Incentive Award Plan

3 Months Ended

Mar. 31, 2025

Incentive Award Plan

Incentive Award Plan

10. Incentive Award Plan

The Company’s Incentive Award Plan (the “Plan”) provides for granting discretionary awards to employees, consultants, and non-employee directors. The awards may be made in the form of options, restricted stock awards, dividend equivalents, stock payments, restricted stock units, other incentive awards, LTIP units, or share appreciation rights.

Should a stock grant be forfeited prior to its vesting, the shares covered by the stock grant are added back to the Plan and remain available for future issuance. Shares of common stock tendered or withheld to satisfy the grant or exercise price or tax withholding obligations upon the vesting of a stock grant are not added back to the Plan.

Restricted shares and units are measured at fair value on the date of grant and amortized as compensation expense over the relevant requisite service period or derived service period. The Company has elected to account for forfeitures as they occur.

As of both March 31, 2025 and 2024, the Company’s issued and outstanding awards consisted of both time-based and performance-based restricted stock grants. The Company’s amortization expense, including forfeitures related to restricted shares was as follows (unaudited and in thousands):


		Three Months Ended March 31,
		2025			2024
Amortization expense, including forfeitures		$	2,064		$	2,770

Capitalized compensation cost (1)		$	172		$	117

(1)

The Company capitalizes compensation costs related to restricted shares granted to certain employees whose work is directly related to the Company’s capital investment in its hotels.

Restricted Stock Awards

The Company’s restricted stock awards are time-based restricted shares that generally vest over periods ranging from three years to five years from the date of grant. The following is a summary of non-vested restricted stock award activity:


				Weighted-Average
				Grant Date
		Number of Shares		Fair Value
Unvested at January 1, 2025		688,288		$	10.70
Granted		309,565		$	11.27
Vested		(311,927)		$	10.95
Forfeited		(861)		$	11.27
Unvested at March 31, 2025		685,065		$	10.84

Restricted Stock Units

The Company’s restricted stock units are performance-based restricted shares that generally vest based on the Company’s total relative shareholder return (“RSR”) or the achievement of pre-determined stock price targets during performance periods ranging from three years to five years. The following is a summary of non-vested restricted stock unit activity at target performance:


				Weighted-Average
		Target Number		Grant Date
		of Shares		Fair Value
Unvested at January 1, 2025		1,382,074		$	10.90
Granted		429,587		$	11.48
Vested (1)		(257,911)		$	12.44
Forfeited		(118,018)		$	11.29
Unvested at March 31, 2025		1,435,732		$	10.77

(1)

Includes vested shares at target performance. In January 2025, the 2022 RSR Three-Year Performance Period restricted stock units vested between the target and maximum levels at 169.2% of target, resulting in the additional vesting of 176,286 shares of the Company’s common stock with a grant date fair value of $12.46.

The restricted stock units granted during the first three months of 2025 vest based on the Company’s total relative shareholder return following a three-year performance period. The number of shares that may become vested ranges from zero to 200% of the amount granted. The grant date fair values of the restricted stock units were determined using a Monte Carlo simulation model with the following assumptions:


Expected volatility		30.0	%
Dividend yield (1)		—
Risk-free rate		4.47	%
Expected term		3 years

(1)

Dividend equivalents are assumed to be reinvested in shares of the Company’s common stock and dividend equivalents will only be paid to the extent the award vests.