The Company has granted restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance share units (“PSUs”), leveraged stock units (“LSUs”) and phantom unit awards under the 2020 LTIP. In accordance with the FASB’s authoritative guidance for share-based payments, the RSAs, RSUs, PSUs and LSUs are accounted for as equity classified awards, and the phantom unit awards are accounted for as liability classified awards.

Equity-based compensation expense from continuing operations is recognized in general and administrative expenses on the Company’s Consolidated Statements of Operations, and equity-based compensation expense from discontinued operations is recognized on the Company’s Consolidated Statements of Operations in discontinued operations, net of income tax. During the year ended December 31, 2021 (Successor), the Company recognized $14.7 million in stock-based compensation expense related to equity classified awards and $0.5 million related to liability classified awards that were attributable to continuing operations. The Company recognized $0.8 million in stock-based compensation expense related to equity classified awards that was attributable to discontinued operations during the year ended December 31, 2021 (Successor). Stock-based compensation expenses were not material for both continuing operations and discontinued operations during the period from November 20, 2020 through December 31, 2020 (Successor).

Restricted stock awards. RSAs are legally issued shares which vest over a three-year period subject to a service condition. The fair value of RSAs is based on the closing sales price of the Company’s common stock on the date of grant or, if applicable, the date of modification. Compensation expense is recognized ratably over the requisite service period.

The following table summarizes information related to RSAs held by non-employee directors of the Company:


	Shares	Weighted Average Grant Date Fair Value per Share
Non-vested shares outstanding December 31, 2020	93,000	$	37.35
Granted	2,916	126.89
Vested	(30,996)	37.35
Forfeited	—	—
Non-vested shares outstanding December 31, 2021	64,920	$	41.37

Restricted stock units. RSUs are contingent shares that are scheduled to vest 25% each year over a four-year period. The fair value is based on the closing price of the Company’s common stock on the date of grant or, if applicable, the date of modification. Compensation expense is recognized ratably over the requisite service period.

The following table summarizes information related to RSUs held by employees of the Company:


	Shares	Weighted Average Grant Date Fair Value per Share
Non-vested shares outstanding December 31, 2020	—	$	—
Granted	518,375	62.61
Vested	(69)	127.91
Forfeited	(5,500)	56.86
Non-vested shares outstanding December 31, 2021	512,806	$	62.66

The fair value of awards vested was immaterial for the year ended December 31, 2021 (Successor). The weighted average grant date fair value of RSUs was $62.61 per share for the year ended December 31, 2021 (Successor). Unrecognized expense as of December 31, 2021 for all outstanding RSUs was $26.9 million and will be recognized over a weighted average period of approximately 3.1 years.

Performance share units. PSUs are contingent shares that may be earned over three-year and four-year performance periods. 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 applicable performance periods, with 50% of the PSU awards eligible to be earned based on performance relative to a certain group of the Company’s oil and gas peers and 50% of the PSU awards eligible to be earned

The following table summarizes information related to PSUs held by employees of the Company:


	Shares	Weighted Average Grant Date Fair Value per Share
Non-vested shares outstanding December 31, 2020	—	$	—
Granted	183,915	63.95
Vested	—	—
Forfeited	—	—
Non-vested shares outstanding December 31, 2021	183,915	$	63.95

No awards vested for the year ended December 31, 2021 (Successor). The weighted average grant date fair value was $63.95 per share for the year ended December 31, 2021 (Successor). Unrecognized expense as of December 31, 2021 for all outstanding PSUs was $8.8 million and will be recognized over a weighted average period of approximately 2.7 years.

Leveraged stock units. LSUs are contingent shares that may be earned over a three-year or four-year performance period. The number of LSUs to be earned is subject to a market condition, which is based on the TSR performance of the Company’s common stock measured against specific premium return objectives. Depending on the Company’s TSR performance, award recipients may earn between 0% and 300% of target; however, the number of shares delivered in respect to these awards during the grant cycle may not exceed ten times the fair value of the award on the grant date.

