Share-Based Compensation |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation | Share-Based Compensation Equity Commonwealth 2015 Omnibus Incentive Plan (2015 Omnibus Plan) On June 16, 2015, at our 2015 annual meeting of shareholders, our shareholders approved the 2015 Omnibus Plan. The 2015 Omnibus Plan replaced the Equity Commonwealth 2012 Equity Compensation Plan (as amended, the 2012 Plan). The Board of Trustees approved the 2015 Omnibus Plan, subject to shareholder approval, on March 18, 2015 (the Effective Date). On January 26, 2016, the Board of Trustees approved an amendment to the 2015 Omnibus Plan to allow the Compensation Committee (Committee) to authorize in an award agreement a transfer of all or a part of certain equity awards not for value to a “family member” (as defined in the 2015 Incentive Plan). At our annual meeting of shareholders on June 20, 2019, our shareholders approved an amendment to the 2015 Omnibus Plan to increase the number of common shares of beneficial interest authorized thereunder by 2,500,000, and, at our annual meeting of shareholders on June 13, 2023, our shareholders approved an amendment to the 2015 Omnibus Plan to increase the number of common shares of beneficial interest authorized thereunder by 1,650,000 (hereafter, as amended, the 2015 Omnibus Plan). The following description of certain terms of the 2015 Omnibus Plan is qualified in all respects by the terms of the 2015 Omnibus Plan. Eligibility. Awards were available to be granted under the 2015 Omnibus Plan to employees, officers and non-employee trustees of the Company, its subsidiaries or its affiliates, or consultants and advisors (who are natural persons) providing services to the Company, its subsidiaries or its affiliates, or any other person whose participation in the 2015 Omnibus Plan is determined by the Committee to be in the best interests of the Company. Term. The 2015 Omnibus Plan automatically terminated on March 18, 2025, ten years after the Board of Trustees approval of the 2015 Omnibus Plan. Shares Available for Issuance. Subject to adjustment as provided in the 2015 Omnibus Plan, the maximum number of common shares of the Company that were available for issuance under the 2015 Omnibus Plan was 7,400,000 shares. Awards. The following types of awards were available to be made under the 2015 Omnibus Plan, subject to limitations set forth in the 2015 Omnibus Plan: · Stock options; · Stock appreciation rights; · Restricted stock; · Restricted stock units; · Unrestricted stock; · Dividend equivalent rights; · Performance shares and other performance-based awards; · Limited partnership interests in any partnership entity through which the Company conducts or may conduct its business; · Other equity-based awards; and · Cash awards. Recipients of the Company’s restricted shares had the same voting rights as any other common shareholder. During the period of restriction, holders of unvested restricted shares were eligible to receive dividend payments on their shares at the same rate and on the same date as any other common shareholder. The restricted shares were service based awards and vested over a service period determined by the Committee. Recipients of the Company’s restricted stock units, or RSUs, were entitled to receive dividends with respect to the common shares underlying the RSUs if and when the RSUs were earned, at which time the recipient was entitled to receive an amount in cash equal to the aggregate amount of cash dividends that would have been paid in respect to the common shares underlying the recipient’s earned RSUs had such common shares been issued to the recipient on the first day of the performance period. To the extent that an award did not vest, the dividends related to unvested RSUs were forfeited. The RSUs were market-based awards with a service condition and recipients earned RSUs based on the Company’s total shareholder return, or TSR, relative to the TSRs of the companies that comprise the Nareit Office Index over a three-year performance period. Following the end of the three-year performance period, the number of earned awards were determined. The earned awards vested in two tranches with 50% of the earned award vesting following the end of the performance period on the date the Committee determined the level of achievement of the performance metric and the remaining 50% of the earned award vesting approximately one year thereafter, subject to the grant recipient’s continued employment. Compensation expense for the RSUs was determined using a Monte Carlo simulation model and was recognized ratably from the grant date to the vesting date of each tranche. LTIP Units were a class of beneficial interests in the Operating Trust that may be issued to employees, officers or trustees of the Operating Trust, the Company or their subsidiaries, or LTIP Units. Time-based LTIP Units had the same general