See “Note 1. Nature of Operations” for discussion of the impact to the Company’s restricted stock awards and units, performance shares, and Cash SARs as a result of the proposed Merger.

At the Company’s annual meeting on May 16, 2019, the shareholders approved the proposal to amend and restate the 2017 Incentive Plan of Carrizo Oil & Gas, Inc. (the “A&R 2017 Incentive Plan”),which included an increase to the number of shares available for issuance under the A&R 2017 Incentive Plan. As of June 30, 2019, there were 3,164,691 shares of common stock available for grant under the A&R 2017 Incentive Plan assuming all future grants will be full value stock awards. The Company has not granted stock appreciation rights to be settled in shares of common stock and has no outstanding stock options. See “Note 11. Stock-Based Compensation” of the Notes to Consolidated Financial Statements in the 2018 Annual Report for details of the Company’s equity-based incentive plans.



	Three Months Ended June 30,
	2019				2018
	Restricted Stock Awards and Units		Weighted Average Grant Date Fair Value		Restricted Stock Awards and Units		Weighted Average Grant Date Fair Value
Unvested, beginning of period	3,320,060			$14.16	2,263,830			$19.15
Granted	115,936			$11.90	1,250			$15.43
Vested	(52,639	)		$25.20	(43,992	)		$25.76
Forfeited	(47,464	)		$12.05	(9,915	)		$18.04
Unvested, end of period	3,335,893			$13.94	2,211,173			$19.02



	Six Months Ended June 30,
	2019				2018
	Restricted Stock Awards and Units		Weighted Average Grant Date Fair Value		Restricted Stock Awards and Units		Weighted Average Grant Date Fair Value
Unvested, beginning of period	2,266,667			$19.28	1,482,655			$28.07
Granted	2,034,619			$11.06	1,348,415			$14.68
Vested	(904,973	)		$20.91	(608,904	)		$31.43
Forfeited	(60,420	)		$13.14	(10,993	)		$19.17
Unvested, end of period	3,335,893			$13.94	2,211,173			$19.02

Grant activity for the three months ended June 30, 2019 primarily consisted of restricted stock units to non-employee directors for their service for the 2019-2020 director term. These grants to the non-employee directors vest on the earlier of the date of the 2020 Annual Meeting of Shareholders and June 30, 2020. Grant activity for the six months ended June 30, 2019 primarily consisted of restricted stock units to employees as part of the annual grant of long-term equity incentive awards that occurred in the first quarter of each of the years presented in the table above. These restricted stock units vest ratably over an approximate three-year period.

As a result of the approval of the A&R 2017 Incentive Plan by shareholders, the Compensation Committee determined that the Company would settle the restricted stock units granted in the first quarter of 2019 in common stock rather than cash upon vesting. As such, the Company modified these restricted stock units, which were previously accounted for as liability awards to equity awards and reclassified the fair value of these awards to shareholders’ equity in the consolidated balance sheets.

The aggregate fair value of restricted stock awards and units that vested during the three months ended June 30, 2019 and 2018 was $0.7 million and $1.0 million, respectively, and $10.5 million and $9.9 million for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019 and 2018, unrecognized compensation costs related to unvested restricted stock awards and units were $38.3 million and $30.5 million, respectively, to be recognized over a weighted average period of 2.2 years.

There was no activity for Cash SARs for the three months ended June 30, 2019 and 2018. The table below summarizes the activity for Cash SARs for the six months ended June 30, 2019 and 2018:



	Six Months Ended June 30,
	2019				2018
	Cash SARs	Weighted Average Exercise Prices		Weighted Average Remaining Life (In years)	Cash SARs	Weighted Average Exercise Prices		Weighted Average Remaining Life (In years)
Outstanding, beginning of period	1,330,924		$21.35		714,238		$27.12
Granted	770,775		$10.98		616,686		$14.67
Exercised	—		$—		—		$—
Forfeited	—		$—		—		$—
Expired	—		$—		—		$—
Outstanding, end of period	2,101,699		$17.55	4.9	1,330,924		$21.35	4.8
Vested, end of period	919,800		$24.34		543,018		$27.18
Vested and exercisable, end of period	—		$24.34	3.0	543,018		$27.18	3.0

Grant activity consisted of Cash SARs to certain employees as part of the annual grant of long-term equity incentive awards that occurred in the first quarter of each of the years presented in the table above. The Cash SARs granted in the first quarter of 2019 and 2018 vest ratably over an approximate three-year period and expire approximately seven years from the grant date.