The following table summarizes information related to LSUs held by employees of the Company:


	Shares	Weighted Average Grant Date Fair Value per Share
Non-vested shares outstanding December 31, 2020	—	$	—
Granted	262,406	78.79
Vested	—	—
Forfeited	—	—
Non-vested shares outstanding December 31, 2021	262,406	$	78.79

No awards vested for the year ended December 31, 2021 (Successor). The weighted average grant date fair value was $78.79 per share for the year ended December 31, 2021 (Successor). Unrecognized expense as of December 31, 2021 for all outstanding LSUs was $15.4 million and will be recognized over a weighted average period of approximately 2.6 years.

Fair value assumptions. The aggregate grant date fair value of PSUs and LSUs was determined by a third-party valuation specialist using a Monte Carlo simulation model. The key valuation inputs were: (i) the forecast period, (ii) risk-free interest rate, (iii) implied equity volatility, (iv) stock price on the date of grant and, for PSUs, (v) correlation coefficient. The risk-free interest rates are the U.S. Treasury bond rates on the date of grant that correspond to each performance period. Implied equity volatility is derived by solving for an asset volatility and equity volatility based on the leverage of the Company and each of its peers. For the PSUs, the correlation coefficient measures the strength of the linear relationship between and amongst the Company and its peers based on historical stock price data.

Phantom unit awards. Phantom unit awards represent the right to receive, upon vesting of the award, a cash payment equal to the fair market value of one share of common stock. The phantom unit awards generally vest in equal installments each year over a three-year period from the date of grant, and compensation expense is recognized over the requisite service period.

During the period from January 1, 2020 through November 19, 2020 (Predecessor) for continuing operations, the Company recognized $29.8 million in stock-based compensation expense related to equity classified awards and $1.2 million related to liability classified awards. During the period from January 1, 2020 through November 19, 2020 (Predecessor) for discontinued operations, the Company recognized $1.5 million in stock-based compensation expense related to equity classified awards and $0.2 million related to liability classified awards. During the year ended December 31, 2019 (Predecessor) for continuing operations, the Company recognized $32.8 million in stock-based compensation expense related to equity classified awards and $2.4 million related to liability classified awards. During the year ended December 31, 2019 (Predecessor) for discontinued operations, the Company recognized $0.9 million in stock-based compensation expense related to equity classified awards and $0.1 million related to liability classified awards.

Restricted stock awards. The Company granted restricted stock awards to its employees and directors under the 2010 LTIP, the majority of which vest over a three-year period. The fair value of restricted stock grants was based on the closing sales price of the Company’s common stock on the date of grant or, if applicable, the date of modification. Compensation expense was recognized ratably over the requisite service period.

The fair value of awards vested was $47.3 million for the period from January 1, 2020 through November 19, 2020 (Predecessor), and $14.6 million for the year ended December 31, 2019 (Predecessor). The weighted average grant date fair value of restricted stock awards granted was $3.06 per share for the period from January 1, 2020 through November 19, 2020 (Predecessor), and $6.61 per share for the year ended December 31, 2019 (Predecessor).

Performance share units. The Company granted PSUs to its officers under the 2010 LTIP. The PSUs are awards of restricted stock units that may be earned based on the level of achievement with respect to the applicable performance metric, and each PSU that is earned represents the right to receive one share of the Company’s common stock.

The Company accounted for the PSUs as equity awards pursuant to the FASB’s authoritative guidance for share-based payments. The number of PSUs to be earned is subject to a market condition, which is based on a comparison of the 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 periods. Depending on the Company’s TSR performance relative to the defined peer group, award recipients will earn between 0% and 240% of the initial PSUs granted. 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 fair value of PSUs vested was $7.6 million for the period from January 1, 2020 through November 19, 2020 (Predecessor) and $2.6 million for the year ended December 31, 2019 (Predecessor). The weighted average grant date fair value of PSUs granted was $2.56 per share for the period from January 1, 2020 through November 19, 2020 (Predecessor) and $6.80 per share for the year ended December 31, 2019 (Predecessor).

