate the ESPP at its sole discretion at any time.

Deferred Compensation

In January 2005, the Parent Company adopted a Deferred Compensation Plan (the “Plan”) that allows trustees and certain key employees to voluntarily defer compensation. Compensation expense is recorded for the deferred compensation and a related liability is recognized. Participants may elect designated benchmark investment options for the notional investment of their deferred compensation. The deferred compensation obligation is adjusted for deemed income or loss related to the investments selected. At the time the participants defer compensation, the Company records a liability, which is included in the Company’s consolidated balance sheet. The liability is adjusted for changes in the market value of the participant-selected investments at the end of each accounting period, and the impact of adjusting the liability is recorded as an increase or decrease to compensation cost.

The Company has purchased mutual funds which can be utilized as a funding source for the Company’s obligations under the Plan. Participants in the Plan have no interest in any assets set aside by the Company to meet its obligations under the Plan. For each of the years ended December 31, 2015 and December 31, 2014, the Company recorded a nominal amount of deferred compensation costs, net of investments in the company-owned policies and mutual funds. For the year ended December 31, 2013, the Company recorded a net increase in compensation costs of $0.2 million, net of investments in the company-owned policies and mutual funds.

Participants in the Plan may elect to have all or a portion of their deferred compensation invested in the Company’s common shares. The Company holds these shares in a rabbi trust, which is subject to the claims of the Company’s creditors in the event of the Company’s bankruptcy or insolvency. The Plan does not permit diversification of a participant’s deferral allocated to the Company common shares and deferrals allocated to Company common shares can only be settled with a fixed number of shares. In accordance with the accounting standard for deferred compensation arrangements where amounts earned are held in a rabbi trust and invested, the deferred compensation obligation associated with the Company’s common shares is classified as a component of shareholder’s equity and the related shares are treated as shares to be issued and are included in total shares outstanding. At December 31, 2015 and 2014, 0.7 million and 0.4 million of such shares, respectively, were included in total shares outstanding. Subsequent changes in the fair value of the common shares are not reflected in operations or shareholders’ equity of the Company.