Hudson Pacific Properties, Inc.HPP
Hudson Pacific Properties, Inc. Stock Compensation Disclosure
Share/Unit-Based Compensation
The Company’s 2010 Incentive Plan permits the Company’s board of directors (the “Board”) to grant, among other things, restricted stock, restricted stock units, operating partnership performance units and performance-based awards. As of December 31, 2025, 1.4 million common shares were available for grant under the 2010 Plan. The calculation of shares available for grant is determined after taking into account unvested restricted stock, unvested operating partnership performance units, and unvested RSUs, assuming the maximum bonus pool eligible ultimately is earned and based on a stock price of $10.83.
The Board awards restricted shares to non-employee Board members on an annual basis as part of such Board members’ annual compensation and to newly elected non-employee Board members in accordance with the Non-Employee Director Compensation Program. The time-based awards are generally issued in the second quarter, in conjunction with the director’s election to the Board and the individual share awards vest in equal annual installments over the applicable service vesting period, which is three years. Additionally, certain non-employee Board members elect to receive operating partnership performance units in lieu of their annual cash retainer fees. These awards are generally issued in the first quarter of the year subsequent to the year in which they were earned and are fully-vested upon their issuance.
The Board awards time-based restricted shares, time-based cash-settled restricted shares, or time-based operating partnership performance units to certain employees on an annual basis as part of the employees’ annual compensation. These time-based awards are generally issued in the first or fourth quarter and vest in equal annual installments over the applicable service vesting period, which is generally three years. Additionally, certain awards are subject to a mandatory holding period upon vesting if the grantee is an executive officer. Lastly, certain employees elect to receive operating partnership performance units in lieu of their annual cash bonus. These awards are generally issued in the first or fourth quarter and are fully-vested upon their issuance.
For 2023, the compensation committee of the Board (“Compensation Committee”) adopted an annual Hudson Pacific Properties, Inc. Performance Stock Unit Plan (“PSU Plan”). Under the PSU Plan, the Compensation Committee awards restricted stock units or performance units in the operating partnership to certain employees. The 2023 PSU Plan grants contain Operational Performance Units, which are eligible to vest based on the achievement of operational metrics over a one-year performance period and vests over three years. The number of Operational Performance Units that becomes eligible to vest based on the achievement of operational performance metrics may be adjusted based on the Company’s achievement of the Company’s Relative Total Shareholder Return (“TSR”) compared to the TSR of the FTSE NAREIT All Equity REITs index over a three-year performance period. Certain of the awards granted under the PSU Plan are subject to a two-year post-vesting restriction period, during which any awards earned may not be sold or transferred.
For 2024, the Compensation Committee adopted an annual equity award program for its top three executive officers consisting of a grant of time-based operating partnership performance units and a grant of market-based operating partnership performance units. The time-based awards were to vest in equal annual installments over the applicable service vesting period, which was five years. The market-based awards were to vest upon the satisfaction of both performance and service-based requirements. The quantity earned was based on the achievement of stock price performance hurdles over the five-year performance period commencing on the second anniversary of the grant date. The earned awards would satisfy the service-based requirement in increments of 60%, 20% and 20% on the third, fourth and fifth anniversaries of the grant date, respectively. The awards were also subject to a two-year post-vesting restriction period, during which any awards earned could not be sold or transferred. In the second quarter of 2025, the top three most highly compensated executive officers agreed to a cancellation of their 2024 performance unit equity awards, which resulted in the accelerated recognition of the remaining unamortized compensation expense of $14.3 million during the year ended December 31, 2025, which is recorded in general and administrative on the Consolidated Statement of Operations.
The Compensation Committee did not adopt a performance-based equity award program for 2025.
Time-Based Awards
The time-based restricted shares and operating partnership performance units are equity-classified awards and are valued based on the quoted closing price of the Company’s common stock on the applicable grant date and discounted for any hold restrictions in accordance with ASC 718. The time-based cash-settled restricted shares are liability-classified awards and are valued based on the quoted closing price of the Company’s common stock as remeasured at each balance sheet date. In both cases, the share and unit-based compensation is amortized through the final vesting period on a straight-line basis. Forfeitures of awards are recognized as they occur.
