Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation

v3.20.2
Share-Based Compensation
 6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Share-based Compensation Share-based Compensation
Stock-Based Compensation Plans
At the Company’s annual meeting of shareholders on June 8, 2020, shareholders approved the 2020 Omnibus Incentive Plan (the “2020 Plan”), which replaced the 2018 Omnibus Incentive Plan (the “Prior Incentive Plan”). From the effective date of the 2020 Plan, no further awards may be granted under the Prior Incentive Plan, however, awards previously granted under the Prior Incentive Plan will remain outstanding in accordance with their terms. The 2020 Plan provides that up to 13,250,000 shares of the Company’s common stock, plus the shares remaining available for awards under the Prior Incentive Plan, may be issued. As of June 30, 2020, there were 15,937,327 common shares remaining available for grant under the 2020 Plan.
RSU Equity Awards
The following table summarizes activity for restricted stock units may be settled in common stock (“RSU Equity Awards”) for the three and six months ended June 30, 2020 and 2019:
Three Months Ended June 30,
2020 2019
RSU Equity Awards
(in thousands)		 Weighted Average Grant Date
Fair Value 		RSU Equity Awards
(in thousands) 		Weighted Average
Grant Date
Fair Value
Unvested, beginning of the period 4,851    $6.95    3,406    $11.14   
Granted (1)
3,257    $1.26    171    $7.87   
Vested (2)
(900)   $10.06    (458)   $12.51   
Forfeited —    $—    (64)   $11.43   
Unvested, end of the period 7,208    $3.99    3,055    $10.75   

Six Months Ended June 30,
2020 2019
RSU Equity Awards
(in thousands)		 Weighted Average Grant Date
Fair Value		 RSU Equity Awards
(in thousands)		 Weighted Average
Grant Date
Fair Value
Unvested, beginning of the period 2,695    $10.25    2,103    $13.24   
Granted (1)
5,575    $2.12    1,881    $8.60   
Vested (2)
(1,062)   $10.02    (791)   $12.23   
Forfeited —    $—    (138)   $10.82   
Unvested, end of the period 7,208    $3.99    3,055    $10.75   

(1)Includes 0.3 million and zero target performance-based RSU Equity Awards during the three months ended June 30, 2020 and 2019, respectively, and 1.1 million and 0.4 million during the six months ended June 30, 2020 and 2019, respectively. The awards granted during the six months ended June 30, 2020 and 2019 will vest at a range of 0% to 300% and 0% to 200%, respectively.
(2)The fair value of shares vested was $0.6 million and $3.4 million during the three months ended June 30, 2020 and 2019, respectively, and $1.3 million and $6.0 million for the six months ended June 30, 2020 and 2019, respectively.
Grant activity for the six months ended June 30, 2020 and 2019 primarily consisted of RSU Equity Awards granted to executives and employees as part of the annual grant of long-term equity incentive awards in January and June 2020, respectively, as compared to the annual grant of long-term equity to executives and employees during the first quarter of 2019.
The number of outstanding performance-based RSU Equity Awards that can vest is based on a calculation that compares the Company’s total shareholder return (“TSR”) to the same calculated return of a group of peer companies selected by the Company and can range between 0% and 300% of the target units for the awards granted in 2020 and between 0% and 200% of the target units for the awards granted in 2018 and 2019. The increase in the maximum amount of performance-based RSU Equity Awards that can vest for the awards granted in 2020 is due to an absolute TSR modifier, which was added as a second factor in the calculation, in addition to the relative TSR multiplier. While the absolute TSR modifier could increase the number of awards that vest, the number of awards that vest could also be reduced if the absolute TSR is less than 5% over the performance period.
The Company recognizes expense for performance-based RSU Equity Awards based on the fair value of the awards at the grant date. Awards with a performance-based provision do not allow for the reversal of previously recognized expense, even if the market metric is not achieved and no shares ultimately vest. The grant date fair value of performance-based RSU Equity Awards, calculated using a Monte Carlo simulation, was $0.5 million and zero for the three months ended June 30, 2020 and 2019, respectively, and $3.4 million and $4.3 million for the six months ended June 30, 2020 and 2019, respectively. The following table summarizes the assumptions used and the resulting grant date fair value per performance-based RSU Equity Award granted during the six months ended June 30, 2020 and 2019:
Performance-based Awards June 29, 2020 January 31, 2020 January 31, 2019
Expected term (in years) 2.5 2.9 2.9
Expected volatility 113.2  % 54.8  % 47.9  %
Risk-free interest rate 0.2  % 1.3  % 2.4  %
Dividend yield —  % —  % —  %
Grant date fair value per performance-based RSU Equity Award $1.80 $3.39 $10.78
As of June 30, 2020, unrecognized compensation costs related to unvested RSU Equity Awards were $19.7 million and will be recognized over a weighted average period of 2.1 years.
Cash-Settled RSU Awards
The table below summarizes the activity for restricted stock units that may be settled in cash (“Cash-Settled RSU Awards”) for the three and six months ended June 30, 2020 and 2019:
Three Months Ended June 30,
2020 2019
Cash-Settled RSU Awards
(in thousands)		 Weighted Average Grant Date
Fair Value 		Cash-Settled RSU Awards
(in thousands)		 Weighted Average
Grant Date
Fair Value
Unvested, beginning of the period 1,707    $7.85    1,044    $11.69   
Granted 386    $2.03    25    $8.1   
Vested (2)   $16.66    (17)   $11.06   
Did not vest at end of performance period (11)   $15.27    —    $—   
Forfeited —    $—    (21)   $16.38   
Unvested, end of the period 2,080    $6.72    1,031    $11.52   

