Quarterly report pursuant to Section 13 or 15(d)

EQUITY AND EARNINGS PER SHARE

v3.20.1
EQUITY AND EARNINGS PER SHARE
 3 Months Ended
Mar. 31, 2020
Stockholders' Equity Note [Abstract]  
EQUITY AND EARNINGS PER SHARE
EQUITY AND EARNINGS PER SHARE
 
A. Stock Options

The following is a summary of the changes in the Company’s outstanding options for the three months ended March 31, 2020:
 
 
Number of Options
 
Weighted Average Strike Price
 
Weighted Average Life Remaining (in years)
Balance at December 31, 2019
 
6,898,346

 
$
3.26

 
 
Expired
 
(1,117,118
)
 
5.44

 
 
Forfeited
 
(770,652
)
 
4.74

 
 
Balance at March 31, 2020
 
5,010,576

 
$
2.55

 
2.92
 
 
 
 
 
 
 
Exercisable at March 31, 2020
 
3,702,422

 
$
2.56

 
2.94


As of March 31, 2020, the Company’s outstanding options were summarized as follows:
 
 
Number of Options
Held by the former Manager
 
3,627,245

Issued to the former Manager and subsequently transferred to certain of the Manager’s employees (A)
 
1,382,998

Issued to the independent directors
 
333

Issued to Drive Shack employees
 
—

Total
 
5,010,576

Weighted average strike price
 
$
2.55


(A)
The Company and the former Manager agreed that options held by certain employees formerly employed by the Manager would not terminate or be forfeited as a result of the Termination and Cooperation Agreement, and the vesting of such options relate to the relevant holder’s employment with the Company and its affiliates following January 1, 2018. In both February 2017 and April 2018, the former Manager issued 1,152,495 options to certain employees formerly employed by the Manager as part of their compensation. The options fully vest and are exercisable one year prior to the option expiration date, beginning March 2020 through January 2024. In July 2019, a certain employee was terminated by the Company and 921,992 options reverted back to the former Manager. 

Stock-based compensation expense is recognized on a straight-line basis through the vesting date of the options. Stock-based compensation expense related to the employee options was $(0.1) million during the three months ended March 31, 2020, and $1.2 million during the three months ended March 31, 2019, and was recorded in general and administrative expense on the Consolidated Statements of Operations. The unrecognized stock-based compensation expense related to the unvested options was $2.0 million as of March 31, 2020 and will be expensed over a weighted average of 2.2 years.

B. Restricted Stock Units ("RSUs")

The following is a summary of the changes in the Company’s RSUs for the three months ended March 31, 2020.

 
 
Number of RSUs
 
Weighted Average Grant Date Fair Value (per unit)
Balance at December 31, 2019
 
520,618

 
$
4.66

Released
 
(1,762
)
 
$
4.73

Forfeited
 
(67,248
)
 
$
4.58

Balance at March 31, 2020
 
451,608

 
$
4.67



The Company grants RSUs to the non-employee directors as part of their annual compensation. The RSUs are subject to a one year vesting period. During the three months ended March 31, 2020, the Company granted no RSUs to non-employee directors and no RSUs granted to non-employee directors vested. The Company also grants RSUs to employees as part of their annual compensation. The RSUs vest in equal annual installments on each of the first three anniversaries of the grant date. During the three months ended March 31, 2020, the Company granted no RSUs to employees. Stock-based compensation expense is recognized on a straight-line basis through the vesting date of the RSUs. Stock-based compensation expense related to RSUs was $0.3 million during the three months ended March 31, 2020, respectively, and less than $0.1 million for the three months ended March 31, 2019. Stock-based compensation expense was recorded in general and administrative expense on the Consolidated Statements of Operations. The unrecognized stock-based compensation expense related to the unvested RSUs was $1.3 million as of March 31, 2020 and will be expensed over a weighted average of 2.0 years.

C. Dividends

On November 11, 2019, the Company declared dividends of $0.609375, $0.503125 and $0.523438 per share on the 9.750% Series B, 8.050% Series C and 8.375% Series D preferred stock, respectively, for the period beginning November 1, 2019 and ending January 31, 2020. Dividends totaling $1.4 million were paid on January 31, 2020. No dividends were declared during the three months ended March 31, 2020.

D. Earnings Per Share

The following table shows the Company's basic and diluted earnings per share (“EPS”):
 
Three Months Ended March 31,
 
2020
 
2019
Numerator for basic and diluted earnings per share:
 
 
 
Loss from continuing operations after preferred dividends and noncontrolling interests
$
(18,757
)
 
$
(15,995
)
Loss Applicable to Common Stockholders
$
(18,757
)
 
$
(15,995
)
Denominator:
 
 
 
Denominator for basic earnings per share - weighted average shares
67,069,534

 
67,027,104

Effect of dilutive securities
 
 
 
Options
—

 
—

RSUs
—

 
—

Denominator for diluted earnings per share - adjusted weighted average shares
67,069,534

 
67,027,104

Basic earnings per share:
 
 
 
Loss from continuing operations per share of common stock, after preferred dividends and noncontrolling interests
$
(0.28
)
 
$
(0.24
)
Loss Applicable to Common Stock, per share
$
(0.28
)
 
$
(0.24
)
Diluted earnings per share:
 
 
 
Loss from continuing operations per share of common stock, after preferred dividends and noncontrolling interests
$
(0.28
)
 
$
(0.24
)
Loss Applicable to Common Stock, per share
$
(0.28
)
 
$
(0.24
)


The Company’s dilutive securities are outstanding stock options and RSUs. During the three months ended March 31, 2020, based on the treasury stock method, the Company had 964,335 potentially dilutive securities, which were excluded due to the Company's loss position. During the three months ended March 31, 2019, based on the treasury stock method, the Company had 2,233,692 potentially dilutive securities.