Pebblebrook Hotel TrustPEB
Pebblebrook Hotel Trust Stock Compensation Disclosure
Share-Based Compensation Plan
Available Shares
The Company maintains the 2009 Equity Incentive Plan (as amended and restated effective May 23, 2025, the "Plan") to attract and retain independent trustees, executive officers and other key employees and service providers. The Plan provides for the grant of options to purchase common shares, share awards, share appreciation rights, performance units and other equity-based awards. Share awards under the Plan vest over a period determined by the Board of Trustees, generally over to five years. The Company pays or accrues for dividends on share-based awards. All outstanding share awards are subject to full or partial accelerated vesting upon a change in control and upon death or disability or certain other employment termination events as set forth in the award agreements.
On May 23, 2025, shareholders of the Company approved an amendment to the Plan which increased the aggregate number of equity-based awards that may be issued under the Plan by 3,000,000 shares and extended the time period during which awards may be granted until June 30, 2036.
As of December 31, 2025, there were 3,846,257 common shares available for issuance under the Plan.
Service Condition Share Awards
From time to time, the Company awards restricted common shares under the Plan to members of the Board of Trustees, officers and employees. These shares generally vest over to five years based on continued service or employment. The following table provides a summary of service condition restricted share activity for the years ended December 31, 2025, 2024 and 2023:
| Shares | Weighted-Average Grant Date Fair Value | ||||||||||
| Unvested at January 1, 2023 | 567,317 | $ | 21.60 | ||||||||
| Granted | 113,084 | $ | 15.04 | ||||||||
| Vested | (183,721) | $ | 23.14 | ||||||||
| Forfeited | (53,131) | $ | 16.72 | ||||||||
| Unvested at December 31, 2023 | 443,549 | $ | 19.88 | ||||||||
| Granted | 139,134 | $ | 16.11 | ||||||||
| Vested | (171,508) | $ | 21.20 | ||||||||
| Forfeited | (3,127) | $ | 15.69 | ||||||||
| Unvested at December 31, 2024 | 408,048 | $ | 18.07 | ||||||||
| Granted | 165,582 | $ | 12.80 | ||||||||
| Vested | (166,135) | $ | 19.70 | ||||||||
| Forfeited | (7,870) | $ | 14.44 | ||||||||
| Unvested at December 31, 2025 | 399,625 | $ | 15.28 | ||||||||
The fair value of each of these service condition restricted share awards is determined based on the closing price of the Company's common shares on the grant date and compensation expense is recognized on a straight-line basis over the vesting period.
For the years ended December 31, 2025, 2024 and 2023, the Company recognized approximately $3.1 million, $3.4 million and $3.5 million, respectively, of share-based compensation expense related to these awards as presented in the accompanying consolidated statements of operations and comprehensive income. As of December 31, 2025, there was $2.2 million of total unrecognized share-based compensation expense related to unvested restricted shares. The unrecognized share-based compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.7 years.
Performance-Based Equity Awards
On February 12, 2020, the Board of Trustees approved a target award of 161,777 performance-based equity awards to officers and employees of the Company. In January 2023, following the completion of the performance period from January 1, 2020 through December 31, 2022, the Company issued 51,686 common shares in settlement of the awards, based on the performance criteria set forth in the award agreements.
On February 18, 2021, the Board of Trustees approved a target award of 189,348 performance-based equity awards to officers and employees of the Company. In January 2024, following the completion of the performance period from January 1, 2021 through December 31, 2023, the Company issued 71,677 common shares in settlement of the awards, based on the performance criteria set forth in the award agreements.
On May 16, 2022, the Board of Trustees approved a target award of 175,898 performance-based equity awards to officers and employees of the Company. In January 2025, following the completion of the performance period from January 1, 2022 through December 31, 2024, the Company issued 29,928 common shares in settlement of the awards, based on the performance criteria set forth in the award agreements.
On February 17, 2023, the Board of Trustees approved a target award of 314,235 performance-based equity awards to officers and employees of the Company. In January 2026, following the completion of the performance period from January 1, 2023 through December 31, 2025, none of these awards vested and the Company issued zero common shares to officers or employees.
On February 15, 2024, the Board of Trustees approved a target award of 322,950 performance-based equity awards to officers and employees of the Company. These awards will vest, if at all, in 2027. The actual number of common shares that ultimately vest will be from 0% to 200% of the target award and will be determined in 2027 based on the performance criteria set forth in the award agreements for the period of performance from January 1, 2024 through December 31, 2026.
On February 7, 2025, the Board of Trustees approved a target award of 348,332 performance-based equity awards to officers and employees of the Company. These awards will vest, if at all, in 2028. The actual number of common shares that ultimately vest will be from 0% to 200% of the target award and will be determined in 2028 based on the performance criteria set forth in the award agreements for the period of performance from January 1, 2025 through December 31, 2027.
