Employee Benefit Plans

Officer, Management and Director Compensation Programs

The officers of the Company participate in an annual non-equity incentive program pursuant to which they are eligible to earn cash payments based on a percentage of their annual base salary in effect for December of the applicable year. Under this component of our executive compensation program, officers are eligible to earn additional cash compensation to the extent specific performance-based metrics are achieved during the most recently completed year. The position held by each officer has a target annual incentive percentage that ranges from 35% to 130% of base salary. The more senior the position, the greater the portion of compensation that varies with performance.

The percentage amount an officer may earn under the annual non-equity incentive plan is the product of the target annual incentive percentage times an “actual performance factor,” which can range from zero to 200%. The actual performance factor depends upon the relationship between actual performance in specific areas at each of our divisions and predetermined goals. For corporate officers, the actual performance factor is based on the goals and criteria applied to the Company’s performance as a whole. For officers who oversee our divisions, the actual performance factor is based on the goals and criteria applied partly to that division’s performance and partly to the Company’s performance overall. Payments under our annual non-equity incentive plan are accrued and expensed in the year earned.

Certain other employees participate in a similar annual non-equity incentive program. Incentive eligibility ranges from 6% to 30% of annual base salary. The actual incentive payment is determined by a mix of the Company's overall performance, the performance of any applicable division and the individual’s performance during each year. These incentive payments are also accrued and expensed in the year earned.


13.	Employee Benefit Plans - Continued

The Company's officers generally receive annual grants of stock options and restricted stock under the Company's long-term equity incentive plan on or about March 1 of each year. Restricted stock grants are also made annually to directors and certain other employees. Except as set forth in the next sentence, dividends received on restricted stock are non-forfeitable and are paid at the same rate and on the same date as on shares of Common Stock. With respect to shares of total return-based restricted stock issued to the Company's chief executive officer, dividends accumulate and are payable only if and to the extent the shares vest. Dividends paid on subsequently forfeited shares are expensed. Additional total return-based restricted stock may be issued at the end of the three-year periods if actual performance exceeds certain levels of performance. Such additional shares, if any, would be fully vested when issued. No expense is recorded for additional shares of total return-based restricted stock that may be issued at the end of the three-year period since that possibility is reflected in the grant date fair value. The following table sets forth the number of shares of Common Stock reserved for future issuance under the Company's long-term equity incentive plans:



	December 31,
	2015	2014
Outstanding stock options and warrants	702,228	592,321
Possible future issuance under equity incentive plans	3,084,158	1,382,406
	3,786,386	1,974,727

Of the possible future issuance under the Company' long-term equity incentive plan at December 31, 2015, no more than an additional 1.1 million shares can be in the form of restricted stock.

During each of the years ended December 31, 2015, 2014 and 2013, we recognized $6.9 million of share-based compensation expense. Because REITs generally do not pay income taxes, we do not realize tax benefits on share-based payments. At December 31, 2015, there was $4.9 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 2.3 years.

- Stock Options

Stock options issued prior to 2005 and after 2013 vest ratably on an annual basis over four years and expire after 10 years. Stock options issued from 2005 through 2013 vest ratably on an annual basis over four years and expire after seven years. The value of all options as of the date of grant is calculated using the Black-Scholes option-pricing model and is amortized over the respective vesting period or the service period, if shorter, for employees who are or will become eligible under the Company's retirement plan. The weighted average fair values of options granted during 2015, 2014 and 2013 were $6.19, $6.75 and $6.50, respectively, per option. The fair values of the options granted were determined at the grant dates using the following assumptions:



	2015		2014		2013
Risk free interest rate (1)	1.7	%	1.8	%	1.0	%
Common stock dividend yield (2)	3.7	%	4.5	%	4.7	%
Expected volatility (3)	22.4	%	30.3	%	32.4	%
Average expected option life (years) (4)	5.75		5.75		5.75

__________


(1)	Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the option grants.


(2)	The dividend yield is calculated utilizing the dividends paid for the previous one-year period and the per share price of Common Stock on the date of grant.


(3)	Based on the historical volatility of Common Stock over a period relevant to the related stock option grant.


(4)	The average expected option life is based on an analysis of the Company's historical data.


