Quarterly report pursuant to Section 13 or 15(d)

Equity

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Equity
 9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Equity Equity
Dividends and Distributions
Our board of directors declared the following dividends in 2023 and 2024:

Announced Date Record Date Pay Date Amount per
share
2/16/2023 4/3/2023 4/10/2023 $ 0.395 
5/4/2023 7/5/2023 7/12/2023 $ 0.395 
8/3/2023 10/4/2023 10/11/2023 $ 0.395 
11/2/2023 12/29/2023
(1)
 01/12/2024 $ 0.395 
2/15/2024 4/5/2024 04/19/2024 $ 0.415 
5/7/2024 7/3/2024 7/12/2024 $ 0.415 
8/1/2024 10/4/2024 10/18/2024 $ 0.415 
11/7/2024 12/30/2024 01/10/2025 $ 0.415 
(1) This dividend is treated as a distribution in the year following the record date for tax purposes.
Equity Offerings
We have an effective universal shelf registration statement registering the potential offer and sale, from time to time and in one or more offerings, of any combination of our common stock, preferred stock, depositary shares, debt securities, warrants and rights (collectively referred to as the “securities”). We may offer the securities directly, through agents, or to or through underwriters by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale or at negotiated prices and may include “at the market” (“ATM”) offerings to or through a market maker or into an existing trading market on an exchange or otherwise. We have a dividend reinvestment and stock purchase plan, allowing stockholders and holders of OP Units (including LTIP Units) to purchase shares of our common stock by reinvesting cash dividends or distributions received. We completed the following public offerings (including ATM issuances) of our common stock during 2024 and 2023:
Date/Period Common Stock Offerings
Shares Issued (2)
Price Per Share
Net Proceeds (1)
  (amounts in millions, except per share amounts)
Q1 2023 ATM 0.763  $ 31.31 
(3)
 $ 24 
5/30/2023 Public Offering 15.000  22.23 
(4)
 333 
Q2 2023 ATM 0.053  26.07 
(3)
 1 
Q3 2023 ATM 4.394  24.71 
(3)
 107 
Q4 2023 ATM 1.006  28.81 
(3)
 29 
Q1 2024 ATM 1.193  25.89 
(3)
 31 
Q2 2024 ATM 1.662 31.42 
(3)
 52 
Q3 2024 ATM 3.040 32.55 
(3)
 98 
(1)Net proceeds from the offerings are shown after deducting underwriting discounts and commissions.
(2)Includes shares issued in connection with the exercise of the underwriters’ option to purchase additional shares.
(3)Represents the average price per share at which investors in our ATM offerings purchased our shares.
(4)Represents the price per share at which the underwriters in our public offering purchased our shares.
Equity-based Compensation Awards
We have issued equity awards that vest from 2024 to 2028 subject to service, performance and market conditions. During the nine months ended September 30, 2024, our board of directors awarded employees and directors 798,160 shares of restricted stock, restricted stock units and LTIP Units that vest from 2025 to 2028. Refer to Note 4 to our financial statements in this Form 10-Q for background on the LTIP Units.
For the three and nine months ended September 30, 2024 we recorded $4 million and $19 million of stock based compensation, respectively, compared to $3 million and $15 million during the three and nine months ended September 30, 2023, respectively. We have a retirement policy which provides for full vesting at retirement of any time-based awards that were granted prior to the date of retirement and permits the vesting of market-based or performance-based awards that were granted prior to the date of retirement according to the original vesting schedule of the award, subject to the achievement of the applicable market or performance measures. Employees are eligible for the retirement policy upon meeting age and years of service criteria. The total unrecognized compensation expense related to awards of shares of restricted stock and restricted stock units was approximately $24 million as of September 30, 2024. We expect to recognize compensation expense related to our equity awards over a weighted-average term of approximately 2 years. A summary of the unvested shares of restricted common stock that have been issued is as follows:

Restricted Shares of Common Stock Weighted Average Grant Date Fair Value Value
(per share) (in millions)
Ending Balance — December 31, 2022 168,452  $ 33.59  $ 5.7 
Granted 77,938  30.03  2.3 
Vested (98,367) 29.18  (2.9)
Forfeited (12,356) 42.74  (0.5)
Ending Balance — December 31, 2023 135,667  $ 33.90  $ 4.6 
Granted 222,049  26.94  6.0 
Vested (41,165) 38.16  (1.6)
Forfeited (3,399) 27.55  (0.1)
Ending Balance — September 30, 2024 313,152  $ 28.48  $ 8.9 
A summary of the unvested shares of restricted stock units that have market-based vesting conditions that have been issued is as follows:

Restricted Stock Units (1)
Weighted Average Grant Date Fair Value Value
(per share) (in millions)
Ending Balance — December 31, 2022 58,404  $ 51.03  $ 3.0 
Granted 63,446  39.29  2.4 
Incremental performance shares granted 7,305  34.63  0.3 
Vested (18,041) 35.17  (0.6)
Forfeited (16,460) 30.90  (0.5)
Ending Balance — December 31, 2023 94,654  $ 48.42  $ 4.6 
Granted —  —  — 
Incremental performance shares granted —  —  — 
Vested —  —  — 
Forfeited (15,480) 68.81  (1.1)
Ending Balance — September 30, 2024 79,174  $ 44.43  $ 3.5 