The aggregate grant date fair value of the market-based awards was determined using a Monte Carlo simulation model. 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, risk-free interest rates, stock price volatility, initial value, stock price on the date of grant and correlation coefficients. The risk-free interest rates are the U.S. Treasury bond rates on the date of grant that corresponds to each performance period. 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 equity-based compensation expense of the PSUs granted during the periods presented (Predecessor):


	2020			2019
Forecast period (years)	2 - 4			2 - 4
Risk-free interest rates	1.53% - 1.55%			2.55% - 2.56%
Oasis stock price volatility	68.56		%	71.17		%
Oasis initial value	$	3.19		$	5.85
Oasis stock price on date of grant	$	2.77		$	6.63

Associated tax benefit. For the year ended December 31, 2019 (Predecessor), the Company had an associated tax benefit of $7.8 million related to all equity-based compensation. The Company did not have any associated tax benefits related to equity-based compensation during the period from January 1, 2020 through November 19, 2020 (Predecessor) as a result of recording a valuation allowance on its deferred tax assets or during the period from November 20, 2020 through December 31, 2020 (Successor) as a result of the vesting of equity-based awards on the Emergence Date.

Class B units in OMP GP. OMP GP previously granted restricted Class B units, representing membership interests in OMP GP, to certain employees, including OMP’s named executive officers, under the 2010 LTIP. The Class B units granted to employees other than the named executive officers vested on the Emergence Date. In connection with the Midstream Simplification, the Class B units granted to OMP’s named executive officers were converted into and exchanged for restricted common units in OMP. On March 30, 2021, 34% of these awards vested, and the remaining awards vested on February 1, 2022.

2020 Incentive Compensation Program. In order to effectively incentivize employees in the then-current environment, the Board of Directors approved a revised 2020 incentive compensation program applicable to all employees effective June 12, 2020 (the “2020 Incentive Compensation Program”).

Under the 2020 Incentive Compensation Program, all 2020 equity-based awards of the Predecessor previously granted under the 2010 LTIP, were forfeited and concurrently replaced with cash retention incentives, which were accounted for as modifications of such 2020 awards. In addition, all employees waived participation in the Company’s 2020 annual cash incentive plan and instead became eligible to earn cash performance incentives based on the achievement of certain specified incentive metrics measured on a quarterly basis from July 1, 2020 to June 30, 2021. The 2020 Incentive Compensation Program resulted in $15.6 million being paid in June 2020 with the remainder of the target amount under such program payable over the following 12 months.

For the Company’s officers and certain other senior employees, the prepaid cash incentives paid in June 2020 could be clawed back if (i) certain specified incentive metrics measured on a quarterly basis were not achieved from July 1, 2020 to December 31, 2020, and (ii) such individuals did not remain employed for a period of up to 12 months, unless such individuals were terminated without cause or resigned for good reason. The after-tax value of the cash incentives paid to the Company’s officers and certain other senior employees of $8.8 million was capitalized to prepaid expenses and amortized over the relevant service periods. The Company immediately expensed the difference between the cash and after-tax value of the prepaid cash incentives of $4.1 million, which was not subject to the clawback provisions of the 2020 Incentive Compensation Program, and recognized additional compensation expense of $0.4 million to adjust for the grant date fair value of certain original 2020 equity-based awards that exceeded the replacement cash retention incentives less amounts previously recognized for the original 2020 equity-based awards. On the Emergence Date and pursuant to the Plan, the remaining unamortized amount of prepaid cash incentives of $4.3 million was vested and included in general and administrative expenses on the Company’s Consolidated Statement of Operations for the period from January 1, 2020 through November 19, 2020 (Predecessor).

For all other employees, the June 2020 incentive payment of $2.7 million was not subject to any clawback provisions, and $2.1 million, which represented the excess of the cash retention payment over amounts previously recognized for the original 2020 equity-based awards in which these cash incentives replaced, was immediately expensed.