Six Months Ended June 30,
2020 2019
Cash-Settled RSU Awards
(in thousands)		 Weighted Average Grant Date
Fair Value 		Cash-Settled RSU Awards
(in thousands)		 Weighted Average
Grant Date
Fair Value
Unvested, beginning of the period 855    $12.42    678    $12.36   
Granted 1,249    $2.98    424    $10.62   
Vested (12)   $12.85    (17)   $11.06   
Did not vest at end of performance period (12)   $16.66    —    $—   
Forfeited —    $—    (54)   $15.21   
Unvested, end of the period 2,080    $6.72    1,031    $11.52   
Grant activity primarily consisted of Cash-Settled RSU Awards to executives as part of the annual grant of long-term equity incentive awards that occurred in the first half of each of the years presented in the table above. These awards cliff vest after an approximate three-year performance period.
The Company’s outstanding Cash-Settled RSU Awards include the same performance-based vesting conditions as the performance-based RSU Equity Awards, which are described above. Additionally, the assumptions used and the resulting grant date fair value per Cash-Settled RSU Award granted for each of the respective periods presented are the same as the performance-based RSU Equity Awards presented above.
The following table summarizes the Company’s liability for Cash-Settled RSU Awards and the classification in the consolidated balance sheets for the periods indicated:
June 30, 2020 December 31, 2019
(In thousands)
Other current liabilities $231    $966   
Other long-term liabilities 674    2,089   
Total Cash-Settled RSU Awards $905    $3,055   
As of June 30, 2020, unrecognized compensation costs related to unvested Cash-Settled RSU Awards were $2.2 million and will be recognized over a weighted average period of 2.3 years.
Share-Based Compensation Expense, Net
Share-based compensation expense associated with the RSU Equity Awards, Cash-Settled RSU Awards, and cash-settled stock appreciation rights (“Cash SARs”), net of amounts capitalized, is included in “General and administrative” in the consolidated statements of operations. The following table presents share-based compensation expense (benefit), net for each respective period:
Three Months Ended June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(In thousands)
RSU Equity Awards $3,212    $2,907    $7,160    $8,383   
Cash-Settled RSU Awards 596    203    (1,400)   1,354   
Cash SARs 1,115    —    (3,641)   —   
4,923    3,110    $2,119    $9,737   
Less: amounts capitalized to oil and gas properties (2,162)   (1,131)   (2,330)   (2,304)  
Total share-based compensation expense (benefit), net $2,761    $1,979    ($211)   $7,433   
See “Note 10 - Stock-Based Compensation” of the Notes to Consolidated Financial Statements in the 2019 Annual Report for details of the Company’s equity-based incentive plans.