Equity

Preferred Stock

The following table presents information regarding the Company’s preferred stock (in thousands):



	December 31,
	2013	2012
Shares authorized	50,000	50,000
Shares outstanding at end of period
8.5% Convertible perpetual preferred stock	2,650	2,650
6.0% Convertible perpetual preferred stock	2,000	2,000
7.0% Convertible perpetual preferred stock	3,000	3,000

The Company is authorized to issue 50.0 million shares of preferred stock, $0.001 par value, of which 7.7 million shares are designated as convertible perpetual preferred stock at December 31, 2013 and 2012. All of the outstanding shares of the Company’s convertible perpetual preferred stock were issued in private transactions, but are now freely tradable, to the extent not owned by affiliates.

Each outstanding share of convertible perpetual preferred stock is convertible at the holder’s option at any time into shares of the Company’s common stock at the specified conversion rate, subject to customary adjustments in certain circumstances. Each holder is entitled to an annual dividend payable semi-annually in cash, common stock or a combination thereof, at the Company’s election. After a specified conversion date, the Company may cause all outstanding shares of the convertible perpetual preferred stock to convert automatically into common stock at the then-prevailing conversion rate if certain conditions are met. The convertible perpetual preferred stock is not redeemable by the Company at any time. The following table summarizes information about each series of the Company’s convertible perpetual preferred stock:



	Convertible Perpetual Preferred Stock
	8.5%		6.0%		7.0%
Liquidation preference per share	$	100.00	$	100.00	$	100.00
Annual dividend per share	$	8.50	$	6.00	$	7.00
Conversion rate per share to common stock	12.4805		9.2115		12.8791
Conversion date to common stock at Company's option(1)	February 20, 2014		December 21, 2014		November 20, 2015

____________________


(1)	Conversion is dependent on certain factors, including the Company’s stock trading above specified prices for a set period.

Preferred stock dividends. All dividend payments to date on the Company’s 8.5%, 6.0% and 7.0% convertible perpetual preferred stock have been paid in cash. Paid and unpaid dividends included in the calculation of (loss applicable) income available to the Company’s common stockholders and the Company’s basic (loss) earnings per share calculation for the years ended December 31, 2013, 2012 and 2011 as presented in the accompanying consolidated statements of operations, are included in tables below (in thousands):



	Dividends Paid		Dividends Unpaid		Total
Year Ended December 31, 2013
8.5% Convertible perpetual preferred stock	$	14,078	$	8,447	$	22,525
6.0% Convertible perpetual preferred stock	6,500		5,500		12,000
7.0% Convertible perpetual preferred stock	18,375		2,625		21,000
Total	$	38,953	$	16,572	$	55,525
Year Ended December 31, 2012
8.5% Convertible perpetual preferred stock	$	14,078	$	8,447	$	22,525
6.0% Convertible perpetual preferred stock	6,500		5,500		12,000
7.0% Convertible perpetual preferred stock	18,375		2,625		21,000
Total	$	38,953	$	16,572	$	55,525
Year Ended December 31, 2011
8.5% Convertible perpetual preferred stock	$	14,078	$	8,447	$	22,525
6.0% Convertible perpetual preferred stock	6,500		5,500		12,000
7.0% Convertible perpetual preferred stock	18,433		2,625		21,058
Total	$	39,011	$	16,572	$	55,583

Common Stock

The following table presents information regarding the Company’s common stock (in thousands):



	December 31,
	2013	2012
Shares authorized	800,000	800,000
Shares outstanding at end of period	490,290	490,359
Shares held in treasury	1,319	1,219

On April 17, 2012, the Company issued approximately 74.0 million shares of SandRidge common stock to satisfy the stock portion of the consideration paid in the Dynamic Acquisition. See Note 3 for further discussion of the Dynamic Acquisition.

Stockholder Rights Plan

On November 19, 2012, the Company’s Board adopted a stockholder rights plan pursuant to which the Board authorized and declared to stockholders of record on November 29, 2012 a dividend of one preferred share purchase right (the “Right”) for each outstanding share of common stock. Effective April 29, 2013, at the direction of the Board, the Company amended the stockholder rights plan to accelerate the expiration date of the Rights to April 29, 2013, resulting in expiration of the Rights and termination of the stockholder rights plan.

