Callon Petroleum Company Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Share-Based Compensation

Share-Based Compensation

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

As discussed in Note 8, the Company grants various forms of share-based compensation awards to employees of the Company and its subsidiaries and to non-employee members of the Board of Directors. At December 31, 2017, shares available for future share-based awards, including stock options or restricted stock grants, under the Company’s only active plan, the 2011 Plan, were 1,338,356.

The following table presents share-based compensation expense for each respective period:

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	For the Year Ended December 31,
	2017				2016				2015
Share-based compensation cost for:	Equity-based		Liability-based		Equity-based		Liability-based		Equity-based		Liability-based
RSU equity awards ^(a)	$	10,225	$	—	$	4,536	$	—	$	3,797	$	—
Cash-settleable RSU awards ^(a)	—		4,294		—		12,285		—		11,437
401(k) CPE stock fund contributions	313		—		277		—		266		—
Total share-based compensation cost^(b)	$	10,538	$	4,294	$	4,813	$	12,285	$	4,063	$	11,437


(a)	Includes the settlement of the outstanding share-based award agreements of the Company’s former Chief Executive Officer, resulting in $6,351 recorded on the Consolidated Statements of Operations as Settled share-based awards for the year ended December 31, 2017.


(b)	The portion of this share-based compensation cost that was included in general and administrative expense totaled $5,194, $9,722 and $9,299 for the years ended December 31, 2017, 2016 and 2015, respectively, and the portion capitalized to oil and gas properties was $3,287, $7,376 and $6,201, for the years ended December 31, 2017, 2016, and 2015, respectively.

The following table presents the unrecognized compensation cost for the indicated periods:



	December 31,
Unrecognized compensation cost related to:	2017		2016		2015
Unvested RSU equity awards	$	13,158	$	7,276	$	5,208
Unvested cash-settleable RSU awards	3,776		8,948		4,728

The Company’s unrecognized compensation cost related to unvested RSU equity awards and cash-settleable RSU awards is expected to be recognized over a weighted-average period of two years.

The following table summarizes the Company’s liability for cash-settled RSU awards for the periods indicated:



	December 31,
Consolidated Balance Sheets Classification	2017		2016
Cash-settled RSU awards (current)	$	4,621	$	8,919
Cash-settled RSU awards (non-current)	3,490		8,071
Total cash-settled RSU awards	$	8,111	$	16,990

Stock Options

The Company issued no stock options for the past three years and had no options vest or forfeit during 2017. Additionally, no options were exercised, and 15,000 options expired unexercised during the year. As of December 31, 2017, the Company had no options outstanding. As of December 31, 2016, the Company had 15,000 options outstanding and exercisable at a weighted average exercise price per option of $14.37, with no aggregate intrinsic value and with a weighted-average remaining contract life per unit of 0.3 years. As of December 31, 2015, the Company had 15,000 options outstanding and exercisable at a weighted average exercise price per option of $14.37, with no aggregate intrinsic value and with a weighted-average remaining contract life per unit of 1.3 years.

Restricted Stock Units

The following table represents unvested restricted stock activity for the year ended December 31, 2017:



			Weighted average
(shares in 000s)	Number of Shares		Grant-Date Fair Value per Share		Years Over Which Expense is Expected to be Recognized
Outstanding at the beginning of the period	1,448		$	10.81
Granted^(a)(b)	1,173		12.25
Vested^(b)(c)	(797	)	11.35
Forfeited	(34	)	9.57
Outstanding at the end of the period	1,790		$	11.54	1.94


(a)	Includes 89 market-based RSUs that will vest at a range of 0% - 200%. See Note 8 for additional information about market-based RSU equity awards.


(b)	Includes 73 market-based RSUs that were granted and subsequently vested at 142% of their issued units in 2017.


(c)	The fair value of shares vested was $9,045.

For the year ended December 31, 2016, the Company granted 684,090 RSUs with a weighted average grant-date fair value of $12.63 per share. The fair value of shares vested during 2016 was $2,608. For the year ended December 31, 2015, the Company granted 559,556 RSUs with a weighted average grant-date fair value of $8.98 per share. The fair value of shares vested during 2015 was $5,425.

As of December 31, 2017, the Company had the following cash-settleable RSUs outstanding (including those that are not based on a market condition):



(shares in 000s)	Base Units Outstanding	Potential Minimum Units Vesting	Potential Maximum Units Vesting
Vesting in 2018	165	13	316
Vesting in 2019	200	17	384
Vesting in 2020	—	—	—
Other	203	203	203
Total cash-settleable RSUs	568	233	903

For the year ended December 31, 2017, 335,471 market-based cash-settled RSUs subject to the peer market-based vesting described in Note 8 vested at between 142% to 200% of their issued units, depending on the date of the vesting, resulting in cash payments of $3,986 in 2017 and payable amounts of $3,062 in 2018. Also during 2017, 43,031 non-market-based cash settled RSUs vested, resulting in cash payments of $526 in 2017. During 2016, 281,792 market-based cash-settled RSUs subject to the peer market-based vesting described above vested at 200% of their issued units, resulting in cash payments of $8,662 in 2017. Also during 2016, 45,282 non-market-based cash settled RSUs vested, resulting in cash payments of $493 in 2016. See Note 8 for additional information regarding cash-settleable RSUs.