characteristics as restricted shares and market-based LTIP Units had the same general characteristics as RSUs. Each LTIP Unit converted automatically into an OP Unit on a one-for-one basis when the LTIP Unit vested and its capital account equalized with the per-unit capital account of the OP Units. Holders of LTIP Units generally were entitled to receive the same per-unit distributions as the other outstanding OP Units in the Operating Trust, except that market-based LTIP Units did not participate in distributions until expiration of the applicable performance period, at which time any earned market-based LTIP Units generally became entitled to receive a catch-up distribution for the periods prior to such time. Administration. The 2015 Omnibus Plan was administered by the Company’s Compensation Committee, which determined all terms and recipients of awards under the 2015 Omnibus Plan. 2025 Equity Award Activity Our Board determined that a change in control occurred on February 25, 2025 as a result of the sale of 1225 Seventeenth Street Plaza, which it determined constituted a sale of substantially all of our assets. Accordingly, equity awards outstanding that remained unvested on February 25, 2025 vested on an accelerated basis. During the period from January 1, 2025 through June 13, 2025, 873,406 RSUs vested, and, as a result, we issued 873,406 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 7). In December 2024, as part of the Plan of Sale and to facilitate an efficient wind-down of the Company, the Company terminated its various Registration Statements on Form S-8, which were used to register the Company’s common shares reserved for issuance as equity awards pursuant to the 2015 Omnibus Plan. As a result, the Company was not able to issue additional shares under the 2015 Omnibus Plan with respect to the portion of any outstanding performance-based awards that was determined to be earned in light of above-target performance. Consequently, on January 27, 2025, the Compensation Committee amended the 2022 Performance-Based Awards granted to our employees who received January 26, 2022 Performance-Based Awards, including our named executive officers, to provide that such awards would be settled in cash as to the portion of the 2022 Performance-Based Awards measured above target, with 50% of such awards vesting on February 4, 2025, when the Compensation Committee approved the performance measurement, and 50% of such awards vesting on the change in control date, subject to the terms and conditions of the applicable award agreements. 2024 Equity Award Activity On January 29, 2024, the Committee approved grants in the aggregate amount of 142,146 restricted shares and 288,596 RSUs at target (719,326 RSUs at maximum) to the Company’s officers and certain employees, as part of their compensation for fiscal year 2023. The restricted shares were valued at $19.36 per share, the closing price of our common shares on the New York Stock Exchange, or NYSE, on the grant date. On June 18, 2024, in accordance with the Company’s compensation program for independent Trustees, the Committee awarded each of the six independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2024-2025 year of service on the Board of Trustees. These awards equated to 6,218 shares or time-based LTIP Units per Trustee, for a total of 31,090 shares and 6,218 time-based LTIP Units, valued at $19.30 per share and unit, the closing price of our common shares on the NYSE on that day. These shares and time-based LTIP Units vest one year after the date of the award, on June 18, 2025. During the year ended December 31, 2024, 391,932 RSUs vested, and, as a result, we issued 391,932 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 7). Outstanding Equity Awards The table below presents a summary of restricted share, RSU and LTIP Unit activity for the year ended September 30, 2025 and December 31, 2024:
(1) The table presents the maximum number of shares issued or issuable from outstanding equity awards. RSUs and market-based LTIP Units not earned are the shares market-based award recipients do not receive based on the performance measurement completed at the end of the performance period. The assumptions and fair values for the RSUs and market-based LTIP Units granted for the year ended December 31, 2024 are included in the following table on a per share and unit basis. During the ten months ended October 31, 2024, we recorded $9.1 million of compensation expense, net of forfeitures, in general and administrative expense for grants to our trustees, employees and an eligible consultant related to our equity compensation plans. Compensation expense recorded during the ten months ended October 31, 2024 includes $0.4 million of accelerated vesting due to staffing reductions in 2024. Forfeitures are recognized as they occur.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||