VORNADO REALTY TRUST 16 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (4) Increases in depreciation and amortization for the Office and Merchandise Mart segments are primarily due to additions to buildings and improvements. (a) Relates primarily to an increase in New York Office. (3) Below are the details of the increases (decreases) in operating expenses by segment: (5) The increase in general and administrative expenses results from: As part of the 2002 annual compensation review in lieu of stock options, on January 28, 2003 the Company granted 166,990 restricted shares at $34.50 per shar (the then closing stock price on the NYSE) to employees of the Company. These awards vest over a 5-year period. Stock-based compensation expense is r ecognized on a straight-line basis over the vesting period. In the year ended December 31, 2003, the Company recognized stock-based compensation expense of $1,898,000 (excluding severance charges), of which $1,020,000 related to January 2003 r estricted stock awards. Merchandise Total Office Retail Mart Other Real estate taxes $ 26,935 $ 20,904 (a) $1,245 $ 4,724 $ 62 Utilities (946) (906) 364 (483) 79 Maintenance 5,286 2,997 2,302 (33) 20 Ground rent 950 1,005 (55) — — Bad debt expense (29) (1,541) 1,238 274 — Other 794 1,394 (139) (958) 497 $ 32,990 $ 23,853 $4,955 $ 3,524 $658 Increase in professional fees in connection with information technology, corporate  governance, insurance, and other projects $ 4,675 Severance payments in 2003 to two senior executives ($3,211) and the non-cash charge  related to the accelerated vesting of their restricted stock ($1,626) 4,837 Other severance 860 Increase in corporate payroll and fringe benefits of which $755 is due to a decrease in  capitalized development payroll and $407 is due to the Company’s deferred compensation  plan (offset by an equal amount of investment income) 2,872 Costs in connection with the relocation of CESCR’s back office operations to the Company’s administrative headquarters in New Jersey 1,123 Stock compensation expense (see below) 1,898 Other 1,175 $17,440