Share-Based Compensation

The Company issues share-based compensation awards including restricted common stock awards, restricted stock units, performance units and performance share units under the SandRidge Energy, Inc. 2009 Incentive Plan. Total share-based compensation expense is measured using the grant date fair value for equity-classified awards and using the fair value at period end for liability-classified awards. For the years ended December 31, 2015, 2014 and 2013, the Company recognized share-based compensation expense of $21.7 million, $22.6 million and $90.2 million, respectively, net of $5.9 million, $6.0 million and $5.6 million capitalized, respectively. 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.

Restricted Common Stock Awards

The Company’s restricted common stock awards generally vest over a four-year period, subject to certain conditions, and are valued based upon the market value of the Company’s common stock on the date of grant. The following table presents a summary of the Company’s unvested restricted stock awards.



	Number of Shares		Weighted- Average Grant Date Fair Value
	(In thousands)
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
Granted	6,367		$	6.17
Vested	(3,432	)	$	7.04
Forfeited / Canceled	(2,022	)	$	6.60
Unvested restricted shares outstanding at December 31, 2014	8,556		$	6.39
Granted	2,928		$	0.88
Vested	(5,186	)	$	4.95
Forfeited / Canceled	(672	)	$	6.38
Unvested restricted shares outstanding at December 31, 2015	5,626		$	4.85

As of December 31, 2015, the Company’s unrecognized compensation cost related to unvested restricted stock awards was $18.0 million. Such cost is expected to be recognized over a weighted-average period of 1.9 years. The Company’s restricted stock awards are equity-classified awards.

Restricted Stock Units

During the year ended December 31, 2015, the Company granted restricted stock units that vest over a maximum of four years and will be settled in cash, shares of Company common stock or a combination of common stock and cash.

Restricted Stock Units - Settled in Cash or Stock. The following table presents a summary of the Company’s unvested restricted stock units which may be settled in shares of the Company’s common stock, cash or some combination of common stock and cash at the Company’s election. These restricted stock units are liability-classified awards, which vest ratably over a maximum four-year period from the date of grant and were valued at December 31, 2015 based upon the Company’s period end common stock price.



	Number of Units		Fair Value per Unit at December 31, 2015
	(In thousands)
Unvested units outstanding at December 31, 2014	—
Granted	11,095
Vested(1)	(2,200	)
Forfeited / Canceled	(767	)
Unvested units outstanding at December 31, 2015	8,128		$	0.20

____________________


(1)	Restricted stock units which vested during the year ended December 31, 2015 were settled by the issuance of common stock.

As of December 31, 2015, the Company’s unrecognized compensation cost related to the unvested restricted stock units noted above was $0.9 million and is expected to be recognized over a weighted-average period of 3.2 years.

Restricted Stock Units - Settled in Cash. The following table presents a summary of the Company’s unvested restricted stock units which will be settled in cash at the end of each vesting period for an amount based on the Company’s common stock price as of the vesting date. These restricted stock units are liability-classified awards and generally vest over a two-year period (40% at the end of the first year and 60% at the end of the second year). The restricted stock units were valued based upon the Company’s period end common stock price, discounted using a credit spread (10.6% at December 31, 2015) that was determined based upon an analysis of the historical option adjusted spread for the Company’s outstanding senior notes and the outstanding long-term debt of comparable companies.



	Number of Units		Fair Value per Unit at December 31, 2015
	(In thousands)
Unvested units outstanding at December 31, 2014	—
Granted	3,104
Vested	(979	)
Forfeited / Canceled	(122	)
Unvested units outstanding at December 31, 2015	2,003		$	0.04	-	$	0.20

As of December 31, 2015, the Company’s unrecognized compensation cost related to unvested two-year restricted stock units was $0.2 million. Such cost is expected to be recognized over a weighted-average period of 1.0 years.

Performance Units and Performance Share Units

The Company periodically grants performance units and performance share units to certain members of senior management which vest ratably over a performance period of approximately three years with cash settlements, if any, occurring at the end of the performance period. The value, and ultimate cash settlement, of the performance units is determined based upon the Company’s total shareholder return relative to that of a predetermined peer group over a specific performance period. The Company’s performance units and performance share units are liability-classified awards.

The performance units and performance share units are valued for accounting purposes using a Monte Carlo simulation based on certain assumptions including (i) a volatility assumption based on the historical realized price volatility of the Company’s common stock and the common stock of the predetermined peer group and (ii) a risk-free interest rate based on the U.S. Treasury bond yield for a term commensurate with the approximate remaining vesting period for each grant.

Performance Units. The following table presents a summary of the fair values of the performance units granted during the years ended December 31, 2014 and 2013 and the related assumptions for all outstanding performance units at December 31, 2015 and 2014.



	December 31,
	2015			2014
Volatility factor	120.0		%	55.6		%
Weighted-average risk-free interest rate	0.7		%	0.5		%
Weighted-average fair value per unit	$	1.08		$	13.85

Performance unit activity for the years ended December 31, 2015, 2014 and 2013 was as follows (in thousands):



	December 31,
	2015		2014		2013(1)
Outstanding at January 1	66		31		—
Granted	—		47		31
Vested	(28	)	—		—
Forfeited /canceled	—		(12	)	—
Outstanding at December 31	38		66		31

Performance period ending December 31, 2015
Vested	—		9		12
Unvested	—		19		19
Performance period ending December 31, 2016
Vested	26		13		—
Unvested	12		25		—

____________________

(1) The 2013 performance units fully vested on December 31, 2015, with no amounts paid.

As of December 31, 2015, the Company’s unrecognized compensation cost related to performance units granted in 2014 was insignificant and is expected to be recognized over the remaining 1.0 year term of the awards.

Performance Share Units. During the year ended December 31, 2015, the Company granted performance share units to certain members of senior management. The following table presents a summary of the fair values of the performance share units granted and the related assumptions for all outstanding performance share units at December 31, 2015.



	December 31, 2015
Volatility factor	95.3		%
Weighted-average risk-free interest rate	1.1		%
Weighted-average fair value per unit	$	0.10

Performance share unit activity for the year ended December 31, 2015 was as follows:



	Number of Performance Share Units
	(In thousands)
Outstanding at December 31, 2014	—
Granted	2,044
Forfeited /canceled	(151	)
Outstanding at December 31, 2015	1,893

Performance period ending December 31, 2017
Vested	695
Unvested	1,198

As of December 31, 2015, the Company’s unrecognized compensation cost related to performance share units granted in 2015 units was $0.1 million. Such cost is expected to be recognized over the remaining 2.0 year term of the awards.