Share-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

13 – 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 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, 2023, there were 2.5 million shares available for future grants.

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

Share-Based Compensation Expense

Share-based compensation expense was $35 million for the year ended December 31, 2023, and $25 million each for the years ended December 31, 2022 and December 31, 2021. As of December 31, 2023, there was $44 million of unrecognized compensation cost, which is expected to be recognized over a weighted-average period of less than two years.

Due to valuation allowances in the taxing jurisdictions of our Grantees, there was an immaterial related tax impact for the year ended December 31, 2023 and no related tax impact for the years ended December 31, 2022 and 2021.

RSUs

RSUs vest based generally on continued employment. The fair value of RSUs are 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 2023, 2022 and 2021 was $54.85, $30.90 and $6.54, respectively. The fair value of RSUs vested during 2023, 2022 and 2021 was $33 million, $18 million and $2 million, respectively. Cash used to settle RSUs in 2023 and 2022 was less than $1 million and $2 million, respectively. Cash was not used to settle RSUs in 2021.

PSUs

PSUs vest based generally on continued employment and achievement of an established target. The fair value of PSUs depends on whether the established target is a performance condition defined solely by reference to our own operations or the market performance of our shares (“market condition”). The actual number of PSUs 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. The WAGD FV per unit of PSUs granted during 2023, 2022 and 2021 was $70.91, $23.14 and $12.62, respectively. The fair value of PSUs vested during 2023, 2022 and 2021, was $118 million, nil and $2 million respectively.

The fair value of PSUs subject to performance conditions defined solely by reference to our own operations is determined based on the closing price of our shares on the date of grant. The units are adjusted periodically based on the metric’s expected performance goal multiplier.

The fair value of PSUs subject to market conditions 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,
	2023		2022		2021
Risk-Free rate	3.8	%	3.2	%	0.8	%
Dividend Yield	n/a		n/a		n/a
Expected Volatility	62.0	%	63.0	%	55.0	%
Expected Life (in years)	2.6		2.5		3.2

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. For the year ended December 31, 2023, expected volatility incorporated our NASDAQ trading history along with the volatility of our constituents. For the years ended December 31, 2022 and 2021, the expected volatility was based on comparable companies’ volatility. The expected life in years is based on the performance measurement period.

Phantom RSUs

Phantom RSUs were exclusively granted in 2021. Due to achievement of the predetermined capped amounts in year one, the awards were cash-settled in 2022 for $14 million, and the remaining in 2023 for an immaterial amount.

Summary of Awards Activity

A summary of activity for non-vested RSUs, PSUs, and Phantom RSUs outstanding and their respective WAGD FV during 2023 is presented below.


(Units in thousands, except dollars)	RSU	WAGD FV		PSU(1)	WAGD FV		Phantom RSU	WAGD FV
Non-Vested at December 31, 2022	918	$	21.05	2,301	$	14.98	17	$	14.50
Granted	350	54.85		342	70.91		—	—
Vested	(579)	15.30		(917)	6.12		(4)	16.47
Cancelled or Forfeited	(24)	35.00		(55)	23.78		(13)	13.86
Non-Vested at December 31, 2023	665	$	43.34	1,671	$	31.00	—	$	—

(1) Vested PSUs during 2023 earned a 200% multiplier. Non-Vested PSUs at December 31, 2023 were comprised of 1,145 PSUs with an achieved 100% performance goal multiplier and 526 PSUs with the potential for up to a 200% performance goal multiplier.