The grant date fair value of the Cash SARs, calculated using the Black-Scholes-Merton option pricing model, was $4.6 million and $4.9 million for the six months ended June 30, 2019 and 2018. The following table summarizes the assumptions used and the resulting grant date fair value of the Cash SARs granted during the six months ended June 30, 2019 and 2018:



	Six Months Ended June 30,
	2019		2018
Expected term (in years)	6.1		6.0
Expected volatility	56.0	%	54.3	%
Risk-free interest rate	2.6	%	2.8	%
Dividend yield	—	%	—	%
Grant date fair value per Cash SAR	$6.00		$7.89

The aggregate intrinsic value of Cash SARs outstanding as of June 30, 2019 and 2018 was zero and $9.1 million, respectively, and the aggregate intrinsic value of Cash SARs vested and exercisable as of June 30, 2019 and 2018 was zero and $0.5 million. As of June 30, 2019 and December 31, 2018, the liabilities for Cash SARs were $2.1 million and $1.8 million, all of which was classified as “Other current liabilities,” in the respective consolidated balance sheets. As of June 30, 2019 and 2018, unrecognized compensation costs related to unvested Cash SARs were $5.1 million and $11.3 million, respectively, to be recognized over a weighted average period of 2.4 years and 2.6 years, respectively.

There was no performance share activity for the three months ended June 30, 2019 and 2018. The table below summarizes performance share activity for the six months ended June 30, 2019 and 2018:



	Six Months Ended June 30,
	2019				2018
	Target Performance Shares ⁽¹⁾		Weighted Average Grant Date Fair Value		Target Performance Shares ⁽¹⁾		Weighted Average Grant Date Fair Value
Unvested, beginning of period	182,209			$27.01	144,955			$47.14
Granted	130,302			$14.20	93,771			$19.09
Vested at end of performance period	(31,244	)		$35.71	(49,458	)		$65.51
Did not vest at end of performance period	(10,407	)		$35.71	(7,059	)		$65.51
Forfeited	—			$—	—			$—
Unvested, end of period	270,860			$19.51	182,209			$27.01

Grant activity consisted of performance shares as part of the annual grant of long-term equity incentive awards to certain employees that occurred in the first quarter of 2019 and 2018. Each performance share represents the right to receive one share of common stock, however, the number of performance shares that vest ranges from zero to 200% of the target performance shares granted based on the total shareholder return (“TSR”) of the Company’s common stock relative to the TSR achieved by a specified industry peer group over an approximate three-year performance period, the last day of which is also the vesting date.

The following table presents the results of the Company’s final TSR ranking during the performance periods that ended during the six months ended June 30, 2019 and 2018:



	Six Months Ended June 30,
	2019		2018
Target performance shares granted	41,651		56,517
Multiplier	75	%	88	%
Performance shares vested	31,244		49,458
Performance shares that did not vest	10,407		7,059
Aggregate fair value of performance shares vested (In millions)	$0.4		$0.8

For the six months ended June 30, 2019 and 2018, the grant date fair value of the performance shares, calculated using a Monte Carlo simulation, was $1.9 million and $1.8 million, respectively. The following table summarizes the assumptions used and the resulting grant date fair value per performance share for the grant activity during the six months ended June 30, 2019:



	Six Months Ended June 30,
	2019		2018
Number of simulations	500,000		500,000
Expected term (in years)	3.1		3.0
Expected volatility	58.2	%	61.5	%
Risk-free interest rate	2.5	%	2.4	%
Dividend yield	—	%	—	%
Grant date fair value per performance share	$14.20		$19.09

As of June 30, 2019 and 2018, unrecognized compensation costs related to unvested performance shares were $3.1 million and $2.9 million, respectively, to be recognized over a weighted average period of 2.1 years and 2.2 years, respectively.

Stock-based compensation expense associated with restricted stock awards and units, Cash SARs, and performance shares, net of amounts capitalized, is included in “General and administrative, net” in the consolidated statements of income. The Company recognized the following stock-based compensation expense, net for the three and six months ended June 30, 2019 and 2018:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands)
Restricted stock awards and units		$5,358			$4,720			$10,181			$9,804
Cash SARs	(426		)	5,788			334			4,373
Performance shares	436			406			871			963
	5,368			10,914			11,386			15,140
Less: amounts capitalized to oil and gas properties	(1,514		)	(3,708		)	(3,417		)	(4,416		)
Total stock-based compensation expense, net		$3,854			$7,206			$7,969			$10,724