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STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
Long Term Incentive Plans
In April 2017, we adopted the 2017 Long Term Incentive Plan (“2017 LTIP”), which provides for the issuance of restricted stock units, performance stock units, and stock options, and reserved 2,467,430 shares of common stock. In June 2021, we adopted the 2021 Long Term Incentive Plan (“2021 LTIP”), which reserved an incremental 700,000 shares of common stock to those previously reserved under the 2017 LTIP. Finally, in conjunction with our merger with Extraction Oil & Gas, Inc. (“Extraction”) in November 2021, we assumed Extraction’s 2021 Long Term Incentive Plan (the “Extraction Equity Plan”), which reserved 3,305,080 shares of common stock now issuable by us. The 2017 LTIP, 2021 LTIP, and Extraction Equity Plan are collectively referred to herein as the “LTIP”.
We record compensation expense associated with the issuance of awards under the LTIP on a straight-line basis over the vesting period based on the fair value of the awards as of the date of grant within general and administrative expense in the accompanying statements of operations. The following table outlines the compensation expense recorded by type of award (in thousands):
Year Ended December 31,
202320222021
Restricted and deferred stock units$19,502 $19,401 $11,895 
Performance stock units15,429 11,966 3,663 
Total stock-based compensation$34,931 $31,367 $15,558 
As of December 31, 2023, unrecognized compensation expense related to the awards granted under the LTIP will be amortized through the relevant periods as follows (in thousands):
Unrecognized Compensation ExpenseFinal Year of Recognition
Restricted and deferred stock units$37,446 2026
Performance stock units23,730 2025
Total unrecognized stock-based compensation$61,176 
Restricted Stock Units and Deferred Stock Units
We grant time-based Restricted Stock Units (“RSUs”) to our officers, executives, and employees and time-based Deferred Stock Units (“DSUs”) to our non-employee directors as part of our LTIP. Each RSU and DSU represents a right to receive one share of our common stock after the RSU or DSU vests and is settled as described below. RSUs generally vest ratably either over a one, two, or three-year service period on each anniversary following the grant date. Each RSU is entitled to a dividend equivalent right to receive, upon settlement, a cash payment based on the regular cash dividends that would have been paid on a share of our common stock during the period between the grant date and the date the RSUs vest and are settled. Accrued but unpaid dividend equivalents are recognized as a liability on the accompanying balance sheets, until the recipients receive the dividend equivalents upon vesting and settlement. DSUs generally vest over a one-year period following the grant date. DSUs are settled in shares of our common stock upon the non-employee director’s separation of service from the Board of Directors (the “Board”). Each DSU is entitled to a dividend equivalent right to receive a cash payment based on the regular cash dividends that would have been paid on a share of our common stock. All amounts payable as a result of such dividend equivalent right are paid (1) with respect to vested DSUs, at the same time dividends are paid to our stockholders and (2) with respect to unvested DSUs, when such underlying DSUs vest. Accrued but unpaid dividend equivalents in respect of unvested DSUs are recognized as a liability on the accompanying balance sheets, until the recipients receive the dividend equivalents upon vesting. The grant-date fair value of RSUs and DSUs is equal to the closing price of our common stock on the date of the grant.
A summary of the status and activity of non-vested RSUs and DSUs for the year ended December 31, 2023 is presented below:
 RSUs and DSUsWeighted-Average Grant-Date Fair Value
Non-vested, beginning of year675,898 $50.27 
Granted607,987 72.10 
Vested(368,062)47.46 
Forfeited(60,196)60.05 
Non-vested, end of year855,627 $66.31 
The aggregate grant-date fair value of the RSUs and DSUs granted under the LTIP during the year ended December 31, 2023 was $43.8 million.