13.	Employee Benefit Plans - Continued

The following table sets forth stock option activity:



	Options Outstanding
	Number of Options		Weighted Average Exercise Price
Balances at December 31, 2012	1,129,309		$	30.10
Options granted	168,700		36.50
Options exercised	(423,627	)	28.22
Balances at December 31, 2013	874,382		32.24
Options granted	190,330		37.90
Options canceled	(134,628	)	41.93
Options exercised	(352,763	)	27.21
Balances at December 31, 2014	577,321		34.92
Options granted	197,408		45.61
Options canceled	(3,829	)	40.21
Options exercised	(83,672	)	34.89
Balances at December 31, 2015 (1) (2)	687,228		$	37.97

__________


(1)	The outstanding options at December 31, 2015 had a weighted average remaining life of 6.1 years.


(2)	The Company had 218,816 options exercisable at December 31, 2015 with a weighted average exercise price of $33.03, weighted average remaining life of 3.2 years and intrinsic value of $2.3 million. Of these exercisable options, there were no exercise prices higher than the market price of our Common Stock at December 31, 2015.

Cash received or receivable from options exercised was $3.3 million, $11.1 million and $12.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. The total intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was $0.9 million, $5.0 million and $3.9 million, respectively. The total intrinsic value of options outstanding at December 31, 2015, 2014 and 2013 was $4.3 million, $5.4 million and $4.3 million, respectively. The Company generally does not permit the net cash settlement of exercised stock options, but does permit net share settlement so long as the shares received are held for at least a year. The Company has a practice of issuing new shares to satisfy stock option exercises.

- Time-Based Restricted Stock

Shares of time-based restricted stock vest ratably on an annual basis over four years. The value of grants of time-based restricted stock is based on the market value of Common Stock as of the date of grant and is amortized to expense over the respective vesting period or the service period, if shorter, for employees who are or will become eligible under the Company's retirement plan.


13.	Employee Benefit Plans - Continued

The following table sets forth time-based restricted stock activity:



	Number of Shares		Weighted Average Grant Date Fair Value
Restricted shares outstanding at December 31, 2012	222,502		$	30.31
Awarded and issued (1)	86,144		36.64
Vested (2)	(94,037	)	27.80
Forfeited	(1,813	)	36.01
Restricted shares outstanding at December 31, 2013	212,796		33.96
Awarded and issued (1)	94,932		37.76
Vested (2)	(85,660	)	32.87
Restricted shares outstanding at December 31, 2014	222,068		35.97
Awarded and issued (1)	71,994		45.91
Vested (2)	(85,809	)	35.14
Forfeited	(3,533	)	39.94
Restricted shares outstanding at December 31, 2015	204,720		$	39.74

__________


(1)	The weighted average fair value at grant date of time-based restricted stock issued during the years ended December 31, 2015, 2014 and 2013 was $3.3 million, $3.6 million and $3.2 million, respectively.


(2)	The vesting date fair value of time-based restricted stock that vested during the years ended December 31, 2015, 2014 and 2013 was $3.9 million, $3.2 million and $3.4 million, respectively. Vested shares include those shares surrendered by employees to satisfy tax withholding obligations in connection with such vesting.

- Total Return-Based Restricted Stock

Shares of total return-based restricted stock vest to the extent the Company's absolute total returns for certain pre-determined three-year periods exceed predetermined goals. The amount subject to vesting ranges from zero to 150%. Notwithstanding the Company’s absolute total returns, if the Company’s total return exceeds 100% of the peer group total return index, at least 50% of total return-based restricted stock issued in 2013 will vest at the end of the applicable period and at least 75% of total return-based restricted stock issued in 2015 and 2014 will vest at the end of the applicable period. The weighted average grant date fair value of such shares of total return-based restricted stock issued in 2015, 2014 and 2013 was determined to be $43.77, $35.58 and $31.73, respectively, and is amortized over the respective three-year period or the service period, if shorter, for employees who are or will become eligible under the Company's retirement plan. The fair values of the total return-based restricted stock granted were determined at the grant dates using a Monte Carlo simulation model and the following assumptions:



	2015		2014		2013
Risk free interest rate (1)	1.0	%	0.7	%	0.4	%
Common stock dividend yield (2)	3.8	%	4.7	%	4.9	%
Expected volatility (3)	43.0	%	43.4	%	43.4	%

__________


(1)	Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the total return-based restricted stock grants.


(2)	The dividend yield is calculated utilizing the dividends paid for the previous one-year period and the average per share price of Common Stock during the three-month period preceding the date of grant.


(3)	Based on the historical volatility of Common Stock over a period relevant to the related total return-based restricted stock grant.