Treasury Stock

The Company makes required statutory tax payments on behalf of employees when their restricted stock awards vest and then withholds a number of vested shares of common stock having a value on the date of vesting equal to the tax obligation. The following table shows the number of shares withheld for taxes and the associated value of those shares for the years ended December 31, 2013, 2012 and 2011. These shares were accounted for as treasury stock when withheld, and then immediately retired.



	Year Ended December 31,
	2013		2012		2011
	(In thousands)
Number of shares withheld for taxes	5,679		1,547		1,176
Value of shares withheld for taxes	$	30,126	$	11,312	$	10,834

Shares of Company common stock held as assets in a trust for the Company’s non-qualified deferred compensation plan are accounted for as treasury shares. These shares are not included as outstanding shares of common stock for accounting purposes. For corporate purposes, including for the purpose of voting at Company stockholder meetings, these shares are considered outstanding and have voting rights, which are exercised by the Company.

Stockholder Receivable

On November 9, 2012, Tom L. Ward, the Company’s Chairman and CEO at that time, and the Company entered into a settlement agreement with a stockholder plaintiff relating to a third-party claim under Section 16(b) of the Securities Exchange Act of 1934, as amended. The claim was filed in December 2010 and related to certain transactions involving Company common stock entered into by Mr. Ward in 2008 and 2009. The settlement agreement found no liability or other wrongdoing under Section 16(b) regarding the transactions in question. Under the settlement agreement, Mr. Ward agreed to pay to the Company $5.0 million in four installments over four years commencing October 2013 and to waive his rights under his indemnification agreement with the Company with respect to this Section 16(b) action. The Company agreed to pay the fees of the plaintiff’s lawyers and paid Mr. Ward’s legal expenses as required under his indemnification agreement.

Based on the nature of the settlement as well as Mr. Ward’s position as an officer of the Company at that time, a receivable was recorded as a component of additional paid-in capital. Amounts receivable from Mr. Ward at December 31, 2013 and 2012 of $3.8 million and $5.0 million, respectively, are included in the accompanying consolidated balance sheets.

Restricted Common Stock

The Company awards restricted common stock under its long-term incentive compensation plan that generally vests over a four-year period, subject to certain conditions, and is valued based upon the market value of common stock on the date of grant. Shares of restricted common stock are subject to restriction on transfer. Unvested restricted stock awards are included in the Company’s outstanding shares of common stock.

Restricted stock activity for the years ended December 31, 2013, 2012 and 2011 was as follows (shares in thousands):



	Number of Shares		Weighted- Average Grant Date Fair Value
Unvested restricted shares outstanding at December 31, 2010	9,476		$	10.89
Granted	8,003		$	8.95
Vested	(3,270	)	$	12.91
Forfeited / Canceled	(823	)	$	9.17
Unvested restricted shares outstanding at December 31, 2011	13,386		$	9.34
Granted	7,604		$	7.46
Vested	(4,394	)	$	10.73
Forfeited / Canceled	(1,268	)	$	8.54
Unvested restricted shares outstanding at December 31, 2012	15,328		$	8.07
Granted	7,462		$	6.32
Vested	(13,395	)	$	7.85
Forfeited / Canceled	(1,752	)	$	7.33
Unvested restricted shares outstanding at December 31, 2013	7,643		$	6.92

For the years ended December 31, 2013, 2012 and 2011, the Company recognized equity compensation expense of $82.8 million, $39.7 million, and $36.0 million, net of $5.5 million, $7.5 million, and $7.6 million capitalized, respectively, related to restricted common stock. Amounts recognized during the year ended December 31, 2013 include approximately $48.5 million recognized in connection with the separation of certain former executives from the Company.

The total fair value of restricted stock that vested during the years ended December 31, 2013, 2012 and 2011, was $71.6 million, $32.1 million and $30.2 million, respectively. As of December 31, 2013, there was approximately $37.0 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 2.3 years. The Company had approximately 9.6 million shares available for grant under its existing incentive compensation plan at December 31, 2013.

See Note 17 for discussion of the Company’s performance units.