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Equity-Based Compensation
9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Equity-Based Compensation Equity-Based Compensation
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 Long Term Incentive Plan (the “2020 LTIP”). In accordance with the FASB’s authoritative guidance for share-based payments, the Company accounts for the RSAs, RSUs, PSUs and LSUs as equity classified awards and the phantom unit awards as liability classified awards.
Equity-based compensation expense from continuing operations is recognized in general and administrative expenses on the Company’s Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2022, the Company recognized $30.7 million and $40.3 million in equity-based compensation expenses related to equity classified awards, respectively. During the three and nine months ended September 30, 2021, the Company recognized $4.1 million and $10.5 million in equity-based compensation expenses related to equity classified awards, respectively. Equity-based compensation expenses related to liability classified awards were $2.1 million and $2.5 million during the three and nine months ended September 30, 2022, respectively. Equity-based compensation expenses related to liability classified awards were not material for the three and nine months ended September 30, 2021.
Pursuant to the Merger Agreement, at the effective time of the Merger, the Company assumed the Whiting Petroleum Corporation 2020 Equity Incentive Plan (the “Whiting Plan”) and the outstanding RSUs and PSUs granted under the Whiting Plan, and accordingly (i) all shares remaining available for issuance under the Whiting Plan as of the Merger were automatically converted into shares of the Company’s common stock, available for issuance under the Whiting Plan and (ii) all such RSUs and PSUs were automatically converted into RSUs and PSUs, respectively, that, to the extent earned, will be settled in shares of the Company’s common stock, subject to appropriate adjustments to the number of shares subject to each award, resulting in the following as of July 1, 2022: (x) 1,611,725 shares of the Company’s common stock remaining available for issuance to eligible participants under the Whiting Plan, (y) 335,386 shares of the Company’s common stock subject to RSUs assumed under the Whiting Plan and (z) 275,310 shares of the Company’s common stock subject to PSUs assumed under the Whiting Plan. The number of PSUs assumed by the Company was determined based upon the change-in-control provisions contained in the original award agreement at the greater of (i) the target number of PSUs subject to such award and (ii) the actual achievement of the performance criteria measured based on the truncated performance period ending immediately prior to the effective time of the Merger. Upon completion of the Merger, the Whiting RSUs and PSUs were subject to time-based vesting criteria. The fair value of the RSU and PSU awards assumed by the Company was $73.3 million, including $27.4 million that was attributable to pre-Merger services and recorded as a part of the consideration transferred and $45.9 million that is attributable to post-Merger services that will be recognized as equity-based compensation expense in the post-combination period. See Note 9—Acquisitions for additional information.
Restricted stock awards. The Company previously granted RSAs, which are legally issued shares, to non-employee directors of Oasis under the 2020 LTIP which were initially scheduled to vest over a three-year period subject to a service condition. The fair value was based on the closing price of the Company’s common stock at the date of grant.
Pursuant to the 2020 LTIP and RSA award agreements, each outstanding RSA became fully vested upon completion of the Merger due to a “change in control.” As a result, 64,920 outstanding RSAs became fully vested on July 1, 2022. There were no outstanding RSAs at September 30, 2022.
Restricted stock units. The Company has granted RSUs, which are contingent shares with a service-based vesting condition, to employees and non-employee directors under the 2020 LTIP. The RSUs granted to employees vest ratably each year over a three-year or four-year period, and the RSUs granted to non-employee directors vest over a one-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. The Company recognizes compensation expense ratably over the requisite service period.
No employee RSUs were granted during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company granted 443,836 employee RSUs with a weighted average grant date per share value of $51.64. On August 31, 2022, the Company granted 13,920 RSUs to non-employee directors with a grant date per share value of $141.55.
Performance share units. The Company has granted PSUs to certain employees under the 2020 LTIP. PSUs are contingent shares that may be earned over three-year and four-year performance periods. The number of PSUs to be earned was initially subject to a market condition that was 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 based on performance relative to the broad-based Russell 2000 index. Depending on the Company’s TSR performance relative to the defined peer group, award recipients could earn between 0% and 150% of target. Pursuant to the PSU award agreements, the number of PSUs earned was certified at the greater of (i) target performance and (ii) actual achievement of the performance criteria measured based on the truncated performance period ending immediately prior to the effective time of the “change in control.” The completion of the Merger on July 1, 2022 represented a “change in control” such that 250,009 PSUs were earned by award recipients and converted into time-based awards.
No PSUs were granted during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company granted 183,915 PSUs with a weighted average grant date per share value of $63.95.
Leveraged stock units. The Company has granted LSUs to certain employees under the 2020 LTIP. LSUs are contingent shares that may be earned over a three-year or four-year performance period. The number of LSUs to be earned was initially subject to a market condition, which was 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 could earn between 0% and 300% of target; however, the number of shares delivered in respect to these awards during the grant cycle could not exceed ten times the fair value of the award on the grant date. Pursuant to LSU award agreements, the number of LSUs earned was certified at the greater of (i) target performance and (ii) actual achievement of the performance criteria measured based on the truncated performance period ending immediately prior to the effective time of the “change in control.” The completion of the Merger on July 1, 2022 represented a “change in control” such that 787,218 LSUs were earned by award recipients and converted into time-based awards.
No LSUs were granted during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company granted 262,406 LSUs with a weighted average grant date per share value of $78.79.
Unvested equity awards. At September 30, 2022, there were 1,417,189 outstanding and unvested equity-based compensation awards (including equity awards assumed in the Merger), all of which are time-based awards subject to vesting over applicable service periods.