Share-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

21. Share-Based Compensation

As part of the emergence from bankruptcy, outstanding awards under all Predecessor equity incentive plans were cancelled, and the 2019 Plan was approved by the Successor.

The share-based compensation plans permit the grant of options, stock appreciation rights, restricted share awards restricted share units (“RSUs”), performance share awards, performance unit awards (“PUs”), other share-based awards and cash-based awards to any employee, non-employee directors and other individual service providers or any affiliate. In addition, the Predecessor had share-based compensation provisions under the Employee Share Purchase Plan (“ESPP”).

For restricted share awards and RSUs, compensation expense is recognized on a straight-line basis over the requisite service period for the separately vesting portion of each award. For PUs, compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. Upon emergence from bankruptcy, all remaining compensation expense was recognized when certain shares accelerated due to change in control provisions in the original award agreements and all remaining outstanding awards were cancelled.

The provisions of each award vary based on the type of award granted and are determined by the Compensation Committee of our Board of Directors. Those awards that are based on a specific contractual term will be granted with a term not to exceed 10 years. Upon grant of a restricted share award, the recipient has the rights of a shareholder, including but not limited to the right to vote such shares and the right to receive any dividends paid on such shares, but not the right to disposition prior to vesting. Recipients of RSUs do not have the rights of a shareholder until such date as the shares are issued or transferred to the recipient under the Plan. As of December 31, 2019, we had four million shares available for grant under our Successor share-based compensation plan.

Share-Based Compensation Expense

We did not recognize any share-based compensation expense during the Successor Period. We recognized the following share-based compensation expense during the 2019 Predecessor Period and the years ended December 31, 2018 and December 31, 2017:



	Successor		Predecessor
	Period From		Period From
	12/14/19		01/01/2019		Years Ended
	through		through		December 31,
(Dollars in millions)	12/31/2019		12/13/2019		2018		2017
Share-based Compensation	$	—	$	46	$	47	$	70
Related Tax (Provision) Benefit	—		—		—		—

Restricted Share Awards and Restricted Share Units

There were no restricted share awards outstanding in 2019. RSUs vest based on continued employment, generally over a three-year period. The fair value of RSUs is determined based on the closing price of our shares on the date of grant. The total fair value, less forfeitures, is expensed over the vesting period. The weighted-average grant date fair value of RSUs granted during the 2019 Predecessor Period and the years ended December 31, 2018 and December 31, 2017 was $0.90, $1.76 and $4.26, respectively. The total fair value of restricted share awards and RSUs vested during the 2019 Predecessor Period and the years ended December 31, 2018 and December 31, 2017 was $2 million, $17 million and $30 million, respectively.

A summary of RSU activity is presented below:



	RSU		Weighted Average Grant Date Fair Value
	(In thousands)
Non-Vested at December 31, 2018 (Predecessor)	17,278		$	2.82
Granted	76		0.90
Vested	(9,747	)	3.64
Cancelled or Forfeited	(7,607	)	1.75
Non-Vested at December 13, 2019 (Predecessor)	—		—
Granted, Vested, Cancelled or Forfeited	—		—
Non-Vested at December 31, 2019 (Successor)	—		—

Performance Units

The performance units granted by the Predecessor had a three-year service period and were to vest upon the Company’s achievement of certain market-based and performance goals. Depending on the performance levels achieved in relation to the predefined targets, shares may be issued for up to 200% of the units awarded. If the established performance goals are not met no shares are issued. In addition, the award agreement had a 200% accelerated vesting condition in the event of a change in control. The grant date fair value of the performance units with market-based goals was determined through use of the Monte Carlo simulation method. The assumptions used in the Monte Carlo simulation during the year ended December 31, 2018, included a weighted average risk-free rate of 2.28%, volatility of 63.0% and a zero dividend yield. The grant date fair value of the performance units with performance goals was determined based on the closing price of our shares on the date of grant. The weighted-average grant date fair value of all performance units we granted during the years ended December 31, 2018 and 2017 was $4.57 and $6.06, respectively. For the 2019 Predecessor Period, 6 million shares were issued when the bankruptcy triggered a change of control clause accelerating the vesting of all outstanding performance units at 200%. The total fair value of these shares was $95 thousand. For the year ended December 31, 2018, we did not issue any shares for performance units. For the year ended December 31, 2017, 145 thousand shares were issued for the performance units related to the departure of a former executive officer. The total fair value of these shares was $1 million.

A summary of performance unit activity for the year ended December 31, 2019, is presented below:



	Performance Units		Weighted Average Grant Date Fair Value
	(In thousands)
Non-vested at December 31, 2018 (Predecessor)	4,014		$	4.99
Granted	—		—
Vested	(3,033	)	4.79
Cancelled or Forfeited	(981	)	5.63
Non-vested at December 13, 2019 (Predecessor)	—		—
Granted	—		—
Non-vested at December 31, 2019 (Successor)	—		—

Employee Stock Purchase Plan

The Predecessor had an ESPP which permitted eligible employees to make payroll deductions to purchase Weatherford shares. Each offering period had a six-month duration beginning on either March 1 or September 1. Shares were purchased at 90% of the lower of the closing price for our ordinary shares on the first or last day of the offering period. We issued 4 million and 3 million shares under the ESPP during the years ended December 31, 2018 and 2017, respectively. In January 2019, we temporarily suspended our ESPP due to insufficient shares remaining available for issuance under the plan as a consequence of our lower share price. New Ordinary Shares have not been registered for issuance under our ESPP.