Pursuant to the Company’s amended and restated certificate of incorporation, the Company’s board of directors may, subject to any limitations prescribed by law but without further stockholder approval, establish and issue from time to time one or more classes or series of preferred stock, par value $0.01 per share, up to an aggregate of 50.0 million shares. The Company had no shares of preferred stock outstanding at December 31, 2019 and 2018.

The Company had 281.2 million shares of Class A common stock outstanding as of December 31, 2019, which includes 0.4 million shares of time-based restricted stock (“RSAs”) and 0.8 million shares of performance-based restricted stock (“PSAs”). Holders of Class A common stock are entitled to one vote per share on all matters to be voted upon by the stockholders and are entitled to ratably receive dividends when and if declared by the Company’s board of directors. Upon liquidation, dissolution, distribution of assets or other winding up, the holders of Class A common stock are entitled to receive ratably the assets available for distribution to the stockholders after payment of liabilities and the liquidation preference of any of the Company’s outstanding shares of preferred stock.

The Company had 35.4 million shares of its Class B common stock outstanding as of December 31, 2019. Holders of the Class B common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to the Company’s stockholders for their vote or approval, except with respect to the amendment of certain provisions of the Company’s amended and restated certificate of incorporation that would alter or change the powers, preferences or special rights of the Class B common stock so as to affect them adversely, which amendments must be by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class, or as otherwise required by applicable law.

Holders of Class B common stock do not have any right to receive dividends, unless the dividend consists of shares of Class B common stock or of rights, options, warrants or other securities convertible or exercisable into or exchangeable for shares of Class B common stock paid proportionally with respect to each outstanding share of Class B common stock and a dividend consisting of shares of Class A common stock or of rights, options, warrants or other securities convertible or exercisable into or exchangeable for shares of Class A common stock on the same terms is simultaneously paid to the holders of Class A common stock. Holders of Class B common stock do not have any right to receive a distribution upon a liquidation or winding up of the Company.

shares that were outstanding during the period. The Company uses the “if-converted” method to determine the potential dilutive effect of exchanges of outstanding PE Units (and corresponding shares of Class B common stock), and the treasury stock method to determine the potential dilutive effect of vesting of its outstanding restricted stock and restricted stock units. For the years ended December 31, 2019 and 2018, Class B common stock was not recognized in dilutive EPS calculations as the effect would have been antidilutive.



	Year ended December 31,
	2019		2018		2017
Basic EPS (in thousands, except per share data)
Numerator:
Basic net income attributable to Parsley Energy, Inc. Stockholders	$	175,212	$	369,127	$	106,774
Denominator:
Basic weighted average shares outstanding	279,636		272,226		240,733
Basic EPS attributable to Parsley Energy, Inc. Stockholders	$	0.63	$	1.36	$	0.44
Diluted EPS
Numerator:
Net income attributable to Parsley Energy, Inc. Stockholders	175,212		369,127		106,774
Effect of conversion of the shares of Company’s Class B common stock to shares of the Company’s Class A common stock	—		—		17,646
Diluted net income attributable to Parsley Energy, Inc. Stockholders	$	175,212	$	369,127	$	124,420
Denominator:
Basic weighted average shares outstanding	279,636		272,226		240,733
Effect of dilutive securities:
Class B common stock	—		—		54,665
Time-Based Restricted Stock and Time-Based Restricted Stock Units	536		658		1,114
Diluted weighted average shares outstanding⁽¹⁾	280,172		272,884		296,512
Diluted EPS attributable to Parsley Energy, Inc. Stockholders	$	0.63	$	1.35	$	0.42

(1)As of December 31, 2019, there were 790,507 and 358,240 PSAs and performance-based restricted stock units (“PSUs”), respectively. As of December 31, 2018 and 2017, there were 1,338,439 PSAs and 640,062 PSUs, respectively. PSAs and PSUs could vest in the future based on predetermined performance and market goals. PSAs and PSUs were not included in the computation of EPS for the years ended December 31, 2019, 2018 and 2017, respectively because the performance and market conditions had not been met, assuming the end of the reporting period was the end of the contingency period.

During the third quarter of 2019, the Company’s board of directors initiated the Company’s first quarterly dividend, payable on issued and outstanding shares of Class A common stock, and, in its capacity as the managing member of Parsley LLC, a corresponding distribution from Parsley LLC to holders of PE Units (each, a “PE Unitholder”). The portion of the Parsley LLC distribution attributable to PE Units held by the Company was used to fund the quarterly dividend on issued and outstanding shares of Class A common stock. As described in these financial statements, as the context requires, dividends paid to holders of Class A common stock and distributions paid to PE Unitholders (other than Parsley Energy, Inc.) may be referred to collectively as “dividends.”

Dividends declared are recorded as a reduction of retained earnings, to the extent that retained earnings were available at the beginning of the reporting period, with any excess recorded as a reduction in paid capital. Dividends paid to PE Unitholders (other than the Company) are treated as a partnership distribution from Parsley LLC and are recorded as a reduction in noncontrolling interests.

