12. Equity and Share-Based Compensation

Common Shares

Share Activity

The following table summarizes changes in the number of outstanding shares during the three months ended March 31, 2015:

	Number of Shares
	Common Stock		Treasury Stock
Share count as of December 31, 2014	70,491,732		(534,677	)
Grants of restricted stock	2,459,754		—
Forfeitures of restricted stock	(511,079	)	—
Acquisition of treasury stock	—		(254,881	)
Share count as of March 31, 2015	72,440,407		(789,558	)

The Company’s 2012 Long Term Incentive Unit Plan (discussed below) allows for the recipients of restricted stock to surrender a portion of their shares upon vesting to satisfy Federal Income Tax (“FIT”) withholding requirements. The Company then remits to the IRS the cash equivalent of the FIT withholding liability. Shares surrendered to the Company in this fashion have been treated as treasury shares acquired at a cost equivalent to the related tax liability. These shares are available for future issuance by the Company.

Incentive Units

At March 31, 2015, 1,099 incentive units were issued and outstanding. These incentive units were issued prior to the Company’s initial public offering. In connection with the corporate reorganization that occurred immediately prior to the Company’s initial public offering, these incentive units were contributed to FR Midstates Interholding, LP (“FRMI”) in exchange for incentive units in FRMI. Holders of FRMI incentive units will receive, out of proceeds otherwise distributable to FRMI, a percentage interest in the amounts distributed to FRMI in excess of certain multiples of FRMI’s aggregate capital contributions and investment expenses (“FRMI Profits”). Although any future payments to the incentive unit holders will be made out of the proceeds otherwise distributable to FRMI and not by the Company, the Company will be required to record a non-cash compensation charge in the period any payment is made related to the FRMI incentive units. To date, no compensation expense related to the FRMI incentive units has been recognized by the Company, as any payout under the FRMI incentive units is not considered probable as the amount of FRMI Profits, if any, cannot be determined.

Share-based Compensation

2012 Long Term Incentive Plan

The 2012 Long Term Incentive Plan (the “2012 LTIP”) provides a means for the Company to attract and retain employees, directors and consultants, and a method whereby employees, directors and consultants of the Company who contribute to its success can acquire and maintain stock ownership or awards, the value of which is tied to the performance of the Company, thereby strengthening their concern for the welfare of the Company and their desire to remain employed.

The 2012 LTIP provides for the granting of Options (Incentive and other), Restricted Stock Awards, Restricted Stock Units, Stock Appreciation Rights, Dividend Equivalents, Bonus Stock, Other Stock Based Awards, Annual Incentive Awards, Performance Awards, or any combination of the foregoing (the “Awards”). Subject to certain limitations as defined in the 2012 LTIP, the terms of each Award are as determined by the Compensation Committee of the Board of Directors. As of December 31, 2014, a total of 8,638,435 common share Awards are authorized for issuance under the 2012 LTIP. Shares of stock subject to an Award that expire, or are canceled, forfeited, exchanged, settled in cash or otherwise terminated, will again be available for future Awards under the 2012 LTIP.

Non-vested Stock Awards

At March 31, 2015, the Company had 4,110,542 non-vested shares of restricted common stock outstanding pursuant to the 2012 LTIP. Shares granted under the LTIP generally vest ratably over a period of three years (one-third on each anniversary of the grant); however, beginning in 2013, shares granted under the 2012 LTIP to directors are subject to one-year cliff vesting.

The fair value of restricted stock grants is based on the value of the Company’s common stock on the date of grant. Compensation expense is recognized ratably over the requisite service period.

The following table summarizes the Company’s non-vested share award activity for the three months ended March 31, 2015:

	Shares		Weighted Average Grant Date Fair Value
Non-vested shares outstanding at December 31, 2014	3,062,015		$	5.28
Granted	2,459,754		$	1.25
Vested	(900,148	)	$	5.22
Forfeited	(511,079	)	$	5.44
Non-vested shares outstanding at March 31, 2015	4,110,542		$	2.86

Unrecognized expense, adjusted for estimated forfeitures, as of March 31, 2015 for all outstanding restricted stock awards, was $8.9 million and will be recognized over a weighted average period of 1.9 years.

At March 31, 2015, 1,832,381 shares remain available for issuance under the terms of the 2012 LTIP.

The share based compensation costs (net of amounts capitalized to oil and gas properties) recognized as general and administrative expense by the Company for the three months ended March 31, 2015 and 2014 were $0.8 million and $1.5 million, respectively, all related to the 2012 LTIP.