Stock-Based Compensation
 6 Months Ended
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation
Note 6—Stock-Based Compensation
On May 23, 2023, the stockholders of the Company approved the 2023 Long Term Incentive Plan (the “LTIP”). The LTIP is an equity incentive plan that replaced the Company’s prior plan, and, among other things, increased the number of shares of Class A Common Stock authorized for issuance to employees and directors by 25,000,000 shares to a total of 69,250,000 shares. The LTIP provides for grants of restricted stock, stock options (including incentive stock options and nonqualified stock options), restricted stock units (including performance stock units), stock appreciation rights and other stock or cash-based awards.
Stock-based compensation expense is recognized within both General and administrative expenses and Exploration and other expenses in the consolidated statements of operations. The Company accounts for forfeitures of awards granted under the LTIP as they occur.
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)2023202220232022
Equity Awards
Restricted stock$13,340 $4,481 $24,013 $7,920 
Stock option awards— 26 1 57 
Performance stock units22,354 2,079 29,551 4,082 
Other stock-based compensation expense(1)
— 71 — 143 
Total stock-based compensation - equity awards35,694 6,657 53,565 12,202 
Liability Awards
Performance stock units— (8,593)— 5,127 
Total stock-based compensation expense$35,694 $(1,936)$53,565 $17,329 
(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 January 1, 2023, the Company no longer offers the ESPP.
Equity Awards
The Company has restricted stock, stock options and performance stock units (“PSUs”) outstanding that were granted under the LTIP as discussed below. Each award has service-based and, in the case of the PSUs, market-based vesting requirements, and are expected to be settled in shares of Class A Common Stock upon vesting. As a result, these awards are classified as equity-based awards in accordance with ASC Topic 718, Compensation-Stock Compensation (“ASC 718”).
In connection with the Merger, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) approved a resolution to extend severance benefits under the Company’s Second Amended and Restated Severance Plan (the “Severance Plan”) to employees that experience a Qualifying Termination (as defined in the Severance Plan) following the Merger. As a result, affected employees of the Company will receive an accelerated vesting of their unvested restricted stock awards and PSUs upon termination, which will change the terms of the vesting conditions and will be treated as modifications in accordance with ASC 718. During the six months ended June 30, 2023, seventeen employees were terminated and received accelerated vesting of their unvested stock awards. These modifications resulted in an increase to total stock-based compensation expense for the three and six months ended June 30, 2023 of $25.9 million and $32.2 million as a result of the change in the fair value of the modified awards. The restricted stock shares and performance stock units that were accelerated are included within the vested line items in the below tables.
Restricted Stock
The following table provides information about restricted stock activity during the six months ended June 30, 2023:
Restricted StockWeighted Average Fair Value
Unvested balance as of December 31, 20228,182,705 $6.03 
Granted731,782 9.79 
Vested(2,577,919)9.04 
Forfeited(536,675)7.64 
Unvested balance as of June 30, 20235,799,893 6.73 
The Company grants service-based restricted stock to certain officers and employees, which either vests ratably over a three-year service period or cliff vests upon a five-year service period, and to directors, which vest over a one-year service period. Compensation cost for these service-based restricted stock grants 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 total fair value of restricted stock that vested during the six months ended June 30, 2023 and 2022 was $23.3 million and $2.0 million, respectively. Unrecognized compensation cost related to restricted shares that were unvested as of June 30, 2023 was $29.9 million, which the Company expects to recognize over a weighted average period of 2.3 years.
Stock Options
Stock options that have been granted under the LTIP expire ten years from the grant date and vest ratably over their 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 following table provides information about stock option awards outstanding during the six months ended June 30, 2023:
OptionsWeighted Average Exercise PriceWeighted Average Remaining Term
(in years)		Aggregate Intrinsic Value
(in thousands)
Outstanding as of December 31, 20222,056,467 $15.44 
Granted— — 
Exercised(46,834)4.98 $249 
Forfeited— — 
Expired(614,334)15.23 
Outstanding as of June 30, 20231,395,299 15.88 2.6$455 
Exercisable as of June 30, 20231,395,299 15.88 2.6$455 
The total fair value of stock options that vested was minimal during the six months ended June 30, 2023 and $0.2 million for the six months ended June 30, 2022. The intrinsic value of the stock options exercised was minimal for the six months ended June 30, 2023 and June 30, 2022. As of June 30, 2023, there was no unrecognized compensation cost related to unvested stock options.