(1)    As discussed in Note 2, restricted stock units with market-based vesting conditions can vest between 0% and 200% subject to both the absolute performance of the Company's common stock as well as relative performance compared to a group of peers. The incremental performance shares granted relate to the vesting of awards at the achieved performance level.
A summary of the unvested LTIP Units that have time-based vesting conditions that have been issued is as follows:

LTIP Units (1)
Weighted Average Grant Date Fair Value Value
(per share) (in millions)
Ending Balance — December 31, 2022 276,766  $ 42.21  $ 11.7 
Granted 342,349  30.08  10.3 
Vested (142,041) 39.21  (5.5)
Forfeited —  —  — 
Ending Balance — December 31, 2023 477,074  $ 34.4  $ 16.5 
Granted 320,063  26.96  8.6 
Vested (236,166) 34.79  (8.2)
Forfeited —  —  — 
Ending Balance — September 30, 2024 560,971  $ 29.99  $ 16.9 

(1)    See Note 4 for information on the vesting of LTIP Units.
A summary of the unvested LTIP Units that have market-based vesting conditions that have been issued is as follows:

LTIP Units (1)
Weighted Average Grant Date Fair Value Value
(per share) (in millions)
Ending Balance — December 31, 2022 324,028  $ 42.84  $ 13.9 
Granted 282,034  39.29  11.1 
Incremental performance shares granted 40,394  19.94  0.8 
Vested (96,496) 19.94  (1.9)
Forfeited (56,102) 4.56  (0.3)
Ending Balance — December 31, 2023 493,858  $ 47.76  $ 23.6 
Granted 128,024  39.11  5.0 
Incremental performance shares granted —  —  — 
Vested —  —  — 
Forfeited (86,274) 65.28  (5.6)
Ending Balance — September 30, 2024 535,608  $ 42.87  $ 23.0 

(1)    See Note 4 for information on the vesting of LTIP Units. LTIP Units with market-based vesting conditions can vest between 0% and 200% subject to both the absolute performance of our common stock as well as relative performance compared to a group of peers. The incremental performance shares granted relate to the vesting of awards at the achieved performance level.
A summary of the unvested LTIP Units that have performance-based vesting conditions that have been issued is as follows:
LTIP Units (1)
Weighted Average Grant Date Fair Value Value
(per share) (in millions)
Ending Balance — December 31, 2023 —  $ —  $ — 
Granted 128,024  25.96  3.3 
Incremental performance shares granted —  —  — 
Vested —  —  — 
Forfeited —  —  — 
Ending Balance — September 30, 2024 128,024  $ 25.96  $ 3.3 
(1)    See Note 4 for information on the vesting of LTIP Units. LTIP Units with performance-based vesting conditions can vest between 0% and 200% subject to the achievement of certain adjusted earnings per share. The incremental performance shares granted relate to the vesting of awards at the achieved performance level.
NOL Stockholder Rights Plan
In 2023, we established a Tax Benefits Preservation Plan (“the Plan”), which was designed to protect our tax benefits in connection with any “ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986. Under the Plan, we declared a dividend distribution of one right (a “Right”) for each outstanding share of our common stock to be paid to all record holders of our common stock at the close of business on November 21, 2023. The Plan was intended to reduce the risk that our ability to use net operating losses (“NOLs”) and certain other Tax Benefits would have become substantially limited as the result of an “ownership change”. As of December 31, 2023, we had approximately $666 million of NOLs and $31 million of tax credits available that may be used to offset future taxable income. On July 1, 2024, we entered into an amendment which caused the Rights under the Plan to expire on July 1, 2024, effectively terminating the Plan at that time in anticipation of the effectiveness of the Company’s reincorporation as a Delaware corporation on July 2, 2024. The Company’s Delaware Certificate of Incorporation includes Charter Tax Benefit Provisions which are intended to replace the Tax Benefits Preservation Plan.
Pursuant to the Plan, during the period in which it existed, if a stockholder (or group) became a 5% stockholder without meeting certain exceptions, the Rights became exercisable upon board approval and entitled stockholders (other than the 5% stockholder or group causing the Rights to become exercisable) to purchase additional of our common shares at a significant discount, resulting in significant dilution in the economic interest and voting power of the 5% stockholder or group causing the Rights to become exercisable. Stockholders owning 5% or more of our outstanding shares at the time the Plan was adopted were grandfathered and would have only caused the Rights to distribute and become exercisable if they acquire any additional HASI shares. Under the Plan, the Board had the ability to determine in its sole discretion that any person shall not be deemed an acquiring person and therefore that the Rights shall not become exercisable if such person becomes a 5% stockholder. The adoption and termination of the Plan and the dividend distribution did not have an impact on our consolidated financial statements.