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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation In 2022, Devon's stockholders approved the 2022 Plan, which replaced the 2017 Plan. From the effective date of the 2022 Plan, no further awards may be made under the 2017 Plan; however, awards previously granted will continue to be governed by the terms of the respective award documents. The 2022 Plan authorizes the grant of nonqualified and incentive stock options, restricted stock awards or units and stock appreciation rights to eligible employees. Restricted stock awards or restricted stock units granted under the 2022 Plan may be subject to performance-based conditions. The 2022 Plan also authorizes the grant of nonqualified stock options, restricted stock awards or units and stock appreciation rights to non-employee directors. To calculate the number of shares that may be granted in awards under the 2022 Plan, options and stock appreciation rights represent one share and other awards represent 1.74 shares. The vesting for certain share-based awards was accelerated in 2021 in conjunction with the reduction of workforce activities described in Note 5 and is included in restructuring and transaction costs in the accompanying consolidated statements of comprehensive earnings. The table below presents the share-based compensation expense included in Devon’s accompanying consolidated statements of comprehensive earnings.
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
G&A |  | $ | 92 |  |  | $ | 87 |  |  | $ | 77 |
Exploration expenses |  |  | 1 |  |  |  | 1 |  |  |  | 1 |
Restructuring and transaction costs |  |  | — |  |  |  | — |  |  |  | 21 |
Total |  | $ | 93 |  |  | $ | 88 |  |  | $ | 99 |
Related income tax benefit |  | $ | 34 |  |  | $ | 34 |  |  | $ | 13 |
The following table presents a summary of Devon’s unvested restricted stock awards and units and performance share units granted under the plans.
|  | Restricted Stock Awards & Units |  |  | Performance Share Units |
|  | Awards/Units |  |  | Weighted Average Grant-Date Fair Value |  |  | Units |  |  | Weighted Average Grant-Date Fair Value |
|  | (Thousands, except fair value data) |
Unvested at 12/31/22 |  |  | 5,788 |  |  | $ | 29.11 |  |  |  | 1,841 |  |  | $ | 31.33 |
Granted |  |  | 1,298 |  |  | $ | 62.24 |  |  |  | 743 |  | (1) | $ | 51.38 |
Vested |  |  | (2,926 | ) |  | $ | 25.25 |  |  |  | (1,037 | ) |  | $ | 27.89 |
Forfeited |  |  | (127 | ) |  | $ | 43.89 |  |  |  | — |  |  | $ | — |
Unvested at 12/31/23 |  |  | 4,033 |  |  | $ | 42.10 |  |  |  | 1,547 |  | (2) | $ | 43.25 |
(1) These grants also include the impact of performance share units granted in prior year that vested higher than 100% target due to Devon's TSR performance compared to applicable peers. (2) A maximum of 3.1 million common shares could be awarded based upon Devon’s final TSR ranking. The following table presents the aggregate fair value of awards and units that vested during the indicated period.
|  | 2023 |  |  | 2022 |  |  | 2021 |
Restricted Stock Awards and Units |  | $ | 172 |  |  | $ | 180 |  |  | $ | 115 |
Performance-Based Restricted Stock Awards |  | $ | — |  |  | $ | — |  |  | $ | 1 |
Performance Share Units |  | $ | 66 |  |  | $ | 62 |  |  | $ | 15 |
The following table presents the unrecognized compensation cost and the related weighted average recognition period associated with unvested awards and units as of December 31, 2023.
|  | Restricted Stock |  |  | Performance |
|  | Awards/Units |  |  | Share Units |
Unrecognized compensation cost |  | $ | 93 |  |  | $ | 18 |
Weighted average period for recognition (years) |  |  | 2.5 |  |  |  | 1.7 |
Restricted Stock Awards and Units Restricted stock awards and units are subject to the terms, conditions, restrictions and limitations, if any, that the Compensation Committee deems appropriate, including restrictions on continued employment. Generally, the service requirement for vesting ranges from one to four years. Dividends declared during the vesting period with respect to restricted stock awards and units will not be paid until the underlying award vests. Devon estimates the fair values of restricted stock awards and units as the closing price of Devon’s common stock on the grant date of the award, which is expensed over the applicable vesting period. Performance Share Units Performance share units are granted to certain members of Devon’s management and employees. Each unit that vests entitles the recipient to one share of Devon common stock. The vesting of these units is based on comparing Devon’s TSR to the TSR of a predetermined group of peer companies over the specified three-year performance period. Subject to certain limits, the vesting of units may be between zero and 200% of the units granted depending on Devon’s TSR as compared to the peer group as of the end of the performance period. At vesting, recipients receive dividend equivalents with respect to the number of units vested. The fair value of each performance share unit is estimated as of the date of grant using a Monte Carlo simulation with the following assumptions used for all grants made under the plan: (i) a risk-free interest rate based on U.S. Treasury rates as of the grant date; (ii) a volatility assumption based on the historical realized price volatility of Devon and the designated peer group; and (iii) an estimated ranking of Devon among the designated peer group. The fair value of the unit on the date of grant is expensed over the applicable vesting period. The following table presents the assumptions related to performance share units granted.
|  | 2023 |  |  | 2022 |  |  | 2021 |
Grant-date fair value |  | $ | 81.70 |  |  | $ | 68.68 |  |  | $ | 18.08 |
Risk-free interest rate |  |  | 4.15 | % |  |  | 1.81 | % |  |  | 0.18 | %
Volatility factor |  |  | 61.43 | % |  |  | 70.1 | % |  |  | 67.8 | %
Contractual term (years) |  |  | 2.89 |  |  |  | 2.89 |  |  |  | 2.89 |

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