Equity-based Awards

12 Months Ended

Dec. 31, 2024

Equity-based Awards

Equity-based Awards

Note 12. Equity-based Awards

In May 2021, the Company shareholders approved a new Equity Incentive Plan (“EIP”) in which the Legacy Amplify MIP and the Legacy Amplify 2017 Non-Employee Directors Compensation Plan (the “Legacy Amplify Non-Employee Directors Compensation Plan”) were replaced by the EIP and no further awards will be allowed to be granted under the Legacy Amplify MIP or the Legacy Amplify Non-Employee Directors Compensation Plan.

On May 15, 2024, the Company’s shareholders approved the Amplify Energy Corp. 2024 Equity Incentive Plan (the “2024 EIP”), which had previously been approved by the board of directors of the Company (the “Board”). No further awards will be granted under the prior Legacy Equity Incentive Plan (“EIP,” and together with the 2024 EIP, the “EIP Plans”).

The 2024 EIP Plan provides for awards that can be granted in the form of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards, stock awards and other incentive awards. To the extent that an award granted under either of the EIP Plans is canceled, expired, forfeited, settled in cash or otherwise terminated without delivery of shares of common stock, the shares of Common Stock retained by or returned to the Company will be available for future awards under the 2024 EIP. Any shares that are tendered by a participant or withheld by the Company (i) in payment of the exercise, base or purchase price relating to a stock option or stock appreciation right under either of the EIP Plans, or (ii) to satisfy any taxes or tax withholding obligations with respect to a stock option or stock appreciation right under either of the EIP Plans, as applicable, will not be available for future awards under the 2024 EIP. Any shares that are withheld by the Company or tendered by a participant to satisfy tax withholding obligations associated with any award other than stock options or stock appreciation rights granted under the 2024 EIP will become available again for future awards under the 2024 EIP. The 2024 EIP is administered by the Board. At December 31, 2024, the Company had 1,889,359 shares remaining available for issuance under the 2024 EIP.

Restricted Stock Units

Restricted Stock Units with Service Vesting Condition

Restricted stock units with service vesting conditions (“TSUs”) are accounted for as equity-classified awards or liability-classified awards. The grant-date fair value is recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures are accounted for as they occur. The Company considered its intent and ability to settle awards in cash or shares of stock in determining whether to classify the awards as equity or liability awards. Compensation costs for equity-classified awards are recorded as general and administrative expense. The fair value of liability-classified awards is determined on a quarterly basis beginning at the grant date until final vesting. Changes in the fair value of liability-classified awards are recorded to general administrative expense and are remeasured at fair value each reporting period.

In February 2024, the Company granted contingent cash-settlement awards in the form of TSUs (the “2024 TSUs”). In May 2024, the Company received shareholder approval of the 2024 EIP, which nullified the contingent cash settlement component for the 2024 TSUs. As of June 30, 2024, the 2024 TSUs were reclassified as equity awards. The compensation cost related to these awards is determined by the fair value of the award on the modification date. The 2024 TSUs will vest in substantially equal installments over a three-year period.

The unrecognized cost associated with TSUs was $5.5 million at December 31, 2024. The Company expects to recognize the unrecognized compensation cost for these awards over a weighted-average period of 1.8 years.

The following table summarizes information regarding the TSUs granted under the EIP for the period presented:

		Weighted-
		Average Grant-
	Number of	Date Fair Value
	Units	per Unit (1)
TSUs outstanding at December 31, 2022	1,502,556	$	3.82
Granted (2)	713,689	$	8.07
Forfeited	(72,095)	$	6.05
Vested	(812,694)	$	4.16
TSUs outstanding at December 31, 2023	1,331,456	$	5.77
Granted (3)	858,314	$	6.37
Forfeited	(5,922)	$	5.04
Vested	(804,492)	$	5.29
TSUs outstanding at December 31, 2024	1,379,356	$	6.43

(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2) The aggregate grant date fair value of TSUs issued for the year ended December 31, 2023 was $5.8 million based on a grant date market price ranging from $6.52 to $8.91 per share.

