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Share-Based Compensation
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9 Months Ended | |||||||||||||||||||||||||||||
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Sep. 30, 2013
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||
| Share-Based Compensation |
Share-Based Compensation
Performance Share Units (“PSUs”)
On March 1, 2013, our Board of Trustees granted 69,579 PSUs with an aggregate grant date fair value of $1.9 million to executives. The PSUs have a performance period beginning on January 1, 2013 and concluding on the earlier of December 31, 2015 or the date of: (1) termination by us without cause, death or disability of the executive or constructive discharge of the executive (collectively, “qualified termination”); or (2) a sale event. The number of PSUs earned (“earned PSUs”) at the end of the performance period will be determined based on the percentile rank of COPT’s total shareholder return relative to a peer group of companies, as set forth in the following schedule:
If the percentile rank exceeds the 25th percentile and is between two of the percentile ranks set forth in the table above, then the percentage of the earned PSUs will be interpolated between the ranges set forth in the table above to reflect any performance between the listed percentiles. At the end of the performance period, we, in settlement of the award, will issue a number of fully-vested COPT common shares equal to the sum of:
If a performance period ends due to a sale event or qualified termination, the number of earned PSUs is prorated based on the portion of the three-year performance period that has elapsed. If employment is terminated by the employee or by us for cause, all PSUs are forfeited. PSUs do not carry voting rights.
We computed a grant date fair value of $26.84 per PSU using a Monte Carlo model, which included assumptions of, among other things, the following: baseline common share value of $25.85; expected volatility for COPT common shares of 29.5%; and a risk-free interest rate of 0.33%. We are recognizing the grant date fair value in connection with these PSU awards over the performance period.
The PSUs granted to our executives on March 1, 2012 and March 3, 2011, as described in COPT’s 2012 Annual Report on Form 10-K and our Current Report on Form 8-K dated July 25, 2013, were outstanding at September 30, 2013.
Restricted Shares
During the nine months ended September 30, 2013, certain employees as well as nonemployee members of our Board of Trustees were granted a total of 177,510 restricted shares with an aggregate grant date fair value of $4.7 million (weighted average of $26.24 per share). Restricted shares granted to employees vest based on increments and over periods of time set forth under the terms of the respective awards provided that the employees remain employed by us. The grants of restricted shares to nonemployee Trustees vest on the first anniversary of the grant date provided that the Trustee remains in his or her position. During the nine months ended September 30, 2013, forfeiture restrictions lapsed on 222,381 previously issued common shares; these shares had a weighted average grant date fair value of $31.54 per share, and the aggregate intrinsic value of the shares on the vesting dates was $5.9 million.
Options
During the nine months ended September 30, 2013, 32,756 options to purchase common shares (“options”) were exercised. The weighted average exercise price of these options was $19.45 per share, and the aggregate intrinsic value of the options exercised was $237,000.
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