We have a stock award and incentive program to attract and retain officers and independent directors. As of December 31, 2023, approximately 2.4 million shares were available for issuance under our Amended and Restated 2020 Stock Award and Incentive Plan (the “Plan”). The total number of shares available for issuance under this Plan may increase due to any forfeiture, cancellation, exchange, surrender, termination, or expiration of an award outstanding under the Plan. Awards under the Plan may be in the form of restricted stock, stock options, or other types of awards as authorized under the Plan. Our plans are administered by the Compensation and Human Resources Committee of the Board of Directors.

We grant awards that are subject to time-based vesting and require continuous employment, typically over a period of four years from the grant date. We also grant awards that vest based on AIR's total shareholder return ("TSR") relative to various indices or other performance based metrics.

The vesting of TSR awards is based on AIR’s TSR relative to apartment REIT indices, or other real estate indices, over a forward-looking performance period of three years. Earned TSR-based awards, if any, typically vest 50% on each of the third anniversary and fourth anniversary of the grant date, based on continued employment. The vesting of performance awards is conditioned on performance goals achieved in the current year, and typically vest over two to three years. Vested LTIP II units may be converted at the holders’ option to common OP Units for a conversion price over a term of 10 years. Our stock options expire generally 10 years from the date of grant. In the case of stock options, the exercise price of the options granted may not be less than the fair market value of a share of Common Stock at the date of grant.

We recognize compensation cost associated with time-based awards ratably over the requisite service periods, which are typically four years. We recognize compensation cost related to the TSR-based awards, which have graded vesting periods, over the requisite service period for each separate vesting tranche of the award, commencing on the grant date. The value of the TSR-based awards takes into consideration the probability that the market condition will be achieved; therefore previously recorded compensation cost is not adjusted in the event that the market condition is not achieved and awards do not vest.


	2023		2022		2021
Share-based compensation expense (1)	$	8,874	$	7,463	$	7,360
Capitalized share-based compensation (2)	422		503		295
Total share-based compensation (3)	$	9,296	$	7,966	$	7,655

(3)Amounts are recorded in additional paid-in capital and common noncontrolling interests in AIR Operating Partnership in the AIR consolidated balance sheets, and in general partner and special limited partner and limited partners in the AIR Operating Partnership consolidated balance sheets.

As of December 31, 2023, total unvested compensation cost not yet recognized was $12.9 million. We expect to recognize this compensation over a weighted-average period of approximately 1.6 years.

As of December 31, 2023, we had stock options outstanding of 831,297, which had no aggregate intrinsic value and a weighted-average remaining contractual term of 2.2 years. We had 718,961 of stock options exercisable as of December 31, 2023, which had no aggregate intrinsic value and a weighted-average remaining contractual term of 1.8 years. The intrinsic value of a stock option represents the amount by which the current price of the underlying stock exceeds the exercise price of the option.

As of December 31, 2023, we had 134,615 shares unvested at a weighted-average grant date fair value of $47.78 per share for restricted stock awards that vest over time. As of December 31, 2023, we had 308,327 of shares unvested based on the target performance payout, at a weighted-average grant date fair value of $43.72 per share for performance based restricted stock awards.

The aggregate fair value of restricted stock awards that vested during the years ended December 31, 2023, 2022, and 2021 was $1.7 million, $4.3 million, and $3.2 million, respectively.

Options are granted with an exercise price at the fair market value of our Common Stock on the date of grant and expiration, subject to employment, which is generally 10 years from the date of grant. Factors considered are the simulated stock price as well as total stockholder return relative to both the NAREIT Equity Apartment Index and the MSCI US REIT Index.

The risk-free interest rate reflects the annualized yield of a zero coupon United States Treasury security with a term equal to the expected term of the awards. The expected dividend yield reflects expectations regarding cash dividend amounts per share paid on our Common Stock during the expected term of the awards. Expected volatility reflects an average of the historical volatility of our Common Stock during the historical period commensurate with the expected term of the award that ended on the date of grant, and the implied volatility is calculated from observed call option contracts closest to the expected term. The derived vesting period of restricted stock and TSR LTIP I units was determined based on

the graded vesting terms. The expected term of the stock options and TSR LTIP II units was based on historical exercises and post-vesting terminations. The valuation assumptions for the 2023, 2022, and 2021 grants were as follows:


	2023			2022			2021
Grant date market value of a common share	$	38.26		$	53.91		$	36.84
Risk-free interest rate	3.85%- 4.14%			1.20% - 1.68%			0.24% - 0.78%
Dividend yield	4.70		%	3.50		%	4.00		%
Expected volatility	28.56% - 28.59%			22.63% - 24.83%			23.08% - 28.21%
Derived vesting period of TSR Restricted Stock and TSR LTIP I units	3.5 years			3.5 years			3.2 years
Weighted average expected term of TSR Stock Options and LTIP II units	5.5 years			5.4 years			5.4 years