CENTERSPACECSR
CENTERSPACE Stock Compensation Disclosure
SHARE-BASED COMPENSATION
Share-based awards are provided to officers, non-officer employees, and trustees under the 2025 Incentive Plan approved by shareholders on May 14, 2025 (the “2025 Incentive Plan”), which allows for awards in the form of cash, unrestricted and restricted common shares, stock options, stock appreciation rights, and restricted stock units (“RSUs”) up to an aggregate of 650,000 shares over the ten-year period in which the plan is in effect. Under the 2025 Incentive Plan, officers and non-officer employees may earn share awards under a long-term incentive plan (“LTIP”), which is a forward-looking program that
measures long-term performance over the stated performance period. These awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year.
Through December 31, 2025, awards under the 2025 Incentive Plan consisted of RSUs. The Company accounts for forfeitures of restricted and unrestricted common shares, RSUs, and stock options when they occur instead of estimating the forfeitures.
Prior to the approval of the 2025 Incentive Plan, share based awards were provided to officers, non-officer employees, and trustees under the 2015 Incentive Plan approved by shareholders on September 15, 2015, as amended and restated on May 18, 2021 (the “2015 Incentive Plan”), which allowed for awards in the form of cash, unrestricted and restricted common shares, stock options, stock appreciation rights, and RSUs up to an aggregate of 775,000 shares over the ten-year period in which the plan was in effect. Through December 31, 2025, awards under the 2015 Incentive Plan consisted of restricted and unrestricted common shares, RSUs, and stock options.
The Company expenses the grant date fair value of LTIP awards in accordance with ASC Topic 718 Compensation-Stock Compensation. ASC 718 requires companies to measure the cost of the recipient services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. The cost of the share award is expensed over the requisite service period, which is usually the vesting period.
Share-Based Compensation Expense
Total share-based compensation expense recognized in the Consolidated Financial Statements for the years ended December 31, 2025, 2024, and 2023 for all share-based awards was as follows:
| (in thousands) | ||||||||||||||
| Year Ended December 31, | ||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||
| Share-based compensation expense | $ | 3,445 | $ | 3,014 | $ | 3,295 | ||||||||
Year Ended December 31, 2025 LTIP Awards
Awards granted to employees on January 1, 2025, under the 2015 Incentive Plan, consisted of an aggregate of 25,121 time-based RSU awards and 11,870 performance RSUs based on total shareholder return (“TSR”). The time-based RSUs vest as to one-third of the shares on each of January 1, 2026, January 1, 2027, and January 1, 2028.
The performance RSUs are earned based on the Company’s TSR as compared to the FTSE Nareit Equity Index over a forward looking three-year period. The maximum number of performance RSUs eligible to be earned is 23,740 RSUs, which is 200% of the performance RSUs granted. Earned awards (if any) will fully vest as of the last day of the measurement period. These awards have market conditions in addition to service conditions that must be met for the awards to vest. Compensation expense is recognized ratably based on the grant date fair value, as determined using the Monte Carlo valuation model, regardless of whether the market conditions are achieved and the awards ultimately vest. Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved. The Company based the expected volatility on a weighted average of the historical volatility of the Company’s daily closing share price, the risk-free interest rate on the interest rates on U.S. treasury bonds with a maturity equal to the remaining performance period of the award, and the expected term on the performance period of the award. The assumptions used to value the TSR performance RSUs were an expected volatility of 27.30%, a risk-free interest rate of 4.27%, and an expected life of 3 years. The share price at the grant date, January 1, 2025, was $66.15 per share.
Awards granted to employees on September 1, 2025, under the 2025 Incentive Plan, consist of 363 time-based RSUs and 2,682 performance RSUs based on TSR. The time-based RSUs vest as to one-third of the shares on each of September 1, 2026, January 1, 2027, and January 1, 2028. The performance RSUs are based on the Company’s TSR, as described above. The maximum number of performance RSUs eligible to be earned is 5,364 RSUs, which is 200% of the performance RSUs granted. The terms of this performance award are consistent with the terms of the performance awards described above.
Restricted Stock Units
During the years ended December 31, 2025, 2024, and 2023 the Company issued 25,934, 21,125, and 22,799 time-based RSUs to employees, respectively, and 9,527, 10,192, and 9,200 to trustees, respectively. The RSUs to employees generally vest over a three-year period and the RSUs to trustees generally vest over a one-year period. The fair value of the time-based RSUs granted during the years ended December 31, 2025, 2024, and 2023 was $2.3 million, $1.9 million, and $1.8 million, respectively. The fair value of share awards at grant date for non-employee trustees was approximately $607,000, $689,000, and $545,000 for the years ended December 31, 2025, 2024, and 2023, respectively. All of these awards are classified as equity awards. The
Company recognizes compensation expense associated with the time-based awards ratably over the requisite service period. The total compensation cost related to non-vested time-based RSUs not yet recognized as of December 31, 2025, 2024, and 2023 was $1.1 million, $966,000, and $798,000, respectively, which the Company expects to recognize over weighted average periods of 1.5 years, 1.40 years, and 1.60 years, respectively.
