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SHARE CAPITAL AND SHARE BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

SHARE CAPITAL AND SHARE OPTIONS [Abstract]

SHARE CAPITAL AND SHARE BASED COMPENSATION


23.			SHARE CAPITAL AND SHARE BASED COMPENSATION

Our common shares are listed on the Nasdaq Stock Exchange.

As at December 31, 2020 and 2019, our authorized and issued share capital is as follows:

Authorized share capital:


(in thousands of $, except per share data)	2020	2019
150,000,000 (2019: 150,000,000) common shares of $1.00 each	150,000	150,000

Issued share capital:


(in thousands of $, except per share data)	2020	2019
109,943,594 (2019: 101,302,404) outstanding issued common shares of $1.00 each	109,944	101,303


(number of shares)	2020	2019
As at January 1	101,302,404	101,302,404
Repurchase and cancellation of treasury shares (1)	(3,500,000)	—
Issuance of shares (2)	12,067,789	—
Vesting of RSUs	73,401	—
As at December 31	109,943,594	101,302,404

(1) In February 2020, we purchased 1.5 million shares for a consideration of $70.4 million and cancelled all our 3.5 million treasury shares, that we repurchased in the current and prior years.

(2) In December 2020, we closed a registered equity offering of 12,067,789 of our common shares, at par value of $1.00 per share. We raised proceeds, net of the underwriter's discount and offering fees, of approximately $100 million, which we used to partially repay the Term Loan facility, fully repay Margin Loan Facility and for general corporate purposes.

Contributed surplus

As at December 31, 2020 and 2019 we had contributed surplus of $200 million. Contributed surplus is capital that can be returned to stockholders without the need to reduce share capital, thereby giving Golar greater flexibility when it comes to declaring dividends.

Share options

In February 2002, our board of directors approved the Golar LNG Limited Share Option Scheme ("Golar Scheme"). The Golar Scheme permits the board of directors, at its discretion, to grant options and to acquire shares in the Company to employees, non-employees and directors of the Company or its subsidiaries. Options granted under the scheme will vest at a date determined by the board at the date of the grant. The options granted under the plan to date have five year terms and vest equally over a period of three to four years. There is no maximum number of shares authorized for awards of equity share options, and either authorized unissued shares or treasury shares in the Company may be used to satisfy exercised options.

The Golar LNG Limited Long Term Incentive Plan ("LTIP") was adopted by our board of directors, effective as of October 24, 2017. The maximum aggregate number of common shares that may be delivered pursuant to any and all awards under the Company’s LTIP shall not exceed 3,000,000 common shares, subject to adjustment due to recapitalization or reorganization as provided under the LTIP. The LTIP allows for grants of (i) share options, (ii) share appreciation rights, (iii) restricted share awards (iv) share awards, (v) other share-based awards, (vi) cash awards, (vii) dividend equivalent rights, (viii) substitute awards and (ix) performance-based awards, or any combination of the foregoing as determined by the board of directors or nominated committee in its sole discretion. Either authorized unissued shares or treasury shares (if there are any) in the Company may be used to satisfy exercised options.

During 2020 and 2019, the Company granted individuals nil share options.

As at December 31, 2020, 2019 and 2018, the number of options outstanding in respect of Golar shares was 1.8 million, 2.7 million and 3.8 million, respectively.

The fair value of each option award is estimated on the grant date or modification date using the Black-Scholes option pricing model. The weighted average assumptions as at grant date are noted in the table below:


	2018
Risk free interest rate	2.5	%
Expected volatility of common stock	62.5	%
Expected dividend yield	0.0	%
Expected term of options (in years)	3.6 years

The assumption for expected future volatility is based primarily on an analysis of historical volatility of our common stock.

Where the criteria for using the simplified method are met, we have used this method to estimate the expected term of options based on the vesting period of the award that represents the period of time options granted are expected to be outstanding. Under the simplified method, the mid-point between the vesting date and the maximum contractual expiration date is used as the expected term. Where the criteria for using the simplified method are not met, we used the contractual term of the options of five years.

The dividend yield has been estimated at 0.0% as the exercise price of the options are reduced by the value of dividends, declared and paid on a per share basis.

