Annual report pursuant to Section 13 and 15(d)

EQUITY-BASED AWARDS

v3.3.1.900
EQUITY-BASED AWARDS
12 Months Ended
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
EQUITY-BASED AWARDS
EQUITY-BASED AWARDS
The Company grants awards in the form of LTIP units and restricted common shares to provide equity based incentive compensation to members of our senior management team, our independent trustees, advisers, consultants, other personnel, and as consideration for self storage property acquisitions.
LTIP Units
LTIP units are a special class of partnership interest in our operating partnership that allow the holder to participate in the ordinary and liquidating distributions received by holders of the OP units (subject to the achievement of specified levels of profitability by our operating partnership or the achievement of certain events). LTIP units do not have full parity with OP units with respect to liquidating distributions and do not receive ordinary distributions until such parity is reached pursuant to the terms of the LP Agreement. If such parity is reached under the LP Agreement, upon vesting, vested LTIP units may be converted into an equal number of OP units, and thereafter have all the rights of OP units, including redemption rights. The grant date fair value for all LTIP units was based on the fair value of comparable equity instruments of the Company such as its OP units, discounted for certain rights available to the similar equity instrument holders and not available to the LTIP unit holders. LTIP units were first granted under the 2013 Long-Term Incentive Plan (the "2013 Plan"), which authorized up to 2.5 million LTIP units for issuance. In connection with our initial public offering, we terminated the 2013 Plan but the awards granted thereunder remained outstanding after its termination. Additional LTIP units are issued pursuant to the LP Agreement discussed in Note 1.
Through December 31, 2015, an aggregate of 2,474,710 LTIP units have been issued under the 2013 Plan and 310,051 LTIP units have been issued under the LP Agreement. Some of the granted LTIP units vested immediately or upon completion of the Company's initial public offering. Others vest upon the contribution of self storage properties or along a schedule at certain times prior to December 31, 2017.
Compensatory Grants
The following table summarizes activity for compensatory LTIP units for the years ended December 31, 2015 and 2014 and the nine months ended December 31, 2013:
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
Nine Months Ended December 31,
 
2015
 
2014
 
2013
 
Number of LTIP units
 
Weighted Average Grant-Date Fair Value
 
Number of LTIP units
 
Weighted Average Grant-Date Fair Value
 
Number of LTIP units
 
Weighted Average Grant-Date Fair Value
Outstanding unvested at beginning of year
509,166

 
$
10.07

 
287,600

 
$
9.28

 

 
$

Granted
6,000

 
13.00

 
378,550

 
10.37

 
406,600

 
9.28

Vested
(278,901
)
 
9.84

 
(156,984
)
 
9.35

 
(119,000
)
 
9.28

Unvested at end of year
236,265

 
$
10.41

 
509,166

 
$
10.07

 
287,600

 
$
9.28


The aggregate fair value of compensatory LTIP units that vested during the years ended December 31, 2015 and 2014 and the nine months ended December 31, 2013 was $2.7 million$1.5 million and $1.1 million, respectively. Total compensation cost recognized for compensatory LTIP units was $3.0 million$1.5 million and $1.1 million for the years ended December 31, 2015 and 2014 and the nine months ended December 31, 2013, respectively. At December 31, 2015, total unvested compensation cost not yet recognized was $2.3 million. The Company expects to recognize this compensation cost over a period of approximately 2.0 years.
If the grantee has a termination of service for any reason during the vesting period, the unvested LTIP units will be forfeited. Compensation expense related to LTIP units granted to members of our senior management team, our independent trustees, advisers, consultants and other personnel is included in general and administrative expense in the accompanying statements of operations.
Acquisition Consideration Grants
On December 31, 2013, the Company granted 1,683,560 LTIP units under the 2013 Plan to PROs, including NSA Predecessor, as part of the consideration for their respective self storage property acquisitions and contributions. The following table presents the number of units issued and units vested for acquisition grants for the years ended December 31, 2015 and 2014 and the nine months ended December 31, 2013:
 
 
 
 
Total LTIP units
 
Units issued on December 31, 2013
1,683,560

 
Units vested upon issuance in 2013 related to:
 
 
Properties contributed or sourced by PROs
(314,410
)
 
Contributions by NSA Predecessor(1)
(107,080
)
 
Total unvested units, December 31, 2013
1,262,070

 
Units vested in 2014 related to:
 
 
Properties contributed or sourced by PROs(2)
(379,970
)
 
Contributions by NSA Predecessor(1)
(359,200
)
 
Total unvested units, December 31, 2014
522,900

 
Units vested in 2015 related to:
 
 
Properties contributed or sourced by PROs(2)
(99,100
)
 
Total unvested units, December 31, 2015
423,800

(3) 
 
 
 
(1) 
The contribution of self storage properties by NSA Predecessor was accounted for as a reorganization of entities under common control and, accordingly, no value was recognized in the Company's financial statements for these LTIP units.  
(2) 
The aggregate fair value of vested LTIP units associated with self storage properties contributed or sourced by PROs represents consideration for the self storage property acquisitions set forth in Note 6.  
(3) 
As of December 31, 2015, the remaining unvested LTIP units will vest as additional self storage properties are contributed or sourced by the PROs. The fair value of such LTIP units will be recorded as additional acquisition consideration based on the fair value in the period such acquisitions are completed. 
The aggregate fair value of purchase consideration recognized during the years ended December 31, 2015 and 2014 and the nine months ended December 31, 2013 was $1.4 million$3.7 million and $2.9 million, respectively.
LP Agreement Grants to Consultants
Pursuant to the LP Agreement, during the years ended December 31, 2015 and 2014, the Company issued 88,981 and 221,070 LTIP units, respectively, that were immediately vested to consultants that provided acquisition services that are included in acquisition costs in the accompanying statements of operations. The aggregate fair value of LTIP units was $1.0 million for the year ended December 31, 2015 and $2.1 million for the year ended December 31, 2014.
Restricted Common Shares
Restricted common shares were first granted under the 2015 National Storage Affiliates Trust Equity Incentive Plan (the "2015 Plan"), which authorizes our compensation, nominating, and corporate governance committee to grant share options, restricted common shares, phantom shares, dividend equivalent rights, LTIP units and other restricted limited partnership units issued by our operating partnership and other equity-based awards up to an aggregate of 5% of the common shares issued and outstanding from time to time on a fully diluted basis (assuming, if applicable, the exercise of all outstanding options and the conversion of all warrants and convertible securities, including OP units and LTIP units, into common shares). As of December 31, 2015, we did not have outstanding under our equity compensation plan, any options, warrants or rights to purchase our common shares. Through December 31, 2015, an aggregate of 17,210 restricted common shares have been issued under the 2015 Plan. These restricted common shares vest over a period of 2.5 years.
The following table summarizes activity for restricted common shares for the year ended December 31, 2015:
 
 
 
 
 
Year Ended December 31,
 
2015
 
Number of Restricted Common Shares
 
Weighted Average Grant-Date Fair Value
Outstanding at beginning of year

 
$

Granted
17,210

 
12.40

Vested
(6,000
)
 
12.40

Forfeited
(210
)
 
12.40

Unvested at end of year
11,000

 
$
12.40


The aggregate fair value and total compensation cost of restricted common shares that vested during the year ended December 31, 2015 was $0.1 million. At December 31, 2015, total unvested compensation cost not yet recognized was $0.1 million. The Company expects to recognize this compensation cost over a period of approximately 2.0 years. If the grantee has a termination of service for any reason during the vesting period, the unvested restricted common shares will be forfeited. Compensation expense related to restricted common shares is included in general and administrative expense in the accompanying statements of operations.