The grant date fair value of the performance awards, with market conditions, were determined using a Monte Carlo simulation method with the following assumptions (dollars in millions):
| Performance Award Grant Date | Percentage of Total Award | Grant Date Fair Value by Component | Volatility | Interest Rate | Dividend Yield | ||||||||||||||||||||||||||||||
| February 12, 2020 | |||||||||||||||||||||||||||||||||||
| Relative Total Shareholder Return | 100.00% | $4.9 | 23.40% | 1.41% | —% | ||||||||||||||||||||||||||||||
| February 18, 2021 | |||||||||||||||||||||||||||||||||||
| Relative Total Shareholder Return | 100.00% | $6.0 | 56.00% | 0.19% | —% | ||||||||||||||||||||||||||||||
| May 16, 2022 | |||||||||||||||||||||||||||||||||||
| Relative Total Shareholder Return | 100.00% | $5.3 | 58.70% | 2.72% | —% | ||||||||||||||||||||||||||||||
| February 17, 2023 | |||||||||||||||||||||||||||||||||||
| Relative and Absolute Total Shareholder Return | 70.00% / 30.00% | $6.0 | 61.60% | 4.31% | —% | ||||||||||||||||||||||||||||||
| February 15, 2024 | |||||||||||||||||||||||||||||||||||
| Relative and Absolute Total Shareholder Return | 70.00% / 30.00% | $6.6 | 38.50% | 4.38% | —% | ||||||||||||||||||||||||||||||
| February 7, 2025 | |||||||||||||||||||||||||||||||||||
| Relative and Absolute Total Shareholder Return | 70.00% / 30.00% | $4.5 | 37.60% | 4.31% | —% | ||||||||||||||||||||||||||||||
In the table above, the Relative Total Shareholder Return and Absolute Total Shareholder Return components are market conditions as defined by ASC 718.
Dividends on unvested performance-based equity awards accrue over the vesting period and will be paid on the actual number of shares that vest at the end of the applicable period. The Company recognizes compensation expense on a straight-line basis through the vesting date.
For the years ended December 31, 2025, 2024 and 2023, the Company recognized approximately $5.7 million, $6.0 million and $5.6 million, respectively, of share-based compensation expense related to performance-based equity awards as presented in the accompanying consolidated statements of operations and comprehensive income. As of December 31, 2025, there was approximately $5.4 million of unrecognized compensation expense related to these performance-based equity awards which will be recognized over the weighted-average remaining vesting period of 1.6 years.
Long-Term Incentive Partnership Units
LTIP units, which are also referred to as profits interest units, may be issued to eligible participants for the performance of services to or for the benefit of the Operating Partnership. LTIP units are a class of partnership unit in the Operating Partnership and receive, whether vested or not, the same per-unit profit distributions as the other outstanding units in the Operating Partnership, which equal per-share distributions on common shares. LTIP units are allocated their pro-rata share of the Company's net income (loss). Vested LTIP units may be converted by the holder, at any time, into an equal number of common Operating Partnership units and thereafter will possess all of the rights and interests of a common Operating Partnership unit, including the right to redeem the common Operating Partnership unit for a common share in the Company or cash, at the option of the Operating Partnership.
As of December 31, 2025, the Operating Partnership had two classes of LTIP units, LTIP Class A units and LTIP Class B units. All of the outstanding LTIP units are held by officers of the Company.
On February 18, 2021, the Board of Trustees granted 600,097 LTIP Class B units to executive officers. These LTIP units will vest ratably on January 1, 2023, 2024, 2025 and 2026, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company's common shares on the grant date of $22.69 per unit with an aggregate grant date fair value of $13.6 million.
On February 17, 2023, the Board of Trustees granted 131,276 LTIP Class B units to executive officers. These LTIP units will vest ratably on January 1, 2024, 2025 and 2026, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company's common shares on the grant date of $15.04 per unit with an aggregate grant date fair value of $2.0 million.
On February 15, 2024, the Board of Trustees granted 136,353 LTIP Class B units to executive officers. These LTIP units will vest ratably on January 1, 2025, 2026 and 2027, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company's common shares on the grant date of $16.13 per unit with an aggregate grant date fair value of $2.2 million.
On February 7, 2025, the Board of Trustees granted 159,594 LTIP Class B units to executive officers. These LTIP units will vest ratably on January 1, 2026, 2027 and 2028, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company's common shares on the grant date of $12.81 per unit with an aggregate grant date fair value of $2.0 million.
As of December 31, 2025, the Operating Partnership had 1,154,431 LTIP units outstanding, of which 710,156 LTIP units have vested. As of December 31, 2024, the Operating Partnership had 994,837 LTIP units outstanding, of which 470,920 LTIP units have vested. Only vested LTIP units may be converted to OP units, which in turn can be tendered for redemption as described in Note 7. Equity.
For the years ended December 31, 2025, 2024 and 2023, the Company recognized approximately $4.9 million, $4.2 million and $3.4 million, respectively, in expense related to these LTIP units. As of December 31, 2025, there was $2.2 million of unrecognized share-based compensation expense related to LTIP units. The aggregate expense related to the LTIP unit grants is presented as non-controlling interest in the Company's accompanying consolidated balance sheets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 22, 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.