Equity-Based Compensation

9 Months Ended

Sep. 30, 2024

Equity-Based Compensation

Equity-Based Compensation

(9) Equity-Based Compensation

(a) Summary of Equity-Based Compensation

The Company’s equity-based compensation includes costs related to its long term incentive plans. Antero Midstream’s equity-based compensation expense is included in general and administrative expenses, and recorded as a credit to additional paid-in capital.

Effective March 12, 2019, the Board of Directors of Antero Midstream Corporation (the “Board”) adopted the Antero Midstream Corporation Long Term Incentive Plan under which awards may be granted to employees, directors, and other service providers of the Company and its affiliates. On June 5, 2024, that Company’s stockholders approved the Amended and Restated Antero Midstream Corporation Long Term Incentive Plan (the “AM LTIP”). This amendment increased the number of shares of the Company’s common stock reserved for awards from 15,398,901 shares to 28,735,901 shares, and extended the term of the plan from March 12, 2029 to June 5, 2034. 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 September 30, 2024, a total of 16,306,731 shares were available for future grant under the AM LTIP.

The Company’s equity-based compensation expense, by type of award, is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2024		2023		2024
Restricted stock units	$	6,358		9,114		17,969		25,036
Performance share units		1,741		2,582		4,525		7,087
Equity awards issued to directors		250		249		681		748
Total expense	$	8,349		11,945		23,175		32,871

(b) Restricted Stock Unit Awards

A summary of the RSU awards activity is as follows:

		Weighted Average
	Number	Grant Date
	of Units	Fair Value
Total awarded and unvested—December 31, 2023	5,877,170	$	10.28
Granted	2,476,696		13.45
Vested	(2,617,562)		10.01
Forfeited	(68,868)		12.11
Total awarded and unvested—September 30, 2024	5,667,436	$	11.76

As of September 30, 2024, unamortized equity-based compensation expense of $48 million related to the unvested RSUs is expected to be recognized over a weighted average period of 1.9 years.

(c) Performance Share Unit Awards

2024 Performance Share Unit Awards

In March 2024, the Company granted performance share unit awards (“PSUs”) to certain of its executive officers that vest based on the Company’s actual return on invested capital (“ROIC”) (as defined in the award agreement) over a three-year period concluding on December 31, 2026 as compared to a targeted ROIC (“2024 ROIC PSUs”). The number of shares of the Company’s common stock that can be earned with respect to the 2024 ROIC PSUs ranges from zero to 200% of the target number of 2024 ROIC PSUs originally granted. The grant date fair value of these awards was based on the closing price of the Company’s common stock on the date of the grant, assuming target achievement of the performance condition. Expense related to the 2024 ROIC PSUs is recognized based on the number of shares of the Company’s common stock that are expected to be issued at the end of the measurement period, and such expense is reversed if the likelihood of achieving the performance condition decreases. The likelihood of achieving the performance conditions related to 2024 ROIC PSU awards was probable as of September 30, 2024.

Summary Information for Performance Share Unit Awards

A summary of the PSU awards activity is as follows:

		Weighted Average
	Number	Grant Date
	of Units	Fair Value
Total awarded and unvested—December 31, 2023	952,101	$	10.90
Granted	350,237		13.44
Total awarded and unvested—September 30, 2024	1,302,338	$	11.59

As of September 30, 2024, unamortized equity-based compensation expense of $14 million related to the unvested PSUs is expected to be recognized over a weighted average period of 1.7 years.