Stock-Based Compensation

Restricted stock awards. The Company has granted restricted stock awards to employees and directors under its Amended and Restated 2010 Long Term Incentive Plan, the majority of which vest over a three-year period. The maximum number of shares available for grant under the Amended and Restated 2010 Long Term Incentive Plan is 7,200,000. The fair value of restricted stock grants is based on the value of the Company’s common stock on the date of grant. Compensation expense is recognized ratably over the requisite service period. The Company assumed annual forfeiture rates by employee group ranging from 0% to 12.7% based on the Company’s forfeiture history for this type of award.

The following table summarizes information related to restricted stock held by the Company’s employees and directors for the periods presented:



	Shares		Weighted Average Grant Date Fair Value per Share
Non-vested shares outstanding December 31, 2013	990,472		$	28.20
Granted	985,685		42.55
Vested	(408,541	)	33.70
Forfeited	(197,198	)	38.89
Non-vested shares outstanding December 31, 2014	1,370,418		$	40.03

Stock-based compensation expense recorded for restricted stock awards was $18.2 million for the year ended December 31, 2014 and $10.2 million for each of the years ended December 31, 2013 and 2012, and is included in general and administrative expenses on the Company’s Consolidated Statement of Operations. The fair value of awards vested was $18.3 million, $6.5 million and $11.7 million for the years ended December 31, 2014, 2013 and 2012. The weighted average grant date fair value of restricted stock awards granted was $42.55 per share, $38.64 per share and $29.66 per share for the years ended December 31, 2014, 2013 and 2012. Unrecognized expense as of December 31, 2014 for all outstanding restricted stock awards was $39.6 million and will be recognized over a weighted average period of 2.1 years.

Performance share units. The Company has granted PSUs to officers of the Company under its Amended and Restated 2010 Long Term Incentive Plan. The PSUs are awards of restricted stock units, and each PSU that is earned represents the right to receive one share of the Company’s common stock. The Company assumed an annual forfeiture rate of 3.3% based on the Company’s forfeiture history for the officer employee group receiving PSUs.

Each grant of PSUs is subject to a designated three-year initial performance period. The number of PSUs to be earned is subject to a market condition, which is based on a comparison of the total shareholder return (“TSR”) achieved with respect to shares of the Company’s common stock against the TSR achieved by a defined peer group at the end of the performance period. Depending on the Company’s TSR performance relative to the defined peer group, an award recipient will earn between 0% and 200% of the initial PSUs granted. If less than 200% of the initial PSUs granted are earned at the end of the initial three-year performance period, then the performance period will be extended an additional year to give the recipient the opportunity to earn up to an aggregate of 200% of the initial PSUs granted.

The following table summarizes information related to PSUs held by the Company’s officers for the periods presented:



	Initial Unit Awards		Weighted Average Grant Date Fair Value per Unit
Non-vested PSUs at December 31, 2013	269,300		$	33.64
Granted	158,970		41.71
Vested	—		—
Forfeited	(26,130	)	35.86
Non-vested PSUs at December 31, 2014	402,140		$	36.68

Stock-based compensation expense recorded for PSUs for the years ended December 31, 2014, 2013 and 2012 was $3.1 million, $1.8 million and $0.4 million, respectively, and is included in general and administrative expenses on the Company’s Consolidated Statement of Operations. The weighted average grant date fair value of PSUs granted was $41.71 per share, $42.01 per share and $26.22 per share for the years ended December 31, 2014, 2013 and 2012. Unrecognized expense as of December 31, 2014 for all outstanding PSUs was $9.7 million and will be recognized over a remaining period of 2.6 years.

The Company accounted for these PSUs as equity awards pursuant to the FASB’s authoritative guidance for share-based payments. The aggregate grant date fair value of the market-based awards was determined using a Monte Carlo simulation model, which results in an expected percentage of PSUs to be earned during the performance period. The fair value of these PSUs is recognized on a straight-line basis over the performance period. As it is probable that a portion of the awards will be earned during the extended performance period, the grant date fair value will be amortized over four years. However, if 200% of the initial PSUs granted are earned at the end of the initial three-year performance period, then the remaining compensation expense will be accelerated in order to be fully recognized over three years. All compensation expense related to the PSUs will be recognized if the requisite performance period is fulfilled, even if the market condition is not achieved.

The Monte Carlo simulation model uses assumptions regarding random projections and must be repeated numerous times to achieve a probabilistic assessment. The key valuation assumptions for the Monte Carlo model are the forecast period, initial value, risk-free interest rate, volatility and correlation coefficients. The risk-free interest rate is the U.S. Treasury bond rate on the date of grant. The initial value is the average of the volume weighted average prices for the 30 trading days prior to the start of the performance cycle for the Company and each of its peers. Volatility is the standard deviation of the average percentage change in stock price over a historical period for the Company and each of its peers. The correlation coefficients are measures of the strength of the linear relationship between and amongst the Company and its peers estimated based on historical stock price data.

The following assumptions were used for the Monte Carlo model to determine the grant date fair value and associated stock-based compensation expense of the PSUs granted during the periods presented:



	2014 PSUs		2013 PSUs		2012 PSUs
Forecast period (years)	4.00		4.00		4.01
Risk-free interest rate	1.12	%	0.65	%	0.46	%
Oasis stock price volatility	44.49	%	47.48	%	51.00	%

Based on these assumptions, the Monte Carlo simulation model resulted in an expected percentage of PSUs earned of 98%, 112% and 98% for the 2014, 2013 and 2012 grants, respectively.

For the years ended December 31, 2014, 2013 and 2012, the Company had an associated tax benefit of $8.4 million, $4.5 million and $4.0 million, respectively, related to all stock-based compensation.