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Compensation Plans | 9 Months Ended
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Sep. 30, 2025
Share-Based Payment Arrangement [Abstract] |
Compensation Plans | Note 12 - Compensation Plans On May 22, 2025, the Company’s stockholders approved the 2025 Equity Incentive Compensation Plan (“2025 Equity Plan”), which succeeded the SM Energy Company Equity Incentive Compensation Plan, as amended and restated effective as of May 22, 2018 (“Predecessor Equity Plan” and together with the 2025 Equity Plan, the “Equity Plans”). The Company ceased granting awards under the Predecessor Equity Plan following the approval of the 2025 Equity Plan, however, existing awards remain outstanding under the Predecessor Equity Plan. Among other items, the 2025 Equity Plan authorized an increase in the total number of shares of the Company’s common stock available for grant of approximately 2.0 million shares. As of September 30, 2025, approximately 2.5 million shares of common stock were available for grant under the 2025 Equity Plan. The 2025 Equity Plan is included as Exhibit 10.1 to this report. Performance Share Units The Company has granted PSUs, which were determined to be equity awards, to eligible employees pursuant to its Equity Plans. The number of shares of the Company’s common stock issued to settle PSUs ranges from zero to two times the number of PSUs awarded and is determined based on certain criteria over a three-year performance period. PSUs generally vest on the third anniversary of the grant date or upon other triggering events as set forth in the applicable Equity Plan. For PSUs granted in 2025, settlement will be determined based on the Company’s total shareholder return (“TSR”) measured over the three-year performance period, including equally weighted absolute TSR and TSR relative to certain peer companies. For PSUs granted in 2024 and 2023, settlement will be determined based on a combination of the following criteria measured over the three-year performance period: relative TSR, absolute TSR, free cash flow (“FCF”) generation, and the achievement of certain sustainability targets, in each case as defined by the award agreement. The Company initially records compensation expense associated with the issuance of PSUs based on the fair value of the awards as of the grant date. Because a portion of the 2024 and 2023 awards depends on performance-based settlement criteria, compensation expense may be adjusted in future periods as the expected number of shares of the Company’s common stock issued to settle the units increases or decreases based on the Company’s expected FCF generation and achievement of certain sustainability targets. During the nine months ended September 30, 2025, the Company granted a total of 374,692 PSUs with a grant date fair value of $10.3 million pursuant to the 2025 Equity Plan. Compensation expense for PSUs is recognized within general and administrative expense and exploration expense over the vesting periods of the respective awards. Total compensation expense recorded for PSUs was $1.8 million and $1.1 million for the three months ended September 30, 2025, and 2024, respectively, and $4.7 million and $3.5 million for the nine months ended September 30, 2025, and 2024, respectively. As of September 30, 2025, there was $15.6 million of total unrecognized compensation expense related to non-vested PSUs, which is being amortized through mid-2028. A summary of activity during the nine months ended September 30, 2025, is presented in the following table:
| PSUs (1) |  | Weighted-Average Grant-Date Fair Value (2)
Non-vested at beginning of year | 694,366 |  | $ | 32.99 |
Granted | 374,692 |  | $ | 27.45 |
Vested | (49,922) |  | $ | 30.02 |
Forfeited | (199,531) |  | $ | 31.01 |
Non-vested at end of quarter | 819,605 |  | $ | 32.27 |
____________________________________________ (1) The number of PSUs presented assumes a multiplier of one. The actual final number of shares of common stock to be issued at the end of the three-year performance will range from zero to two times the number of PSUs awarded depending on the three-year performance multiplier. (2) Amounts represent price per unit. During the nine months ended September 30, 2025, the Company settled PSUs that were granted in 2022, at a 0.28 times multiplier based on the same performance criteria utilized for PSUs granted in 2024 and 2023, as described above. The Company and all eligible recipients mutually agreed to net share settle a portion of the awards to cover income and payroll tax withholdings, as provided for in the Predecessor Equity Plan and applicable award agreements. After withholding 26,397 shares to satisfy income and payroll tax withholding obligations, the Company issued 39,475 shares of common stock in accordance with the terms of the applicable award agreement. Employee Restricted Stock Units The Company has granted RSUs to eligible employees pursuant to its Equity Plans. Each RSU represents a right to receive one share of the Company’s common stock upon settlement of the award at the end of the specified vesting period. RSUs generally vest in one-third increments on each anniversary of the applicable grant date over the applicable vesting period, or upon other triggering events as set forth in the applicable Equity Plan. The Company records compensation expense associated with the issuance of RSUs based on the fair value of the awards as of the grant date. The fair value of an RSU is equal to the closing price of the Company’s common stock on the grant date. Compensation expense for RSUs is recognized within general and administrative expense and exploration expense over the vesting periods of the respective awards. During the nine months ended September 30, 2025, the Company granted to employees a total of 981,046 RSUs with a grant date fair value of $25.8 million pursuant to the 2025 Equity Plan and the Company settled RSUs upon the vesting of awards granted in previous years. The Company and the majority of eligible recipients mutually agreed to net share settle a portion of the awards to cover income and payroll tax withholdings, as provided for in the Predecessor Equity Plan and applicable award agreements. After withholding 161,787 shares to satisfy income and payroll tax withholding obligations, the Company issued 324,981 shares of common stock in accordance with the terms of the applicable award agreements. Total compensation expense recorded for RSUs was $5.1 million and $4.5 million for the three months ended September 30, 2025, and 2024, respectively, and $14.2 million and $12.0 million for the nine months ended September 30, 2025, and 2024, respectively. As of September 30, 2025, there was $37.9 million of total unrecognized compensation expense related to non-vested RSUs, which is being amortized through mid-2028. A summary of activity during the nine months ended September 30, 2025, is presented in the following table:
| RSUs |  | Weighted-Average Grant-Date Fair Value (1)
Non-vested at beginning of year | 1,039,837 |  | $ | 37.87 |
Granted | 981,046 |  | $ | 26.34 |
Vested | (486,768) |  | $ | 36.39 |
Forfeited | (101,254) |  | $ | 34.38 |
Non-vested at end of quarter | 1,432,861 |  | $ | 30.73 |
____________________________________________ (1) Amounts represent price per unit. Director Shares During the nine months ended September 30, 2025, and 2024, the Company issued a total of 82,193 and 37,530 shares, respectively, of its common stock to its non-employee directors under the Equity Plans. All shares issued to non-employee directors fully vest during the year in which they are granted. Employee Stock Purchase Plan Under the Company’s Employee Stock Purchase Plan (“ESPP”), eligible employees may purchase shares of the Company’s common stock through payroll deductions of up to 15 percent of their eligible compensation, subject to a maximum of 2,500 shares per offering period and a maximum of $25,000 in value related to purchases for each calendar year. The purchase price of the common stock is 85 percent of the lower of the trading price of the common stock on either the first or last day of the six-month offering period. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. There were a total of 90,314 and 56,006 shares issued under the ESPP during the nine months ended September 30, 2025, and 2024, respectively. Total proceeds to the Company for the issuance of these shares was $1.9 million and $1.8 million during the nine months ended September 30, 2025, and 2024, respectively. The fair value of ESPP grants is measured at the date of grant using the Black-Scholes option-pricing model.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 715 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/715/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 712 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/712/tableOfContent Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 710 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/710/tableOfContent Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/718/tableOfContent + Details
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