Equity-Based Compensation

6 Months Ended

Jun. 30, 2020

Equity-Based Compensation

Equity-Based Compensation

(11) Equity-Based Compensation

The Company’s general and administrative expenses include equity-based compensation costs related to the Antero Midstream GP LP Long-Term Incentive Plan (“AMGP LTIP”) and the Series B Units prior to the Transactions. Equity-based

compensation after the Transactions include (i) costs allocated to Antero Midstream Corporation by Antero Resources for grants made prior to the Transactions pursuant to the Antero Resources Corporation Long-Term Incentive Plan (the “AR LTIP”), (ii) costs related to the Antero Midstream Corporation Long-Term Incentive Plan (the “AM LTIP”) and (iii) the Exchanged B Units (as defined below). Antero Midstream Corporation’s portion of the equity-based compensation expense is included in general and administrative expenses, and recorded as a credit to the applicable classes of equity. Equity-based compensation expense allocated to Antero Midstream Corporation was $2.8 million for the period from March 13, 2019 to June 30, 2019. For the three and six months ended June 30, 2020, equity-based compensation allocated to Antero Midstream Corporation was $1.3 million and $3.2 million, respectively. For grants made prior to the Transactions, Antero Resources has total unamortized expense related to its various equity-based compensation plans that can be allocated to the Company of approximately $15 million as of June 30, 2020, which includes grants made under the Antero Midstream Partners Long Term Incentive Plan (the “AMP LTIP”) prior to the Transactions, which were converted into awards under the AM LTIP. A portion of this will be allocated to Antero Midstream Partners as it is amortized over the remaining service period of the related awards. Antero Midstream Corporation does not reimburse Antero Resources for noncash equity compensation allocated to it for awards issued under the AR LTIP.

Exchanged B Units

Upon Closing of the Transactions, each Series B Unit, vested and unvested, was exchanged for 176.0041 shares of AM common stock (the “Series B Exchange”). A total of 17,353,999 shares of the Company’s common stock were issued in exchange for the 98,600 Series B Units then outstanding (the “Exchanged B Units”). The Company recognized $18 million and $29 million of equity-based compensation expense related to the Series B awards for the three and six months ended June 30, 2019, respectively, including expenses recognized with respect to the Series B Units prior to the Closing of the Transactions and expenses recognized with respect to the Exchanged B Units following the closing of the Transactions through June 30, 2019. There were no forfeitures after the Series B Exchange was completed.

AMGP LTIP

The Company recognized expense of $0.2 million for the six months ended June 30, 2019. In connection with the Transactions, the AMGP LTIP was terminated on March 12, 2019. No expense was recognized for the three months ended June 30, 2019.

AM LTIP

The Company is authorized to grant up to 15,398,901 shares of AM common stock to employees and directors under the AM LTIP. The AM LTIP provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), dividend equivalents, other stock-based awards, cash awards and substitute awards. The terms and conditions of the awards granted are established by the compensation committee of the Board. As of June 30, 2020, a total of 12,840,630 shares were available for future grant under the AM LTIP. For the three and six months ended June 30, 2020, the Company recognized expense of $1.3 million and $2.7 million, respectively, related to these awards.

Restricted Stock Unit Awards

A summary of the restricted stock unit awards activity during the six months ended June 30, 2020 is as follows:

		Weighted
		Average		Aggregate
	Number of	grant date		intrinsic value
	units	fair value		(in thousands)
Total AM LTIP RSUs awarded and unvested—December 31, 2019	1,275,990	$	14.38	$	9,685
Granted	985,269	$	7.23
Vested	(454,933)	$	13.63
Forfeited	(47,367)	$	14.43
Total AM LTIP RSUs awarded and unvested—June 30, 2020	1,758,959	$	10.45	$	8,971

Intrinsic values are based on the closing price of the Company’s common shares on the referenced dates. At June 30, 2020, unamortized expense of $15 million related to the unvested RSUs is expected to be recognized over a weighted average period of approximately 2.1 years and the Company’s proportionate share will be allocated to it as it is recognized.

Performance Share Unit Awards Based on Return on Invested Capital

For the three and six months ended June 30, 2020, the Company recognized $78 thousand and $156 thousand, respectively, of expense related to performance share unit awards based on return of invested capital. For each of the three and six months ended June 30, 2019, the Company recognized $163 thousand of expense related to these awards.

As of June 30, 2020, there was $0.6 million of unamortized equity-based compensation expense related to unvested PSUs that is expected to be recognized over a weighted average period of 1.8 years.

Cash Awards

In January 2020, the Company granted cash awards of $2.2 million to certain executives under the AM LTIP that vest ratably over a period of up to three years. As of June 30, 2020, the Company has accrued $0.8 million in Other liabilities in the unaudited condensed consolidated balance sheet.