| Share-Based Compensation |
Note 10—Share-Based Compensation Prior to completion of the IPO, our board of directors adopted, and our stockholders approved, the Invitation Homes Inc. 2017 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, associates, consultants, and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, and to align their interests with those of our stockholders. Under the Omnibus Incentive Plan, we may issue up to 16,000,000 shares of common stock. Our share-based awards consist of time-vesting restricted stock units (“RSUs”), performance and market based vesting RSUs (“PRSUs”), and Outperformance Awards (defined below). Time-vesting RSUs are participating securities for EPS purposes, and PRSUs and Outperformance Awards are not. For detailed discussion of RSUs and PRSUs issued prior to January 1, 2021, refer to our Annual Report on Form 10-K for the year ended December 31, 2020. Share-Based Awards The following summarizes our share-based award activity during the three months ended March 31, 2021. Annual Long Term Incentive Plan (“LTIP”): •Annual LTIP Awards Granted: During the three months ended March 31, 2021, we granted 675,627 RSUs pursuant to LTIP awards (together with previously granted annual LTIP awards, “LTIP Awards”). Each award includes components which vest based on time-vesting conditions, market based vesting conditions, and performance based vesting conditions, each of which is subject to continued employment through the applicable vesting date. The time-vesting RSUs granted during the three months ended March 31, 2021 vest in three equal annual installments based on an anniversary date of March 1, 2021. The PRSUs granted during the three months ended March 31, 2021 may be earned based on the achievement of certain measures over a three year performance period that ends December 31, 2023. The number of PRSUs earned will be determined based on performance achieved during the performance period for each measure at certain threshold, target, or maximum levels and corresponding payout ranges. In general, the LTIP PRSUs are earned after the end of the performance period on the date on which the performance results are certified by our compensation and management development committee (the “Compensation Committee”). All of the LTIP Awards are subject to certain change in control and retirement eligibility provisions that may impact these vesting schedules. •PRSU Results: During the three months ended March 31, 2021, the Compensation Committee certified performance achievement with respect to our 2018 LTIP Awards. Certain PRSUs vested and achieved performance in excess of the target level, resulting in the issuance of an additional 159,180 shares of common stock. Such awards are reflected as an increase in the number of awards granted and vested in the table below. Certain other PRSUs did not achieve performance criteria, resulting in the cancellation of 47,145 awards. Such awards are reflected as an increase in the number of awards forfeited/canceled in the table below. Outperformance Awards On May 1, 2019, the Compensation Committee approved one-time equity based awards with market based vesting conditions in the form of PRSUs and OP Units (the “Outperformance Awards”). The Outperformance Awards may be earned based on the achievement of rigorous absolute total shareholder return and relative total shareholder return thresholds over a three year performance period ending on March 31, 2022. Upon completion of the performance period, the dollar value of the awards earned under the absolute and relative total shareholder return components will be separately calculated, and the number of earned Outperformance Awards will be determined based on the earned dollar value of the awards and the stock price at the performance certification date. Earned awards will vest 50% on March 31, 2022 and 25% on each of the first and second anniversaries of such date, subject to continued employment. The current aggregate $12,390 grant-date fair value of the Outperformance Awards still outstanding was determined based on Monte-Carlo option pricing models which estimate the probability of the vesting conditions being satisfied. Summary of Total Share-Based Awards The following table summarizes activity related to non-vested time-vesting RSUs and PRSUs, other than Outperformance Awards, during the three months ended March 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Time-Vesting Awards | | PRSUs | | Total Share-Based Awards(1) | | | Number | | Weighted
Average Grant
Date Fair Value
(Actual $) | | Number | | Weighted Average Grant Date Fair Value (Actual $) | | Number | | Weighted
Average Grant
Date Fair Value
(Actual $) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance, December 31, 2020 | | 560,123 | | | $ | 24.54 | | | 975,811 | | | $ | 26.36 | | | 1,535,934 | | | $ | 25.70 | | Granted | | 208,482 | | | 29.32 | | | 626,325 | | | 27.44 | | | 834,807 | | | 27.91 | | Vested(2) | | (198,522) | | | (24.24) | | | (436,493) | | | (23.31) | | | (635,015) | | | (23.60) | | Forfeited / canceled | | (741) | | | (27.06) | | | (47,831) | | | (22.05) | | | (48,572) | | | (22.13) | | | | 569,342 | | | $ | 26.40 | | | 1,117,812 | | | $ | 28.34 | | | 1,687,154 | | | $ | 27.68 | |
(1)Total share-based awards excludes Outperformance Awards. (2)All vested share-based awards are included in basic EPS for the periods after each award’s vesting date. The estimated fair value of share-based awards that fully vested during the three months ended March 31, 2021 was $13,715. During the three months ended March 31, 2021, 516 RSUs were accelerated pursuant to the terms and conditions of the Omnibus Incentive Plan and related award agreements. Grant-Date Fair Values The grant-date fair values of the time-vesting RSUs and PRSUs with performance condition vesting criteria are generally based on the closing price of our common stock on the grant date. However, the grant-date fair values for share-based awards with market condition vesting criteria are based on Monte-Carlo option pricing models. The following table summarizes the significant inputs utilized in these models for such awards granted during the three months ended March 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended March 31, 2021 | | | | | | | | | | | | | | | | | | Expected volatility(1) | | 33.2% | | | | | | | | | | | Risk-free rate | | 0.31% | | | | | | | | | Expected holding period (years) | | 2.84 | | | | | | | | | | | | | | | | | | | | | |
(1)Expected volatility was estimated based on the historical volatility of INVH’s realized returns and the applicable index. Summary of Total Share-Based Compensation Expense During the three months ended March 31, 2021 and 2020, we recognized share-based compensation expense as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Three Months
Ended March 31, | | | | | | | | | 2021 | | 2020 | | | | | | General and administrative | | | | | | $ | 4,640 | | | $ | 3,268 | | | | | | Property management expense | | | | | | 1,174 | | | 833 | | | | | | | Total | | | | | | $ | 5,814 | | | $ | 4,101 | | | | | |
As of March 31, 2021, there is $34,187 of unrecognized share-based compensation expense related to non-vested share-based awards which is expected to be recognized over a weighted average period of 2.16 years.
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