(3) The aggregate grant date fair value of TSUs issued for the year ended December 31, 2024 was $5.5 million based on a grant date market price ranging from $6.26 to $6.72 per share.

Restricted Stock Units with Market and Service Vesting Conditions

Restricted stock units with market and service vesting conditions (“PRSUs”) are accounted for as equity-classified awards or liability-classified awards. The grant-date fair value is recognized as compensation cost on a graded-vesting basis. The fair value of the awards is estimated on their grant dates using a Monte Carlo simulation.

The Company recognizes compensation cost over the requisite service or performance period. The Company accounts for forfeitures as they occur. Compensation costs are recorded as general and administrative expense. The unrecognized cost associated with these awards was $2.8 million at December 31, 2024. The Company expects to recognize the unrecognized compensation cost for these awards over a weighted-average period of approximately 1.7 years.

2022 and 2023 PRSU Awards

The 2022 and 2023 PRSU awards are accounted for as equity-classified awards and were issued with a three-year vesting period beginning on the grant date and ending on the third anniversary of the grant date. The three-year performance period for the 2022 awards is January 1, 2022 through December 31, 2024. The three-year performance period for the 2023 awards is January 1, 2023 through December 31, 2025. Vesting of PRSUs can range from zero to 200% of the target units granted based on the Company’s relative total shareholder return as compared to the total shareholder return of the Company’s performance peer group over the applicable performance period.

2024 PRSU Award

In February 2024, the Company granted contingent cash-settlement awards in the form of PRSUs (the “2024 PRSUs”). In May 2024, the Company received shareholder approval of the 2024 EIP, which nullified the contingent cash settlement component for the 2024 PRSUs. As of June 30, 2024, the 2024 PRSUs were reclassified as equity awards with a three-year vesting period. The compensation cost related to these awards is determined by the fair value of the award on the modification date. The three-year performance period for the 2024 PRSUs is January 1, 2024 through December 31, 2026.

The below table reflects the ranges for the assumptions used in the Monte Carlo model for the 2024 and 2023 PRSUs awards:

	Modification Date: May 2024		Date of Grant: February 2024		April 2023		February 2023
Expected volatility	63.2	%	75.8	%	92.5	%	119.2	%
Dividend yield	0.00	%	0.00	%	0.00	%	0.00	%
Risk-free interest rate	4.72	%	4.19	%	3.78	%	3.74	%

The following table summarizes information regarding the PRSUs granted under the EIP for the period presented:

		Weighted-
		Average Grant-
	Number of	Date Fair Value
	Units	per Unit (1)
PRSUs outstanding at December 31, 2022	380,512	$	4.28
Granted (2)	321,436	$	10.59
Forfeited	(144,567)	$	6.55
Vested	(154,680)	$	2.20
PRSUs outstanding at December 31, 2023	402,701	$	9.31
Granted (3)	312,843	$	7.55
Forfeited	—	$	—
Vested	(107,044)	$	2.63
PRSUs outstanding at December 31, 2024	608,500	$	9.58

(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2) The aggregate grant date fair value of PRSUs issued for the year ended December 31, 2023 was $3.4 million based on a calculated fair value price ranging from $1.27 to $15.04 per share.

(3) The aggregate grant date fair value of PRSUs issued for the year ended December 31, 2024 was $2.4 million based on a calculated fair value price ranging from $2.63 to $8.33 per share.

Compensation Expense

The following table summarizes the amount of recognized compensation expense associated with these awards that are reflected in the accompanying statements of operations for the periods presented (in thousands):

	For the Year Ended
	December 31,
	2024		2023
Share-based compensation costs
TSUs	$	4,877	$	4,336
PRSUs		1,922		944
	$	6,799	$	5,280