Healthcare Realty Trust IncHR
Healthcare Realty Trust Inc Stock Compensation Disclosure
Stock and Other Incentive Plans
Stock Incentive Plan
The Company's Incentive Plan permits the grant of incentive awards to its employees and directors in any of the following forms: options, stock appreciation rights, restricted stock, restricted or deferred stock units, performance awards, dividend equivalents, or other stock-based awards, including units in the OP. As of December 31, 2025 and 2024, the Company had share-based awards available for grant under the Incentive Plan of 3,979,387 and 6,140,496 shares, respectively. Non-vested shares issued to employees under the Incentive Plan are generally subject to fixed vesting periods varying from to eight years beginning on the date of issue. If a recipient voluntarily terminates his or her relationship with the Company or is terminated for cause before the end of the vesting period, the shares are forfeited, at no cost to the Company. Once the shares have been issued, the recipient has the right to receive dividends and the right to vote the shares through the vesting period. Compensation expense, included in general and administrative expense, recognized during the years ended December 31, 2025, 2024 and 2023 from the amortization of the value of shares over the vesting period issued to employees and directors was $22.4 million, $31.8 million and $14.6 million, respectively. Included in these amounts for 2025 and 2024, is accelerated amortization of awards in connection with the termination without cause of certain of the Company's officers totaling $8.8 million and $17.8 million, respectively. The following table represents expected amortization of the Company's non-vested shares issued as of December 31, 2025:
| Dollars in millions | FUTURE AMORTIZATION of non-vested shares | ||||
| 2026 | $ | 11.5 | |||
| 2027 | 9.6 | ||||
| 2028 | 2.9 | ||||
| 2029 | 0.6 | ||||
| 2030 and thereafter | 0.3 | ||||
| Total | $ | 24.9 | |||
Executive Incentive Plan
The Compensation Committee has adopted an executive incentive plan pursuant to the Incentive Plan (the "Executive Incentive Plan") to provide specific award criteria with respect to incentive awards made under the Incentive Plan subject to the discretion of the Compensation Committee. Under the terms of the Executive Incentive Plan, the Company's named executive officers and certain other members of senior management may earn incentive awards in the form of cash, non-vested stock, restricted stock units ("RSUs"), and units in the OP ("OP Units").
For 2025, 2024 and 2023, compensation expense, included in general and administrative expense, resulting from the amortization of the Executive Incentive Plan non-vested shares and RSU grants to officers was approximately $15.1 million, $16.8 million, and $9.0 million, respectively. Included in these amounts for 2025 and 2024, is accelerated amortization of outstanding non-vested stock and RSU awards in connection with the termination without cause of certain of the Company's officers totaling $6.0 million and $8.5 million, respectively. Details of equity awards that have been issued under this plan are as follows:
Restricted Stock
•During the first quarter of 2025, the Company granted non-vested stock awards to its named executive officers and other members of senior management with an aggregate grant date fair value of $6.9 million,
which consisted of an aggregate of 414,611 non-vested shares of common stock with a three-year vesting period.
•During the second quarter of 2025, the Company granted non-vested stock awards to its named executive officers and other members of senior management with an aggregate grant date fair value of $7.8 million, which consisted of an aggregate of 499,323 non-vested shares of common stock with vesting periods ranging from to four years.
•During the third quarter of 2025, the Company granted non-vested stock awards to members of its senior management with an aggregate grant date fair value of $0.5 million, which consisted of an aggregate of 27,946 non-vested shares of common stock with a three-year vesting period.
•During the fourth quarter of 2025, the Company granted non-vested stock awards to members of its senior management with an aggregate grant date fair value of $0.5 million, which consisted of an aggregate of 24,482 non-vested shares of common stock with an approximate two-year vesting period.
Restricted Stock Units
•On February 11, 2025, the Company granted an aggregate of 275,735 RSUs to members of senior management, subject to a three-year performance period, with an aggregate grant date fair value of $5.4 million.
•During the second quarter of 2025, the Company granted an aggregate of 16,038 RSUs to members of senior management, subject to a three-year performance period, with an aggregate grant date fair value of $0.3 million.
The RSUs vest based on relative total shareholder return ("TSR") performance and were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $19.47 for the RSU grants using the following assumptions:
| Volatility | 28.0 | % | |||
| Dividend assumption | Accrued | ||||
| Expected term | 3 years | ||||
| Risk-free rate | 4.35 | % | |||
| Stock price (per share) | $16.17 | ||||
LTIP Series C Units
On February 11, 2025, the Company granted an aggregate of 166,976 LTIP-C units in the OP to its named executive officers subject to a three-year performance period with an aggregate grant date fair value of $1.6 million.
The LTIP-C units in the OP vest based on relative TSR performance and were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $9.88 for the February 2025 grant using the following assumptions:
| Volatility | 28.0 | % | |||
| Dividend assumption | Accrued | ||||
| Expected term | 3 years | ||||
| Risk-free rate | 4.35 | % | |||
| Stock price (per share) | $16.17 | ||||
The Company records amortization expense based on the Monte Carlo simulation throughout the performance period.
On April 15, 2025, the Company granted 347,770 LTIP-C units in the OP to its newly appointed Chief Executive Officer subject to a three-year performance period with an aggregate grant date fair value of $3.4 million.
The LTIP-C units in the OP vest based on relative TSR performance and were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $9.83 for the April 2025 grant using the following assumptions:
| Volatility | 27.0 | % | |||
| Dividend assumption | Accrued | ||||
| Expected term | 3 years | ||||
| Risk-free rate | 3.80 | % | |||
| Stock price (per share) | $15.70 | ||||
The Company records amortization expense based on the Monte Carlo simulation throughout the performance period.
