STOCK COMPENSATION - RESTRICTED STOCK AND PERFORMANCE SHARE GRANTS

The Company’s stock incentive plans provide for the making of awards to employees based upon time-based criteria or through the achievement of performance-related objectives. The Company has issued three types of stock grant awards under these plans: restricted stock with time-based vesting, performance share grants that only vest upon the achievement of specified performance conditions, and performance share grants that include threshold, target, and maximum achievement levels based on the achievement of specific performance milestones. These awards are tied to corporate cash flow goals and the achievement of specified milestone development activities.

The following is a summary of the Company's performance share grants with performance conditions for the year ended December 31, 2013:



Performance Share Grants with Performance Conditions
Below threshold performance		—
Threshold performance		40,764
Target performance		177,044
Maximum performance		233,613

The following is a summary of the Company’s stock grant activity, both time and performance unit grants, assuming target achievement for outstanding performance grants for the following twelve month periods ended:



	December 31 2013		December 31 2012		December 31 2011
Stock Grants Outstanding Beginning of the Year at Target Achievement	688,041		744,508		782,087
New Stock Grants/Additional shares due to maximum achievement	192,348		113,643		64,679
Vested Grants	(361,886	)	(170,110	)	(36,980	)
Expired/Forfeited Grants	(252,802	)	—		(65,278	)
Stock Grants Outstanding December 31, 2013 at Target Achievement	265,701		688,041		744,508

The unamortized cost associated with nonvested stock grants and the weighted-average period over which it is expected to be recognized as of December 31, 2013 was $3,506,000 and 29 months, respectively. The fair value of restricted stock with time-based vesting features is based upon the Company’s share price on the date of grant and is expensed over the service period. Fair value of performance grants that cliff vest based on the achievement of performance conditions is based on the share price of the Company’s stock on the day of grant once the Company determines that it is probable that the award will vest. This fair value is expensed over the service period applicable to these grants. For performance grants that contain a range of shares from zero to maximum we determine, based on historic and projected results, the probability of (1) achieving the performance objective, and (2) the level of achievement. Based on this information, we determine the fair value of the award and measure the expense over the service period related to these grants. Because the ultimate vesting of all performance grants is tied to the achievement of a performance condition, we estimate whether the performance condition will be met and over what period of time. Ultimately, we adjust compensation cost according to the actual outcome of the performance condition. Under the Non-Employee Director Stock Incentive Plan, or NDSI Plan, each non-employee director receives his or her annual compensation in stock.

The following table summarizes stock compensation costs for the Company's 1998 Stock Incentive Plan, or the Employee 1998 Plan, and NDSI Plan for the following periods:



Employee 1998 Plan:	December 31 2013		December 31 2012		December 31 2011
Expensed	$	161,000	$	5,054,000	$	5,016,000
Capitalized	294,000		392,000		166,000
	455,000		5,446,000		5,182,000
NDSI Plan	768,000		386,000		325,000
	$	1,223,000	$	5,832,000	$	5,507,000

During the fourth quarter of 2013, the Company achieved the final performance milestone for Tejon Mountain Village, which was full entitlement with all required permits resulting in 296,389 shares to vest.

During the second quarter of 2012, the Company achieved the second performance milestone for the Tejon Mountain Village project, which was to successfully defend its environmental impact report in the courts and achieve litigation free entitlement resulting in 99,207 shares to vest.

During the third quarter of 2012, we adjusted our estimates as to the achievement of performance milestones for the Centennial project. These adjustments led to a reduction in expense in 2012 costs associated with the Centennial performance milestones due to strategic decisions being made as to the methods and tactics being used to achieve entitlement approval, which will add additional time to the entitlement process.