Share-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

15 – Share-Based Compensation

Share-Based Plan

The Weatherford International plc Third Amended and Restated 2019 Equity Incentive Plan, (“2019 Equity Plan”) authorizes the issuance of 8.6 million shares of common stock by the Compensation and Human Resources Committee of our Board of Directors in the form of options, share appreciation rights, restricted share awards, restricted share units (“RSUs”), performance-based restricted share units (“PSUs”), Phantom restricted share units (“Phantom RSUs”) and other share-based and performance-based awards to any employee, consultant, or non-employee director (“Grantees”). The provisions of each award vary based on the type of award granted. Awards made under the 2019 Equity Plan vest and settle in shares of newly issued common stock or cash. As of December 31, 2022, there were 3.3 million shares available for future grants.

Share-Based Compensation Expense

Share-based compensation expense was $25 million each for the years ended December 31, 2022 and 2021 and immaterial for 2020. Due to valuation allowances in the taxing jurisdictions of our Grantees, there is no related tax impact for each of the periods presented.

Share-Based Award

The Company has granted RSUs, PSUs, and Phantom RSUs under the 2019 Equity Plan. All awards require continued employment and generally vest over a one to three year vesting period. The Grantees do not have the rights of a shareholder under these awards until such date as the shares are issued.

RSUs vest based on continued employment. 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 per unit (“WAGD FV”) of RSUs granted during 2022, 2021 and 2020 was $30.90, $6.54 and $3.37, respectively. The fair value of RSUs vested during 2022, 2021 and 2020 was $18 million, $2 million and immaterial, respectively. Cash used to settle RSUs in 2022 was $2 million. Cash was not used for 2021 or 2020. As of December 31, 2022, there was $12 million of unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted-average period of two years.

PSUs vest based on continued employment and achievement of an established target. The actual number of PSU’s earned is subject to increase or decrease based on the performance goal multiplier and may range from 0% to 200%. The total fair value, less forfeitures, is expensed over the vesting period. Fair value of PSU’s depends on whether the established target is a performance or market condition.

The fair value of PSUs subject to performance conditions defined solely by reference to the Company’s own operations is determined based on the closing price of our shares on the date of grant. Compensation cost is recognized only when the Company concludes it is probable the performance condition will be achieved and can increase, or decrease based on fluctuations in the Company’s forecasts.

The fair value of PSUs subject to the market performance of the Company’s shares is determined by utilizing an advanced option-pricing model. All compensation cost is recognized if the employment condition is fulfilled even if the market condition is never satisfied, as the likelihood of achieving the market condition is incorporated into the fair value of the award. The weighted average of assumptions used in the models were as follows:


	Year Ended December 31,
	2022		2021		2020
Risk-Free rate	3.2	%	0.8	%	n/a
Dividend Yield	n/a		n/a		n/a
Expected Volatility	63.0	%	55.0	%	n/a
Expected Life (in years)	2.5		3.2		n/a

The risk-free rate is obtained as of the grant date with terms matching the performance period. The dividend yield is based on historical dividend payments and expectations of management. The expected volatility is based on comparable companies’ volatility, and the expected life in years is based on the performance measurement period.

The WAGD FV per unit of PSUs granted during 2022, 2021 and 2020 was $23.14, $12.62 and $2.46, respectively. The fair value of PSUs vested during 2021 was $2 million and nil for 2020 and 2022. As of December 31, 2022, there was $19 million of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted-average period of two years.

Phantom RSUs were only granted in 2021. Phantom RSUs vest, based on continued employment, over two years and can be settled in either cash or shares. The Company intends to settle all Phantom RSUs in cash, therefore they are recorded as a liability and remeasured based on current market value over the vesting period until settlement. Cash payout is calculated using the volume weighted price of the Company’s shares averaged for the 30 trading days immediately preceding the applicable vesting date, and was capped at certain predetermined amounts. During 2021, Phantoms RSUs were granted with a WAGD FV of $6.38 and the liability as of December 31, 2021 was $14 million, which was settled in cash in 2022. As of December 31, 2022, there was an immaterial amount of unrecognized compensation expense related to Phantom RSUs, due to achievement of the predetermined capped amounts in year one, which is expected to be settled in cash in 2023.

A summary of activity for non-vested RSUs, PSUs, and Phantom RSUs outstanding (units in thousands) and their respective WAGD FV during 2022 is presented below. The table reflects the performance multiplier for PSUs at 100%.


	RSU	WAGD FV	PSU	WAGD FV	Phantom RSU	WAGD FV
Non-Vested at December 31, 2021	1,065	6.19	1,924	12.74	1,239	6.53
Granted	609	30.90	618	23.14	—	—
Vested	(679)	6.37	—	—	(465)	6.55
Cancelled or Forfeited	(77)	22.86	(241)	18.02	(757)	6.34
Non-Vested at December 31, 2022	918	21.05	2,301	14.98	17	14.50