For 2025, compensation expense resulting from the amortization of LTIP-C units awarded to officers was approximately $2.6 million. The Company accelerated the amortization of outstanding LTIP-C awards in connection with the termination without cause of certain of its officers, totaling $0.8 million.
Officer Incentive Program
In 2025 the Company granted a performance-based award to certain non-executive officers totaling approximately $0.7 million, which was granted in the form of 45,277 non-vested shares. The shares have vesting periods of three years.
For 2025, 2024 and 2023, compensation expense resulting from the amortization of these non-vested share grants awarded to officers was approximately $0.9 million, $0.5 million, and $0.6 million, respectively.
Salary Deferral Plan
The Company's salary deferral plan allows certain of its officers to elect to defer up to 50% of their base salary in the form of non-vested shares subject to long-term vesting. The number of shares will be increased through a Company match depending on the length of the vesting period selected by the officer. The officer's vesting period choices are: three years for a 30% match; five years for a 50% match; and eight years for a 100% match. During 2025, 2024 and 2023, the Company issued 17,338 shares, 29,902 shares and 31,792 shares, respectively, to its officers through the salary deferral plan. For 2025, 2024 and 2023, compensation expense resulting from the amortization of non-vested share grants to officers was approximately $0.5 million, $1.1 million, and $0.9 million, respectively.
Non-employee Directors Incentive Plan
The Company grants non-vested share-based awards to its non-employee directors under the Incentive Plan. The directors’ awards typically have a one-year vesting period and are subject to forfeiture prior to such date upon termination of the director’s service, at no cost to the Company. For 2025, 2024 and 2023, compensation expense resulting from the amortization of non-vested share-based grants to directors was approximately $1.9 million, $2.4 million, and $2.1 million, respectively.
•During the second quarter of 2025, the Company granted non-vested stock awards to certain of its independent directors, with a grant date fair value of $1.1 million, which consisted of an aggregate of 72,144 non-vested shares, with a one-year vesting period.
•During the second quarter of 2025, the Company also granted LTIP Series D units in the OP to certain of its independent directors, with a grant fair value of $0.5 million, which consisted of an aggregate of 34,586 non-vested units, with a one-year vesting period.
Other Grants
The Company also issued grants to certain members of senior management resulting in compensation expense for 2025, 2024, and 2023 totaling $1.4 million, $2.2 million, and $0.8 million respectively.
In 2024, the Company granted 69,022 non-vested shares to its interim Chief Executive Officer with a grant date fair value of $1.2 million with vesting the earlier of the appointment of a permanent CEO or one-year. In 2025, the Company accelerated the amortization of $0.9 million.
The Company also issued one-time non-vested share grants related to executive management transition in 2016. In 2024, the Company accelerated the amortization of these outstanding awards, including in connection with the termination without cause of its CEO and CFO, totaling $1.6 million.
The following table represents the summary of non-vested share-based awards (including restricted stock, RSUs, LTIP-C units and LTIP-D units) under the Incentive Plans and related information for the years ended December 31, 2025, 2024, and 2023:
| YEAR ENDED DECEMBER 31, | |||||||||||
| Dollars in thousands, except per share data | 2025 | 2024 | 2023 | ||||||||
| Share-based awards, beginning of year | 1,799,737 | 2,615,562 | 2,090,060 | ||||||||
Granted 1 | 1,942,226 | 1,732,484 | 1,164,359 | ||||||||
| Vested | (959,869) | (2,284,767) | (403,266) | ||||||||
Change in awards based on performance assessment 2 | (21,758) | (47,202) | (205,668) | ||||||||
| Forfeited | (194,899) | (216,340) | (29,923) | ||||||||
| Share-based awards, end of year | 2,565,437 | 1,799,737 | 2,615,562 | ||||||||
| Weighted-average grant date fair value of | |||||||||||
| Share-based awards, beginning of year | $ | 22.30 | $ | 25.56 | $ | 30.35 | |||||
| Share-based awards granted during the year | $ | 14.76 | $ | 15.49 | $ | 18.70 | |||||
| Share-based awards vested during the year | $ | 17.83 | $ | 21.43 | $ | 28.38 | |||||
| Share-based awards change in performance assessment during the year | $ | 29.16 | $ | 20.21 | $ | 29.05 | |||||
| Stock-based awards forfeited during the year | $ | 13.84 | $ | 16.87 | $ | 31.16 | |||||
| Share-based awards, end of year | $ | 17.89 | $ | 22.30 | $ | 25.56 | |||||
| Grant date fair value of shares granted during the year | $ | 28,661 | $ | 26,844 | $ | 22,171 | |||||
1LTIP-C units are issued at the maximum possible value of the award and are reflected as such in this table until the performance period has been satisfied and the exact number of awards are determinable.
2The Company's RSUs that are based on operating performance metrics are evaluated on the probability of those performance metrics being achieved. During 2023, the Company determined that the operating performance goals related to the RSUs issued in 2022 are not probable of being achieved and reversed all of the outstanding amortization expense for that grant. In addition, the Company lowered the probability of achieving the operating performance goals related to the RSUs issued in 2023.
The vesting periods for the non-vested shares granted during 2025 ranged from to eight years with a weighted-average amortization period remaining as of December 31, 2025 of approximately 2.7 years.
During 2025, 2024 and 2023, the Company withheld 234,496 shares, 485,209 shares and 126,085 shares, respectively, of common stock from its officers to pay estimated withholding taxes related to the vesting of shares.
401(k) Plan
The Company maintains a 401(k) plan that allows eligible employees to defer salary, subject to certain limitations imposed by the Internal Revenue Code. The Company provides a matching contribution up to $2,800 per employee, subject to certain limitations. The Company’s matching contributions were approximately $1.3 million for 2025, $1.4 million for 2024 and $1.5 million for 2023.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Mar 1, 2023 | |
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.