v3.25.4
Equity Based Compensation
 12 Months Ended
Dec. 31, 2025
Share-Based Payment Arrangement [Abstract]  
Equity Based Compensation Equity-Based Compensation
Equity Incentive Plan
In May 2023, the Company’s stockholders approved the Essential Properties Realty Trust, Inc. 2023 Incentive Plan (the “2023 Equity Incentive Plan”), which replaced the Essential Properties Realty Trust, Inc. 2018 Incentive Plan (the “2018 Equity Incentive Plan” and, collectively with the 2023 Equity Incentive Plan, the “Equity Incentive Plans”). The 2023 Equity Incentive Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSUs, other stock awards, performance awards and LTIP Units up to an aggregate of 4,300,808 shares of the Company’s common stock, subject to certain conditions. Officers, employees, non-employee directors, consultants, independent contractors and agents who provide services to the Company or to any subsidiary of the Company are eligible to receive such awards. All subsequent awards of equity will be granted under the 2023 Equity Incentive Plan, and no further awards will be made under the 2018 Equity Incentive Plan.
The following table presents information about the Company's RSAs, RSUs and LTIP Units during the years ended December 31, 2025, 2024 and 2023:
Restricted Stock Awards
Restricted Stock UnitsLTIP Units
SharesWtd. Avg. Grant Date Fair ValueUnitsWtd. Avg. Grant Date Fair ValueSharesWtd. Avg. Grant Date Fair Value
Unvested, January 1, 20239,039 $14.12 817,380 $30.26 — $— 
Granted— — 457,859 31.39 — — 
Vested(9,039)14.12 (436,967)26.98 — — 
Forfeited— — (94,419)32.79 — — 
Unvested, December 31, 2023— $— 743,853 $32.56 — $— 
Unvested, January 1, 2024— $— 743,853 $32.56 — $— 
Granted— — 532,311 33.05 — — 
Vested— — (322,372)32.46 — — 
Forfeited— — (391)24.86 — — 
Unvested, December 31, 2024— $— 953,401 $32.87 — $— 
Unvested, January 1, 2025— $— 953,401 $32.87 — $— 
Granted— — 366,333 34.15 221,983 38.39 
Vested— — (473,543)32.72 — — 
Forfeited— — (56,978)32.30 (32,573)38.39 
Unvested, December 31, 2025— $— 789,213 $33.59 189,410 $38.39 
Restricted Stock Awards
In January 2019, RSAs relating to an aggregate of 46,368 shares of unvested restricted common stock were granted to the Company's executive officers, other employees and an external consultant under the Equity Incentive Plans. These RSAs vested over periods ranging from one year to four years from the date of grant, subject to the individual recipient's continued provision of service to the Company through the applicable vesting dates. The Company estimates the grant date fair value of RSAs granted under the Equity Incentive Plans using the average market price of the Company's common stock on the date of grant. The final vesting of these RSAs occurred in January 2023.
The following table presents information about the Company's RSAs for the periods presented: 
Year ended December 31,
(in thousands)202520242023
Compensation cost recognized in general and administrative expense$— $— $2 
Dividends declared on unvested RSAs and charged directly to distributions in excess of cumulative earnings— — — 
Fair value of shares vested during the period— — 128 
Restricted Stock Units and LTIP Units
Performance-Based Awards. The Company issues grants of performance-based RSUs and LTIP Units to the Company’s senior management team under the Equity Incentive Plans. Of these awards, 75%, in the case of performance-based RSU awards issued in 2020, 2021, 2022, and 2023, and 100%, in the case of awards issued subsequent to 2023, are non-vested RSUs or LTIP Units for which vesting percentages and the ultimate number of units vesting is calculated based on the total stockholder return (“TSR”) of the Company’s common stock as compared to the TSR of peer companies identified in the grant agreements over the relevant performance period. The payout schedule can produce vesting percentages ranging from 0% to 250% of target. TSR is calculated over the performance period for each award based upon the average closing price for the 20-trading day period ending December 31st of the year prior to grant divided by the average closing price for the 20-trading day period ending
December 31st of the third year following the grant. The target number of units is based on achieving a TSR equal to the 50th percentile of the peer group. The Company records expense on these TSR RSUs and LTIP Units based on achieving the target.