Performance Stock Units
The Company grants performance stock units (“PSU”) to certain officers that are subject to market-based vesting criteria as well as a service period ranging from three to five years. Vesting at the end of the service period depends on the Company’s absolute annualized total shareholder return (“TSR”) over the service period, as well as the Company’s TSR relative to the TSR of a peer group of companies. These market-based conditions must be met in order for the stock awards to vest, and it is therefore possible that no shares could ultimately vest. However, the Company recognizes compensation expense for the PSUs subject to market conditions regardless of whether it becomes probable that these conditions will be met or not, and compensation expense is not reversed if vesting does not actually occur.
The Company’s PSUs currently outstanding can be settled in either Class A Common Stock or cash upon vesting at the Company’s discretion. The Company intends to settle all PSUs in Class A Common Stock and has sufficient shares available under the LTIP to settle the units in Class A Common Stock at the potential future vesting dates. Accordingly, the PSUs have been treated as equity-based awards with their fair values determined as of the grant or modification date, as applicable. The fair values of the awards are 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. Expected volatility was calculated based on the historical volatility of the Company’s Class A Common Stock, and the risk-free interest rate is based on U.S. Treasury yield curve rates with maturities consistent with the vesting periods.
The following table summarizes the key assumptions and related information used to determine the fair value of PSUs granted during the six months ended June 30, 2023:
2023 Awards
Number of PSUs granted237,097
Weighted average fair value$16.68
Number of simulations10,000,000
Expected implied stock volatility59.2%
Risk-free interest rate4.1%
The following table provides information about PSUs outstanding during the six months ended June 30, 2023:
AwardsWeighted Average Fair Value
Unvested balance as of December 31, 20227,638,098 $13.11 
Granted237,097 16.68 
Vested(1)
(1,624,895)9.74 
Forfeited(210,035)13.64 
Unvested balance as of June 30, 20236,040,265 13.71 
(1)     This balance includes vested PSU awards as of June 30, 2023 based on the original number of PSUs granted. Actual PSUs vested is based upon the Company’s absolute annualized TSR calculation at the time of vesting, which may be greater than or less than the original number granted.
The total fair value of PSUs that vested during the six months ended June 30, 2023 was $32.0 million. As of June 30, 2023, there was $56.7 million of unrecognized compensation cost related to PSUs that were unvested, which the Company expects to recognize on a pro-rata basis over a weighted average period of 2.7 years.
Liability Awards
The Company granted 5.5 million PSUs during third quarter of 2020 to certain executive officers that were settleable in cash and subject to market-based vesting criteria as well as a three-year service condition unless otherwise accelerated in accordance with the terms in the 2020 PSU agreement. As the PSUs were settleable in cash they were classified as liability awards in accordance with ASC 718 with the compensation cost for these liability awards being recorded based on their fair value as of each balance sheet date.
On August 18, 2022, the Compensation Committee amended the 2020 PSU agreement to allow a portion of the units to be settled in either cash or Class A Common Stock upon vesting at the Company’s discretion. The Company has the ability and currently intends to settle the 4.7 million 2020 PSUs that were modified in shares. As a result, these units were reclassified to equity based awards in accordance with ASC 718 and $10.0 million of incremental stock compensation expense was recognized during the third quarter of 2022 associated with the change in the fair value of the units.
The remaining 0.8 million 2020 PSUs were accelerated vested and settled in a $9.4 million cash payment during the third quarter of 2022. There are no liability classified performance stock units outstanding as of June 30, 2023.