Shareholders' Equity and Share-Based Compensation (Notes)

3 Months Ended

Mar. 31, 2024

Shareholders' Equity and Share-based Compensation

SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

Preferred Stock. The Company’s Board of Directors has designated 6,600,000 shares of the Company’s preferred stock for issuance as Series C Preferred Stock, of which the Company has 4,460,000 of such shares outstanding as of March 31, 2024. The Series C Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption, and will remain outstanding indefinitely unless redeemed, repurchased, or converted into common stock pursuant to the terms of the Series C Preferred Stock. Except under certain limited circumstances described in Article IIIC of the Company’s Restated Articles of Incorporation, the Company may not redeem the Series C Preferred Stock prior to April 15, 2025. On or after that date, the Series C Preferred Stock may be redeemed at any time and from time to time at the Company's option at a cash redemption price of $25.00 per share plus any accumulated and unpaid dividends. Because the Series C Preferred Stock is redeemable only at the option of the issuer, it is classified as equity on the Company’s consolidated balance sheet.

The Series C Preferred Stock pays a cumulative cash dividend equivalent to 6.900% of the $25.00 liquidation preference per share each year until April 15, 2025. The terms of the Series C Preferred Stock state that upon April 15, 2025 and thereafter, the Company will pay cumulative cash dividends at a percentage of the $25.00 liquidation value per share equal to an annual floating rate of 3-month LIBOR plus a spread of 5.461%. When 3-month LIBOR ceases to be a published, the fallback provision provided in the terms of the Series C Preferred Stock will allow for the Company to appoint a third-party independent financial institution of national standing to select an industry accepted alternative base rate. The Company paid its regular quarterly dividend of $0.43125 per share of Series C Preferred Stock on April 15, 2024 to shareholders of record as of April 1, 2024.

Common Stock. During the three months ended March 31, 2024, the Company issued 7,007,448 shares of its common stock through its at-the-market (“ATM”) program at an aggregate value of $86.8 million, net of broker commissions and fees. The Company currently pays a monthly dividend on its common stock. The Company’s timing, frequency, and amount of dividends declared on its common stock are determined by its Board of Directors. When declaring dividends, the Board of Directors considers the Company’s taxable income, the REIT distribution requirements of the Tax Code, and maintaining compliance with dividend requirements of the Series C Preferred Stock, along with other factors that the Board of Directors may deem relevant from time to time.

Share-Based Compensation. The following table presents a rollforward of share-based awards for the periods indicated:


	Three Months Ended
	March 31,
	2024			2023
Type of Award	Shares	Weighted Average Grant Date Fair Value Per Share		Shares	Weighted Average Grant Date Fair Value Per Share
Restricted stock:
Awards outstanding, beginning of period	104,282	$	12.61	133,951	$	15.22
Granted	46,544	12.50		27,932	11.97
Vested	(76,865)	12.76		(36,573)	16.75
Awards outstanding, end of period	73,961	$	12.39	125,310	$	14.05

Target RSUs: (1)
Awards outstanding, beginning of period	394,497	$	13.06	86,666	$	16.57
Granted	214,755	12.50		106,850	11.97
Vested	(68,896)	14.42		(33,213)	13.50
Awards outstanding, end of period	540,356	$	12.66	160,303	$	14.14

Target PSUs: (2)
Awards outstanding, beginning of period	276,866	$	13.17	201,284	$	16.60
Granted	322,132	12.50		160,277	11.97
Vested	—	—		—	—
Awards outstanding, end of period	598,998	$	12.81	361,561	$	16.60

(1)The number of RSUs shown represent the target number of awards. Actual number of shares that will potentially settle may range from 0% if the recipient’s service-based vesting condition is not met to 100% if the service-based vesting condition is met.

(2)The number of PSUs shown represent the target number of awards. Actual number of shares that will potentially settle may range from 0% to 200% based on the achievement of the performance goals defined in each grant award.

As of March 31, 2024, the Company expects 95% of the remaining target PSUs will be settled on their vesting dates. The three-year performance period for 84,695 of target PSUs ended on December 31, 2023, of which 42,348 units were converted to shares of common stock during the three months ended March 31, 2024.

The Company has DERs accrued for RSUs and PSUs of $0.4 million and $0.6 million, respectively, as of March 31, 2024 compared to $0.4 million and $0.8 million, respectively, as of December 31, 2023, which is included on the Company’s consolidated balance sheet within “accrued dividends payable.” During the three months ended March 31, 2024, the Company paid $0.4 million in cash to settle DERs related to RSUs and PSUs awards granted in 2021.

Total share-based compensation expense recognized by the Company for the three months ended March 31, 2024 was $4.3 million compared to $1.0 million for the three months ended March 31, 2023. The increase in share-based compensation for the quarter ended March 31, 2024 is due to accelerated recognition of expense for certain stock incentive awards granted in March 2024 to retirement eligible employees. The following table discloses the

Company’s remaining compensation expense related to stock awards it has granted as of March 31, 2024, which will be amortized over the period disclosed:


	March 31, 2024
($s in thousands)	Remaining Compensation Cost		WAVG Period of Recognition
Restricted stock	$	685	2.2 years
RSUs	4,360		2.5 years
PSUs	2,810		2.5 years
Total	$	7,855	2.5 years