The following table summarizes the Company’s performance-based RSU and LTIP Unit grants at target during the relevant periods:
202520242023202220212020
Performance-based RSU grants6,840 149,936 147,587 149,699 126,353 84,684 
Performance-based LTIP Unit grants133,191 — — — — — 
Total performance-based grants140,031 149,936 147,587 149,699 126,353 84,684 
The grant date fair values of the TSR RSUs and LTIP Units were measured using a Monte Carlo simulation model based on the following assumptions:
Grant Year
202520242023
Volatility
24%
24%
37%
Risk free rate
4.50%
4.46%
4.36%
The remaining 25% of these performance-based RSUs issued in 2020, 2021, 2022 and 2023 vest based on the Compensation Committee's subjective evaluation of the individual recipient’s achievement of certain strategic objectives over the relevant performance period of the award. In February 2023, 2024 and 2025, the Compensation Committee identified specific performance targets and completed its subjective evaluation in relation to the performance-based RSUs issued in 2020, 2021 and 2022 and concluded that 50,598, 63,448 and 85,114 RSUs, respectively, should be awarded. 50% of these RSUs vested immediately upon the Compensation Committee's certification and the remaining 50% vested or will vest on the December 31st following the Compensation Committee's certification, subject to the recipient's continued provision of service to the Company through such date. The Company began recording compensation expense with respect to these subjective performance-based RSUs granted in 2020, 2021 and 2022 after each respective completion of the Compensation Committee's subjective evaluation.
In April 2023, the Compensation Committee evaluated and awarded 11,334 subjective performance-based RSUs to a former member of the Company's senior management team, which vested immediately. During the year ended December 31, 2023, the Company recorded $0.3 million of compensation expense related to the subjective RSUs awarded to this former employee.
As of December 31, 2025, the Compensation Committee had not identified specific performance targets relating to the individual recipients' achievement of strategic objectives for the subjective awards granted in 2023. As such, these awards do not have either a service inception or a grant date for GAAP accounting purposes and the Company recorded no compensation expense with respect to this portion of the performance-based RSUs during the years ended December 31, 2025, 2024 and 2023.
January 2022 Performance-Based Award. In January 2022, the Company issued 69,372 performance-based RSUs (at target) to an executive officer under the Equity Incentive Plans. These RSUs vest based on the compound annual growth rate of the Company’s adjusted funds from operations ("AFFO CAGR") over a four year performance period ended December 31, 2025, and the payout schedule can produce vesting percentages ranging from 0% to 200% of target. To the extent the performance goal is achieved, these performance-based RSUs will vest in 50% increments on each of the four-year and five-year anniversary of the grant date, subject to the recipient's continued provision of service to the Company through the applicable vesting dates. During the year ended December 31, 2025, based on its actual AFFO CAGR performance, and during the years ended December 31, 2024 and 2023, based on its AFFO CAGR forecasts, the Company concluded that achievement of the maximum performance level was probable and recorded compensation expense based on these actual or estimated results.
Service-Based Awards. The Company also issues RSUs and LTIP Units to the Company’s executive officers, other employees and directors under the Equity Incentive Plans which vest over a period of up to five years
from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting dates.
The following table summarizes the Company’s service-based vesting RSU and LTIP Unit grants during the relevant periods:
202520242023202220212020
RSU grants102,892 179,187 210,406 199,793 135,686 184,760 
LTIP Unit grants88,792 — — — — — 
Total grants191,684 179,187 210,406 199,793 135,686 184,760 
A portion of the RSUs that vested in 2025, 2024, and 2023 were net share settled such that the Company withheld shares with a value equal to the relevant employee's income and employment tax obligations with respect to the vesting and remitted a cash payment to the appropriate taxing authority.
The following table presents information about the Company's RSUs and LTIP Units for the periods presented:
Year ended December 31,
(in thousands)202520242023
Compensation cost recognized in general and administrative expense$14,438 $10,829 $9,002 
Dividend equivalents and distributions declared and charged directly to distributions in excess of cumulative earnings893 472 407 
Fair value of units vested during the period15,497 10,465 11,791 
The following table presents information about the Company's RSUs and LTIP Units as of the dates presented:
December 31,
(Dollars in thousands)20252024
Total unrecognized compensation cost$12,382 $13,955 
Weighted average period over which compensation cost will be recognized (in years)2.02.1