The unamortized value of RSUs with market conditions as of December 31, 2025, 2024, and 2023 was approximately $1.5 million, $1.4 million, and $1.0 million, respectively.
The activity for the years ended December 31, 2025, 2024, and 2023 related to RSUs was as follows:
| RSUs with Service Conditions | RSUs with Market Conditions | |||||||||||||||||||
| Wtd Avg Grant- | Wtd Avg Grant- | |||||||||||||||||||
| Shares | Date Fair Value | Shares | Date Fair Value | |||||||||||||||||
| Unvested at December 31, 2022 | 21,414 | $ | 88.83 | 30,042 | $ | 106.90 | ||||||||||||||
| Granted | 31,999 | 57.21 | 20,497 | 82.63 | ||||||||||||||||
Vested(1) | (22,036) | 78.74 | (13,820) | 87.04 | ||||||||||||||||
| Forfeited | (383) | 73.85 | (14,653) | 96.05 | ||||||||||||||||
| Unvested at December 31, 2023 | 30,994 | $ | 65.54 | 22,066 | $ | 104.01 | ||||||||||||||
| Granted | 31,317 | 61.28 | 18,876 | 80.60 | ||||||||||||||||
Vested(1) | (15,626) | 66.15 | (9,771) | 130.91 | ||||||||||||||||
| Forfeited | (192) | 58.42 | — | — | ||||||||||||||||
| Unvested at December 31, 2024 | 46,493 | $ | 61.16 | 31,171 | $ | 81.40 | ||||||||||||||
| Granted | 35,461 | 65.38 | 14,552 | 90.01 | ||||||||||||||||
Vested(1) | (34,476) | 64.48 | (12,295) | 82.63 | ||||||||||||||||
| Forfeited | (357) | 62.87 | — | — | ||||||||||||||||
| Unvested at December 31, 2025 | 47,121 | $ | 61.90 | 33,428 | $ | 84.70 | ||||||||||||||
(1)Includes 17,545, 2,102, and 2,855 restricted shares withheld for taxes during the years ended December 31, 2025, 2024, and 2023.
Stock Options
During the year ended December 31, 2025, Centerspace did not issue any stock options to employees. Previously issued stock options vest over a four-year period. As of December 31, 2025, the total compensation costs related to non-vested stock options not yet recognized is $18,000, which the Company expects to recognize over a weighted average period of 1.00 year. The stock option activity for the years ended December 31, 2025, 2024, and 2023 was as follows:
| Number of Shares | Weighted Average Exercise Price | ||||||||||
| Outstanding at December 31, 2022 | 196,623 | $ | 74.02 | ||||||||
| Exercisable at December 31, 2022 | 80,421 | 66.94 | |||||||||
| Granted | 45,955 | 58.67 | |||||||||
Exercised(1) | (20,061) | 58.67 | |||||||||
| Expired | (103,768) | 73.03 | |||||||||
| Forfeited | (1,739) | 80.66 | |||||||||
| Outstanding at December 31, 2023 | 117,010 | $ | 71.41 | ||||||||
| Exercisable at December 31, 2023 | 59,477 | 70.06 | |||||||||
| Outstanding at December 31, 2024 | 117,010 | $ | 71.41 | ||||||||
| Exercisable at December 31, 2024 | 85,433 | 70.64 | |||||||||
Exercised(1) | (11,632) | 66.36 | |||||||||
| Expired | (1,555) | $ | 70.64 | ||||||||
| Outstanding at December 31, 2025 | 103,823 | $ | 71.99 | ||||||||
| Exercisable at December 31, 2025 | 86,821 | $ | 72.18 | ||||||||
(1)Includes 11,522 and 19,560 stock options withheld to cover purchase price in cashless exercise during the years ended December 31, 2025 and 2023.
The intrinsic value of a stock option represents the amount by which the current price of the underlying stock exceeds the exercise price of the option. As of December 31, 2025, stock options outstanding had $121,000 aggregate intrinsic value with a weighted average remaining contractual term of 5.1 years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2017 | Jun 28, 2017 | |
| 2016 | Jun 29, 2016 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.