A summary of the share option activity for the year ended December 31, 2020 is presented below:


(in thousands of $, except per share data)	Shares (in '000s)	Weighted average exercise price		Weighted average remaining contractual term (years)
Options outstanding at December 31, 2019	2,680	$	30.23	1.9
Forfeited during the year	(376)	$	26.69
Lapsed during the year	(463)	$	55.45
Options outstanding at December 31, 2020	1,841	$	24.62	1.2


Options outstanding and exercisable at:
December 31, 2020	1,717	$	24.46	1.2
December 31, 2019	2,221	$	30.74	1.7
December 31, 2018	2,320	$	39.02	2.0

The exercise price of all options is reduced by the amount of dividends declared and paid. The above figures for options granted, exercised and forfeited show the average of the prices at the time of granting, exercising and forfeiting of the options, and for options outstanding at the beginning and end of the year, the average of the reduced option prices is shown.

As of December 31, 2020, 2019 and 2018, the aggregate intrinsic value of share options that were both outstanding and exercisable was $nil as the exercise price was higher than the market value of the share options at year end.


	Year ended December 31
In $'000	2020	2019	2018
Intrinsic value of share options exercised	—	—	2,621
Total fair value of share options fully vested in the year	3,175	8,967	16,623

Compensation cost recognized in the consolidated statement of income	2,274	7,148	11,748
Share options cost capitalized*	110	608	421

*Relates to capitalized costs on share options awarded to employees directly involved in certain vessel conversion projects.

As of December 31, 2020, the total unrecognized compensation cost amounting to $0.2 million relating to options outstanding is expected to be recognized over a weighted average period of two months.

Restricted Stock Units (RSU)

Time-based RSUs

Pursuant to the LTIP, the Company granted certain individuals 0.7 million and 0.2 million of RSUs during the years ended December 31, 2020 and 2019, respectively. The RSUs vest equally over a period of 3 years.

The fair value of the RSU award is estimated using the market price of our common stock at grant date with expense recognized over the three-year vesting period.

A summary of time-based RSU activities for the year ended December 31, 2020 is presented below:


(in thousands of $, except per share data)	Shares (in '000s)	Weighted average grant date fair value per share	Weighted average remaining contractual term (years)
Non-vested RSUs at December 31, 2019	223	20.61	2.40
Granted during the year	667	7.51
Vested during the year	(73)	20.61
Forfeited during the year	(69)	7.87
Non-vested RSUs at December 31, 2020	748	10.02	2.00

Performance-based RSUs

In March 2020, the Company also granted certain individuals RSUs that are subject to the achievement of a total shareholder return (TSR) performance condition relative to the TSR of a predetermined group of peer companies over a three-year performance period ending December 31, 2022. The maximum number of RSUs that may be earned under the award is 159,430. Payouts of the performance-based RSUs will range from 0% to 100% of the target awards based on the Company’s TSR ranking within the peer group. This award will vest in March 2023.

The fair value of this award is estimated on the grant date using the Monte Carlo simulation model. The weighted average assumptions as of grant date are noted in the table below:


	2020
Remaining performance period	2.8 years
Contractual term	3.0 years
Expected dividend yield	0.0		%
Risk fee interest rate	0.42		%
Golar volatility	84		%
Share price at grant date	$	7.49

The assumption for expected future volatility is based primarily on an analysis of historical volatility of our common stock with an implied volatility factored in for the last 0.9 years of the performance period.

A summary of performance-based RSU activity for the year ended December 31, 2020 is presented below:


(in thousands of $, except per share data)	Shares (in '000s)	Weighted average grant date fair value per share	Weighted average remaining contractual term (years)
Granted during the year	159	6.25
Non-vested performance based RSUs at December 31, 2020	159	6.25	2.21


	Year ended December 31
In $'000	2020	2019	2018
Compensation cost recognized in the consolidated statement of income	2,739	1,124	—
RSU cost capitalized*	295	—	—

*Relates to capitalized costs on RSUs awarded to employees directly involved in certain vessel conversion projects.

As of December 31, 2020, the total unrecognized compensation cost of $5.9 million relating to both time-based and performance based RSUs outstanding is expected to be recognized over a weighted average period of 1.9 years.