Stock-Based Compensation
 6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation
Note 6—Stock-Based Compensation
On October 7, 2016, the stockholders of the Company approved the Centennial Resource Development, Inc. 2016 Long Term Incentive Plan (the “LTIP”), which authorized an aggregate of 16,500,000 shares of Class A Common Stock for issuance. On April 29, 2020, the stockholders of the Company approved the amended and restated LTIP, which, among other things, increased the number of shares of Class A Common Stock authorized for issuance by 8,250,000 shares. As of June 30, 2020, the Company had 14,763,345 shares of Class A Common Stock available for future grants. The LTIP provides for grants of restricted stock, stock options (including incentive stock options and nonqualified stock options), restricted stock units, stock appreciation rights and other stock or cash-based awards.
During the three months ended June 30, 2020, as a result of the decline in crude oil and natural gas prices, ongoing uncertainty regarding the oil supply-demand macro environment and the related suspension of the Company’s drilling and completion activities, the Company implemented a reduction to its workforce. In connection with this reduction, the Compensation Committee of the Company’s Board of Directors approved an accelerated partial vesting of certain unvested stock options and restricted stock awards held by 32 of the terminated employees. The acceleration changed the terms of the vesting conditions and are therefore treated as modifications in accordance with ASC Topic 718, Compensation-Stock Compensation. The modification resulted in a decrease to total stock-based compensation expense of $2.5 million associated with the decrease in the fair value of the modified awards compared to the original awards’ fair value. The shares and options that were accelerated are included within the vested line item in the below tables.
Stock-based compensation expense is recognized within both General and administrative expenses and Exploration expense in the Consolidated Statements of Operations. The Company accounts for forfeitures of awards granted under the LTIP as they occur in determining compensation expense.
The following table summarizes stock-based compensation expense recognized for the periods presented:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands)
2020
 
2019
 
2020
 
2019
Restricted stock awards
$
3,387

 
$
3,408

 
$
7,741

 
$
6,590

Stock option awards
291

 
2,625

 
1,275

 
5,209

Performance stock units
1,003

 
725

 
2,006

 
1,442

Other stock-based compensation expense(1)
46

 
—

 
114

 
—

Total stock-based compensation expense
$
4,727

 
$
6,758

 
$
11,136

 
$
13,241

 
(1)  
Includes expenses related to the Company’s Employee Stock Purchase Plan (the “ESPP”). In May 2019, an aggregate of 2,000,000 shares were authorized by stockholders for issuance under the ESPP, which became effective on July 1, 2019. As of June 30, 2020, the Company had 1,940,801 shares of Class A Common Stock available for future issuance.
Restricted Stock
The following table provides information about restricted stock activity during the six months ended June 30, 2020:
 
Awards
 
Weighted Average Grant-Date Fair Value
Unvested balance as of December 31, 2019
4,838,996

 
$
8.51

Granted
1,385,235

 
2.53

Vested
(540,402
)
 
8.52

Forfeited
(757,975
)
 
5.81

Unvested balance as of June 30, 2020
4,925,854

 
6.90


The Company grants service-based restricted stock awards to executive officers and employees, which vest ratably over a three-year service period, and to directors, which vest over a one-year service period. Compensation cost for the service-based restricted stock awards is based on the closing market price of the Company’s Class A common stock on the grant date, and such costs are recognized ratably over the applicable vesting period. The weighted average grant-date fair value for restricted stock awards granted during the period was $2.53 and $12.48 per share for the six months ended June 30, 2020 and 2019, respectively. The total fair value of restricted stock awards that vested during the six months ended June 30, 2020 and 2019 was $4.6 million and $1.5 million, respectively, and includes awards with vesting terms that were accelerated as discussed above. Unrecognized compensation cost related to restricted shares that were unvested as of June 30, 2020 was $21.7 million, which the Company expects to recognize over a weighted average period of 1.9 years.
Stock Options
Stock options that have been granted under the LTIP expire ten years from the grant date and vest ratably over a three-year service period. The exercise price for an option granted under the LTIP is the closing market price of the Company’s Class A Common Stock on the grant date.
Compensation cost for stock options is based on the grant-date fair value of the award which is then recognized ratably over the vesting period of three years. The Company estimates the fair value using the Black-Scholes option-pricing model. Expected volatilities are based on the weighted average asset volatility of the Company and an identified set of comparable companies. Expected term is based on the simplified method and is estimated as the mid-point between the weighted average vesting term and the time to expiration as of the grant date. The Company uses U.S. Treasury bond rates in effect at the grant date for its risk-free interest rates.
The following table summarizes the assumptions and related information used to determine the grant-date fair value of stock option awards for the periods presented:

Six Months Ended June 30,

2020

2019
Weighted average grant-date fair value per share
$
1.16


$
4.77

Expected term (in years)
6


6

Expected stock volatility
86
%

46
%
Dividend yield
—
%

—
%
Risk-free interest rate
1.0
%

2.4
%

The following table provides information about stock option awards outstanding during the six months ended June 30, 2020:
 
Options
 
Weighted Average Exercise Price
 
Weighted Average Remaining Term
(in years)
 
Aggregate Intrinsic Value
(in thousands)
Outstanding as of December 31, 2019
4,764,167

 
$
15.99

 
 
 
 
Granted
124,000

 
2.13

 
 
 
 
Exercised
—

 
—

 
 
 

Forfeited
(94,409
)
 
13.99

 
 
 
 
Expired
(2,086,164
)
 
16.34

 
 
 
 
Outstanding as of June 30, 2020
2,707,594

 
15.15

 
6.4
 
$
40

Exercisable as of June 30, 2020
2,136,070

 
15.95

 
5.9
 
$
—


The total fair value of stock options that vested during the six months ended June 30, 2020 and 2019 was $4.2 million and $4.1 million, respectively, and includes awards with vesting terms that were accelerated as discussed above. There were no stock options exercised during either the six months ended June 30, 2020 or 2019. As of June 30, 2020, there was $1.8 million of unrecognized compensation cost related to unvested stock options, which the Company expects to recognize on a pro-rata basis over a weighted-average period of 1.4 years.
Performance Stock Units
During the six months ended June 30, 2020 and 2019, there was no significant performance stock units activity. As of June 30, 2020, there was $3.7 million of unrecognized compensation cost related to performance stock units that were unvested, which the Company expects to recognize on a pro-rata basis over a weighted average period of 1.6 years.