Tanger Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Equity-Based Compensation of the Operating Partnership (Notes)

Equity-Based Compensation of the Operating Partnership (Notes) (Tanger Properties Limited Partnership)

12 Months Ended

Dec. 31, 2011

Tanger Properties Limited Partnership

Disclosure of Compensation Related Costs Equity Based Payments [Text Block]

Equity-Based Compensation of the Operating Partnership

As discussed in Note 16, the Operating Partnership and the Company have a joint plan whereby equity based and performance based awards may be granted to directors, officers and employees. When shares are issued by the Company, the Operating Partnership issues corresponding units to the Company based on the current exchange ratio as provided by the Operating Partnership agreement. Based on the current exchange ratio, each unit in the Operating Partnership is equivalent to four common shares of the Company. Therefore, when the Company grants an equity based award, the Operating Partnership treats each award as having been granted by the Operating Partnership. The maximum units that may be issued to the Company due to equity awards granted by the Company are limited by the Plan to 15.4 million of the Company's common shares, or in terms of units, 3,850,000 units. Units available to satisfy future equity based awards by the Company at December 31, 2011 totaled 1,025,930.

The tables below set forth the unit based compensation expense and other related information as recognized in the Operating Partnership's consolidated financial statements.

We recorded equity-based compensation expense in general and administrative expenses in the consolidated statements of operations for the years ended December 31, 2011, 2010 and 2009, respectively, as follows (in thousands):



	2011		2010		2009
Restricted units ⁽¹⁾	$	5,227	$	4,095	$	11,720
Notional unit performance awards	1,885		1,753		—
Options	179		—		78
Total equity based compensation	$	7,291	$	5,848	$	11,798


(1)	For the year ended December 31, 2009, includes $6.9 million of incremental equity-based compensation related to the accelerated vesting of restricted units.

Stanley K. Tanger, founder of the Company, retired as an employee of the Company and resigned as Chairman of the Board effective September 1, 2009. Pursuant to Mr. Tanger's employment agreement, as mutually agreed upon by the Company and Mr. Tanger, he received a cash severance amount of $3.4 million. Additionally, the Board approved a modification to Mr. Tanger's restricted share agreements whereas, upon his retirement, 432,000 unvested restricted common shares previously granted to Mr. Tanger vested. As a result of this vesting, we recorded $6.9 million in incremental share-based compensation expense. Mr. Tanger's severance costs are included in the general and administrative expenses in the consolidated statement of operations for the year-ended December 31, 2009. Mr. Tanger continued to serve as a member of the Company's Board of Directors until his passing on October 23, 2010.

Equity-based compensation expense capitalized as a part of rental property and deferred lease costs during the years ended December 31, 2011, 2010 and 2009 was $234,000, $393,000 and $302,000, respectively.

Options outstanding at December 31, 2011 had the following weighted average exercise prices and weighted average remaining contractual lives:



	Options Outstanding				Options Exercisable
Range of exercise prices	Options	Weighted average exercise price		Weighted remaining contractual life in years	Options	Weighted average exercise price
$38.76	2,500	$	38.76	2.32	2,500	$	38.76
$38.83	15,425	38.83		2.33	15,425	38.83
$47.25	3,000	47.25		2.84	3,000	47.25
$104.24	44,375	104.24		9.16	—	—
	65,300	$	83.66	6.99	20,925	$	40.03

A summary of option activity under our Amended and Restated Incentive Award Plan as of December 31, 2011 and changes during the year then ended is presented below (aggregate intrinsic value amount in thousands):



Options	Units		Weighted-average exercise price		Weighted-average remaining contractual life in years	Aggregate intrinsic value
Outstanding as of December 31, 2010	30,050		$	39.66
Granted	47,875		104.24
Exercised	(9,125	)	38.83
Forfeited	(3,500	)	104.24
Outstanding as of December 31, 2011	65,300		$	83.66	6.99	$	2,273

Vested and Expected to Vest as of
December 31, 2011	55,545		$	80.05	6.61	$	2,135

Exercisable as of December 31, 2011	20,925		$	40.03	2.40	$	1,642

The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was $652,000, $1.7 million and $1.5 million, respectively.

The following table summarizes information related to unvested restricted units outstanding as of December 31, 2011:



Unvested Restricted Units	Number of units		Weighted average grant date fair value
Unvested at December 31, 2010	179,440		$	71.81
Granted	82,250		101.91
Vested	(60,956	)	73.84
Forfeited	(5,800	)	71.13
Unvested at December 31, 2011	194,934		$	83.70

The total value of restricted units vested during the years ended 2011, 2010 and 2009 was $7.1 million, $4.7 million and $13.5 million, respectively.

As of December 31, 2011, there was $19.5 million of total unrecognized compensation cost related to unvested equity-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 3.2 years.