Performance Stock Units
We grant market-based performance stock units (“PSUs”) to our officers and certain executives as part of our LTIP. The number of shares of our common stock issued to settle PSUs ranges from zero to 225% (or, for PSUs granted prior to fiscal year 2023, 200%) of the number of PSUs granted and is determined based on performance achievement against certain market-based criteria over a three-year performance period. PSUs generally vest on December 31 of the year preceding the third anniversary of the date of grant and settle in January of the following year. Each PSU is entitled to a dividend equivalent right to receive, upon settlement, a cash payment based on the regular cash dividends that would have been paid on a share of our common stock during the period between the grant date and the date the PSUs vest. Accrued but unpaid dividend equivalents are recognized as a liability on the accompanying balance sheets, until the recipients receive the dividend equivalents upon vesting and settlement.
Performance achievement is determined based on either, or a combination of, (1) our annualized absolute total stockholder return (“TSR”) or (2) for certain PSUs granted prior to fiscal year 2023, our absolute TSR relative to that of a defined peer group. Absolute TSR is determined based upon the performance of our common stock over the performance period relative to the price of our common stock at the grant date. For awards with a relative TSR component, our absolute TSR is compared with the absolute TSRs of a group of peer companies over the performance period. The absolute TSR for us and each of the peer companies is determined by dividing (A) (i) the volume-weighted average share price for the last 30 trading days of the performance period, minus (ii) the volume-weighted average share price for the 30 trading days preceding the beginning of the performance period, plus (iii) dividends paid by (B) the volume-weighted average share price for the 30 trading days preceding the beginning of the performance period. The resultant amount is then annualized based on the length of the performance period.
The grant-date fair value of the PSUs was estimated using a Monte Carlo valuation model. The Monte Carlo valuation model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment. Significant assumptions used in this valuation include our expected volatility as well as the volatilities for each of our peers and an interpolated risk-free interest rate based on U.S. Treasury yields with maturities consistent with the performance period.
The following table presents the range of assumptions used to determine the fair value of the PSUs with market-based settlement criteria as granted under the LTIP throughout each of the periods presented:
Year Ended December 31,
202320222021
Expected term (in years)3.0
3.2
2.2 to 3.0
Risk-free interest rate
3.6% to 5.0%
1.8% to 3.2%
0.3% to 0.6%
Expected daily volatility
3.1% to 3.7%
4.0% to 4.7%
3.8% to 4.7%
A summary of the status and activity of non-vested PSUs for the year ended December 31, 2023 is presented below:
 
PSUs (1)
Weighted-Average Grant-Date Fair Value
Non-vested, beginning of year345,999 $77.42 
Granted290,496 104.11 
Vested(89,901)78.49 
Forfeited(73,759)87.49 
Expired(242)18.26 
Non-vested, end of year472,593 $92.08 
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(1)The number of awards assumes that the associated performance condition is met at the target amount (multiplier of one). The final number of shares of our common stock issued may vary depending on the performance multiplier, which ranges from zero to 225% (or, for PSUs granted prior to fiscal year 2023, 200%), depending on the level of satisfaction of the performance condition.
The aggregate grant-date fair value of the PSUs granted under the LTIP during the year ended December 31, 2023 was $30.2 million. The performance period for PSUs granted in 2021 ended on December 31, 2023. These PSUs are expected to be released during the first quarter of 2024 with a performance achievement of 142%.
Stock Options
The LTIP allows for the issuance of stock options to our employees at the sole discretion of the Board. Options expire ten years from the grant date unless otherwise determined by the Board.
Stock options are valued using a Black-Scholes Model where expected volatility is based on an average historical volatility of a peer group selected by management over a period consistent with the expected life assumption on the grant date, the risk-free rate of return is based on the U.S. Treasury constant maturity yield on the grant date with a remaining term equal to the expected term of the awards, and our expected life of stock option awards is derived from the midpoint of the average vesting time and contractual term of the awards.
A summary of and activity of stock options that are outstanding and exercisable for the year ended December 31, 2023 is presented below:
 Stock OptionsWeighted-
Average
Exercise Price		Weighted-Average Remaining Contractual Term (in years)Aggregate Intrinsic Value (in thousands)
Outstanding, beginning of year15,170 $34.36 
Exercised(13,928)34.36 
Forfeited(111)34.36 
Outstanding, end of year1,131 $34.36 3.3$38 
The aggregate intrinsic value of options exercised during the year ended December 31, 2023 was $0.5 million.