Equity-Based Compensation of the Company

3 Months Ended

Mar. 31, 2025

Share-Based Payment Arrangement [Abstract]

Equity-Based Compensation of the Company

We have a shareholder approved equity-based compensation plan, the Incentive Award Plan of Tanger Inc. and Tanger Properties Limited Partnership, as amended (the “Plan”), which covers our non-employee directors, officers, employees and consultants. Under the Plan, we may grant equity-based awards in the form of (among other things)

restricted common shares of the Company, restricted share units with respect to common shares of the Company

(which we sometimes refer to as “notional units”) and LTIP units of the Operating Partnership.

Per the Operating Partnership’s limited partnership agreement, when a common share is issued by the Company, the Operating Partnership issues one corresponding operating partnership unit to the Company’s wholly-owned subsidiary, Tanger LP Trust. Therefore, when the Company grants an equity-based award in respect of its common shares, the Operating Partnership treats each award as having been granted by the Operating Partnership.

Each LTIP unit, if and upon vesting, is convertible, upon the satisfaction of minimum allocations to the capital

account of the LTIP unit for federal income tax purposes, into a non-voting Class C common unit of the Operating

Partnership. Each such Class C common unit may be exchanged by the holder for one common share of the

Company. LTIP units are intended to qualify as profits interests for US federal income tax purposes.

In the discussion below, the term “we” refers to the Company and the Operating Partnership together and the term “shares” is meant to also include corresponding units of the Operating Partnership.

We recorded equity-based compensation expense in general and administrative expenses in our consolidated statements of operations as follows (in thousands):


	Three months ended
	March 31,
	2025		2024
Restricted common shares and time-based LTIP units	$	1,672	$	2,359
Performance-based notional unit awards and performance-based LTIP units	1,168		1,051
Options	86		87
Total equity-based compensation	$	2,926	$	3,497

Equity-based compensation expense capitalized as a part of rental property and deferred lease costs were as follows (in thousands):


	Three months ended
	March 31,
	2025		2024
Equity-based compensation expense capitalized	$	33	$	74

Restricted Common Share Awards

During February 2025, the Company granted to its non-employee directors and executive officers, approximately 30,000 and 169,000 restricted common shares, respectively. The grant date fair values of the awards were $34.59 and $35.30 per share, respectively. The restricted common shares vest ratably over a three-year period on February 15th of each year for executive officers and over a one-year period on February 15th for non-employee directors. Compensation expense related to the amortization of the deferred compensation is being recognized in accordance with the vesting schedule of the restricted shares.

For certain restricted shares that vest and restricted share units that are settled during the period, we withhold shares with value equivalent up to the employees’ maximum statutory obligation for the applicable income and other employment taxes, and remit cash to the appropriate taxing authorities. The total number of shares withheld upon vesting or settlement were approximately 212,000 and 376,000 for the three months ended March 31, 2025 and 2024, respectively. The total number of shares withheld was based on the value of the common shares on the vesting or settlement date as determined by our closing share price on the prior day. Total amounts paid for the employees’ tax obligation to taxing authorities were $7.3 million and $10.5 million for the three months ended March 31, 2025 and 2024, respectively. These amounts are reflected as financing activities within the consolidated statements of cash flows.

Basic Long Term Incentive Plan Units

During 2025, the Company granted to certain non-employee directors 15,180 LTIP units with time-based vesting requirements and a grant date fair value of $34.59 per unit that vest ratably over one year subject to continued service. Compensation expense for these units is being recognized over a one-year period.

2025 Performance Share Plan

During 2025, the Compensation Committee of the Company approved the general terms of the Tanger Inc. 2025 Performance Share Plan (the “2025 PSP”) covering the Company's executive officers whereby a maximum of approximately 62,000 restricted common shares and 234,000 LTIP units may be earned if certain share price appreciation goals are achieved over a three-year measurement period. The 2025 PSP is a long-term incentive compensation plan. Recipients may earn notional units which may convert into restricted common shares of the Company or LTIP units, based on the Company’s absolute total shareholder return and its total shareholder return relative to its peer group over a three-year measurement period. Any shares or LTIP units earned at the end of the three-year measurement period are subject to a time-based vesting schedule, with 50% of the shares and units vesting immediately following the measurement period, and the remaining 50% vesting one-year thereafter, contingent upon continued employment with the Company through the vesting date (unless accelerated due to termination prior thereto (a) by the Company without cause, (b) by participant for good reason or, (c) due to death or disability).

The following table sets forth 2025 PSP performance targets and other relevant information about the 2025 PSP:


Performance targets (1)
Absolute portion of award:
Percent of total award	33.3%
Absolute total shareholder return range	26%	-	40.5%
Percentage of units to be earned	20%	-	100%

Relative portion of award:
Percent of total award	66.7%
Percentile rank of peer group range(2)	30th	-	80th
Percentage of units to be earned	20%	-	100%

Maximum number of restricted common shares that may be earned	62,000
February grant date fair value per LTIP unit	$22.33
February grant date fair value per share	$22.22

(1)The number of restricted common shares received and LTIP units earned under the 2025 PSP will be determined on a pro-rata basis by linear interpolation between total shareholder return thresholds, both for absolute total shareholder return and for relative total shareholder return amongst the Company’s peer group.

(2)The peer group is based on companies included in the FTSE Nareit Retail Index.

The fair values of the 2025 PSP awards granted during the three months ended March 31, 2025, were determined at the grant dates using a Monte Carlo simulation pricing model and the following assumptions:


Risk free interest rate (1)	4.0	%
Expected dividend yield (2)	4.0	%
Expected volatility (3)	29	%

(1)Represents the interest rate as of the grant date on U.S. treasury bonds having the same life as the estimated life of the restricted unit grants.

(2)The dividend yield is calculated utilizing the average dividend yield over the previous three-year period and the current dividend yield as of the valuation date.

(3)Based on a mix of historical and implied volatility for our common shares and the common shares of our peer index companies over the measurement period.

2022 Performance Share Plan

In February 2025, the measurement period for the 2022 Performance Share Plan concluded. Based on the Company’s absolute and relative total shareholder return over the three-year measurement period, we issued 401,613 restricted common shares in February 2025, with 258,532 vesting immediately and the remaining 143,081 vesting in February 2026. The vesting of those 143,081 shares is contingent upon continued employment with the Company through the vesting date (unless terminated prior thereto (a) by the Company without cause, (b) by participant for good reason or (c) due to death or disability, in which cases vesting will accelerate).