Market-Based and Performance-Based Awards
The following table outlines key components of the 2024 market-based awards, which were subsequently cancelled in the second quarter of 2025:
| Market-Based Performance Unit | |||||
| Maximum bonus pool, in millions | $25.5 | ||||
| Performance period | 1/1/2026 to 12/31/2030 | ||||
| Vesting period | 1/1/2024 to 1/1/2029 | ||||
The following table outlines key components of the 2023 PSU Plan:
| Operational Performance Unit | |||||
| Maximum bonus pool, in millions | $15.0 | ||||
| Performance period | 1/1/2023 to 12/31/2023 | ||||
The stock-based compensation cost of the 2024 market-based awards and the 2023 PSU Plan was valued in accordance with ASC 718 utilizing a Monte Carlo simulation to estimate the probability of the performance vesting conditions being satisfied. The stock-based compensation is amortized through the final vesting period under a graded vesting expense recognition schedule. Forfeitures of awards are recognized as they occur.
The per unit fair value of the 2024 market-based awards and the 2023 PSU awards granted was estimated on the date of grant using the following assumptions in the Monte Carlo simulation:
| 2024 | 2023 | ||||||||||
| Expected price volatility for the Company | 41.00% | 40.00% | |||||||||
| Expected price volatility for the particular REIT index | N/A | 27.00% | |||||||||
| Risk-free rate | 3.89% | 3.44% | |||||||||
| Dividend yield | 3.00 - 6.00% | 5.40% | |||||||||
Summary of Unvested Share Activity
The following table summarizes the activity and status of all unvested stock awards:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Shares | Weighted-Average Grant-Date Fair Value | Shares | Weighted-Average Grant-Date Fair Value | Shares | Weighted-Average Grant-Date Fair Value | |||||||||||||||||||||||||||||||||
| Unvested at January 1 | 83,058 | $ | 51.59 | 99,119 | $ | 69.23 | 44,262 | $ | 161.98 | |||||||||||||||||||||||||||||
| Granted | 64,076 | 14.26 | 27,891 | 40.39 | 88,331 | 52.78 | ||||||||||||||||||||||||||||||||
| Vested | (66,527) | 43.10 | (40,981) | 83.65 | (28,347) | 165.27 | ||||||||||||||||||||||||||||||||
| Canceled | (13,633) | 16.75 | (2,971) | 94.57 | (5,127) | 54.81 | ||||||||||||||||||||||||||||||||
| Unvested at December 31 | 66,974 | $ | 31.41 | 83,058 | $ | 51.59 | 99,119 | $ | 69.23 | |||||||||||||||||||||||||||||
The following table summarizes the activity and status of all unvested time-based restricted operating partnership performance units:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Units | Weighted-Average Grant-Date Fair Value | Units | Weighted-Average Grant-Date Fair Value | Units | Weighted-Average Grant-Date Fair Value | ||||||||||||||||||||||||||||||
| Unvested at January 1 | 471,519 | $ | 54.67 | 181,700 | $ | 68.74 | 51,094 | $ | 157.71 | ||||||||||||||||||||||||||
| Granted | 367,986 | 16.24 | 430,057 | 50.96 | 203,270 | 57.12 | |||||||||||||||||||||||||||||
| Vested | (148,864) | 52.95 | (115,531) | 63.56 | (72,664) | 98.77 | |||||||||||||||||||||||||||||
| Canceled | — | — | (24,707) | 52.22 | — | — | |||||||||||||||||||||||||||||
| Unvested at December 31 | 690,641 | $ | 34.56 | 471,519 | $ | 54.67 | 181,700 | $ | 68.74 | ||||||||||||||||||||||||||
Share/Unit-Based Compensation Recorded
The following table presents the classification and amount recognized for share/unit-based compensation related to the Company’s awards:
| For the Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Expensed stock compensation(1)(2) | $ | 30,399 | $ | 26,009 | $ | 23,863 | |||||||||||
Capitalized stock compensation(3) | 1,669 | 2,160 | 3,021 | ||||||||||||||
Total stock compensation(4) | $ | 32,068 | $ | 28,169 | $ | 26,884 | |||||||||||
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1.Amounts are recorded in general and administrative expenses, office operating expenses and studio operating expenses on the Consolidated Statements of Operations.
2.Amount expensed during the year ended December 31, 2025 includes $14.3 million of accelerated expense recognized in connection with the cancellation of the 2024 performance unit equity awards.
3.Amounts are recorded in investment in real estate, at cost on the Consolidated Balance Sheets.
4.Amounts are recorded in accounts payable, accrued liabilities and other, additional paid-in capital and non-controlling interest—units in the operating partnership on the Consolidated Balance Sheets.
As of December 31, 2025, total unrecognized compensation cost related to unvested share and unit-based payments was $16.1 million. It is expected to be recognized over a weighted-average period of two years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2018 | Feb 16, 2018 | |
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.