13.	Employee Benefit Plans - Continued

The following table sets forth total return-based restricted stock activity:



	Number of Shares		Weighted Average Grant Date Fair Value
Restricted shares outstanding at December 31, 2012	125,288		$	32.87
Awarded and issued (1)	65,486		31.73
Vested (2)	(41,863	)	24.75
Forfeited	(15,523	)	24.75
Restricted shares outstanding at December 31, 2013	133,388		35.29
Awarded and issued (1)	74,569		35.58
Restricted shares outstanding at December 31, 2014	207,957		35.70
Awarded and issued (1) (3)	118,817		37.64
Vested (2) (3)	(129,762	)	31.97
Forfeited	(1,709	)	37.25
Restricted shares outstanding at December 31, 2015	195,303		$	36.66

__________


(1)	The fair value at grant date of total return-based restricted stock issued during the years ended December 31, 2015, 2014 and 2013 was $2.5 million, $2.7 million and $2.1 million, respectively, at target.

(2)

The vesting date fair value of total return-based restricted stock that vested during the years ended December 31, 2015 and 2013 was $5.9 million and $1.5 million, respectively, based on the performance of the specific plans. Vested shares include those shares surrendered by employees to satisfy tax withholding obligations in connection with such vesting. There were no vested shares of total return-based restricted stock during the year ended December 31, 2014.


(3)	The 2015 amounts include 61,860 additional shares from the 2012 plan since the plan's payout was in excess of the initial 100% target.

401(k) Retirement Savings Plan

We have a 401(k) Retirement Savings Plan covering substantially all employees who meet certain age and employment criteria. We contribute amounts for each participant at a rate of 75% of the employee’s contribution (up to 6% of each employee’s bi-weekly salary and cash incentives, subject to statutory limits). During the years ended December 31, 2015, 2014 and 2013, we contributed $1.3 million, $1.2 million and $1.1 million, respectively, to the 401(k) savings plan. The assets of this qualified plan are not included in our Consolidated Financial Statements since the assets are not owned by us.

Retirement Plan

The Company has a retirement plan for employees with at least 30 years of continuous service or are at least 55 years old with at least 10 years of continuous service. Subject to advance written notice and a non-compete agreement, eligible retirees would be entitled to receive a pro rata amount of the annual non-equity incentive compensation earned during the year of retirement. Stock options and time-based restricted stock would be non-forfeitable and vest according to the terms of their original grants. Eligible retirees would also be entitled to retain any total return-based restricted stock that subsequently vests after the retirement date according to the terms of their original grants. For employees who meet the age and service eligibility requirements, 100% of their annual grants are expensed at the grant date as if fully vested. For employees who will meet the age and service eligibility requirements within the normal vesting periods, the grants are amortized over the shorter service period.


13.	Employee Benefit Plans - Continued

Deferred Compensation

Prior to 2010, officers could elect to defer all or a portion of their cash compensation, which was then invested in unrelated mutual funds under our non-qualified deferred compensation plan. These investments are recorded at fair value, which aggregated $2.7 million and $3.6 million at December 31, 2015 and 2014, respectively, and are included in prepaid expenses and other assets, with an offsetting deferred compensation liability recorded in accounts payable, accrued expenses and other liabilities. Deferred amounts ultimately payable to the participants are based on the value of the related mutual fund investments. Accordingly, changes in the value of the unrelated mutual funds are recorded in interest and other income and the corresponding offsetting changes in the deferred compensation liability are recorded in general and administration expense. As a result, there is no effect on our net income.

The following table sets forth our deferred compensation liability:



	Year Ended December 31,
	2015			2014			2013
Beginning deferred compensation liability	$	3,635		$	3,996		$	3,354
Mark-to-market adjustment to deferred compensation (in general and administrative expenses)	(32		)	235			803
Distributions from deferred compensation plans	(867		)	(596		)	(161		)
Total deferred compensation liability	$	2,736		$	3,635		$	3,996

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan pursuant to which employees may contribute up to 25% of their cash compensation for the purchase of Common Stock. At the end of each quarterly offering period, each participant's account balance, which includes accumulated dividends, is applied to acquire shares of Common Stock at a cost that is calculated at 85% of the average closing price on the New York Stock Exchange on the five consecutive days preceding the last day of the quarter. In the years ended December 31, 2015, 2014 and 2013, the Company issued 29,496, 28,682 and 27,250 shares, respectively, of Common Stock under this Plan. The 15% discount on newly issued shares, which is taxable income to the participants and is recorded by us as additional compensation expense, aggregated $0.2 million in each of the years ended December 31, 2015, 2014 and 2013. As a general rule, shares purchased under the Plan must be held for at least a year.