The following table sets forth information with respect to cash dividends and distributions declared by the Company’s board of directors during 2019, on its own behalf and in its capacity as the managing member of Parsley LLC, on issued and outstanding shares of Class A common stock and PE Units:



Declaration Date	Record Date	Payment Date	Dividend/Distribution Amount⁽¹⁾		Total Dividend/Distribution Payment⁽²⁾ (in thousands)
August 6, 2019	September 20, 2019	September 30, 2019	$	0.03	$	9,547
November 5, 2019	December 10, 2019	December 20, 2019	$	0.03	$	9,548




(1)	Per share of Class A common stock and per PE Unit. The portion of the Parsley LLC distribution attributable to PE Units held by the Company was used to fund the quarterly dividend on issued and outstanding shares of Class A common stock.
(2)	Reflects total cash dividend and distribution payments made, or to be made, to holders of Class A common stock and PE Unitholders (other than the Company) as of the applicable record date.

As a result of the 2017 Equity Offerings, the Company’s ownership of Parsley LLC increased from 86.5% to 89.8% and the PE Unitholders’ (other than the Company) ownership of Parsley LLC decreased from 13.5% to 10.2%. Subsequently, as a result of the consummation of the Double Eagle Acquisition, the Company’s ownership of Parsley LLC decreased from 89.8% to 78.4% and the PE Unitholders’ (other than the Company) ownership of Parsley LLC increased from 10.2% to 21.6%. Any impact to additional paid in capital as a result of the 2017 Equity Offerings was completely offset by a valuation allowance.

During the year ended December 31, 2017, certain PE Unitholders exercised their exchange right under the Parsley LLC Agreement (as defined below), collectively electing to exchange an aggregate of 5.7 million PE Units (and a corresponding number of shares of Class B common stock) for an aggregate of 5.7 million shares of Class A common stock (collectively, the “2017 Exchanges”). In turn, the Company exercised its call right under the Parsley LLC Agreement, electing to issue Class A common stock directly to each of the exchanging PE Unitholders in satisfaction of their elections. As a result of the 2017 Exchanges, the Company’s ownership of Parsley LLC increased from 78.4% to 80.2% and the PE Unitholders’ (other than the Company) ownership of Parsley LLC decreased from 21.6% to 19.8%. The “Parsley LLC Agreement” refers to the Limited Liability Company Agreement of Parsley LLC, dated June 11, 2013, thereafter amended and restated by the Second Amended and Restated Limited Liability Company Agreement, dated May 29, 2014, thereafter amended and restated by the Third Amended and Restated Limited Liability Company Agreement, dated February 20, 2019, thereafter amended and restated by the Fourth Amended and Restated Limited Liability Company Agreement, dated July 22, 2019, as in effect as of the applicable date.

During the year ended December 31, 2018, certain PE Unitholders exercised their exchange right under the Parsley LLC Agreement, collectively electing to exchange an aggregate of 25.6 million PE Units (and a corresponding number of shares of Class B common stock) for an aggregate of 25.6 million shares of Class A common stock (collectively, the “2018 Exchanges”). In turn, the Company exercised its call right under the Parsley LLC Agreement, electing to issue Class A common stock directly to each of the exchanging PE Unitholders in satisfaction of their elections. As a result of the 2018 Exchanges, the Company’s ownership in Parsley LLC increased from 80.2% to 88.5% and the ownership of the PE Unitholders (other than the Company) in Parsley LLC decreased from 19.8% to 11.5%.

During the year ended December 31, 2019, certain PE Unitholders, including an executive officer of the Company, exercised their exchange right under the Parsley LLC Agreement, collectively electing to exchange 1.1 million PE Units (and a corresponding number of shares of Class B common stock) for 1.1 million shares of Class A common stock (collectively, the “2019 Exchanges”). In turn, the Company exercised its call right under the Parsley LLC Agreement, electing to issue Class A common stock directly to each of the exchanging PE Unitholders in satisfaction of their elections. As a result of the 2019

Because these changes in the Company’s ownership interest in Parsley LLC did not result in a change of control, the transactions were accounted for as equity transactions under ASC Topic 810, Consolidation, which requires that any differences between the carrying value of the Company’s basis in Parsley LLC and the fair value of the consideration received are recognized directly in equity and attributed to the controlling interest. The Company has consolidated the financial position and results of operations of Parsley LLC and records noncontrolling interests for the economic interests in Parsley LLC held by PE Unitholders (other than the Company).



	Year ended December 31,
	2019			2018		2017
	(in thousands)
Net income (loss) attributable to the noncontrolling interests of:
Parsley LLC	$	35,231		$	76,079	$	17,645
Pacesetter Drilling, LLC	(25		)	763		(499		)
Total net income attributable to noncontrolling interests	$	35,206		$	76,842	$	17,146

As discussed in Note 2—Summary of Significant Accounting Policies—Principles of Consolidation, Parsley LLC owns, indirectly a 63.0% interest in Pacesetter. The remaining 37.0%interest in Pacesetter is reflected by the Company as a noncontrolling interest. Following the sale of Pacesetter’s physical assets in 2018, discussed in Note 7—Sales of Property, Plant and Equipment, Pacesetter made distributions to its equity holders of $0.6 million and $2.0 million during the years ended December 31, 2019 and 2018, respectively.