Stock-Based Compensation

Restricted Stock Units

Lonestar grants awards of restricted stock units ("RSUs") to employees and directors as part of its long-term compensation program. The awards vest over a three-year period, with specific terms of vesting determined at the time of grant. The Company determined the fair value of granted RSUs based on the market price of the Class A voting common stock of the Company on the date of grant. RSUs are paid in Class A voting common stock or cash (see below) after the vesting of the applicable RSU. Compensation expense for granted RSUs is recognized over the vesting period. For the years ended December 31, 2019 and 2018, the Company recognized $2.6 million and $1.6 million, respectively, of stock-based compensation expense for RSUs.

During the first quarter of 2018, the Company elected to offer cash settlement to all employees for vested RSUs and, as a result of this modification, the RSU awards are classified as a liability on the Company’s balance sheet in accordance with ASC 718, Compensation – Stock Compensation. As of the date of the modification, periodic compensation expense related to the awards is recognized based on the fair value of the awards, subject to a floor valuation that represents the compensation expense amount that would have otherwise been recognized had the Company not modified the terms of the award. The liability for RSUs on the accompanying consolidated balance sheet as of December 31, 2019 and 2018 was $1.8 million and $1.3 million, respectively.

As of December 31, 2019, there was $3.0 million of unrecognized compensation expense related to non-vested RSU grants. This unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.9 years. The fair value of RSU grants that vested during 2019 and 2018 totaled $2.1 million and $1.3 million, respectively.

A summary of the status of the Company's non-vested RSU grants issued, and the changes during the year ended December 31, 2019, is presented below:



	Shares		Weighted Average Fair Value per Share
Outstanding non-vested RSUs at December 31, 2018	1,011,045		$	5.06
Granted	1,300,003		3.40
Vested	(450,422	)	4.56
Forfeited	(10,950	)	—
Outstanding non-vested RSUs at December 31, 2019	1,849,676		$	4.04

Stock Appreciation Rights

Lonestar grants awards of stock appreciation rights (“SARs”) to employees and directors as part its long-term compensation program. The awards vest over a three-year period, with specific terms of vesting determined at the time of grant, and expire five-years after the date of issuance. The SARs are granted with a strike price equal to the fair market value at the time of grant, which is generally defined as the closing price of the Company's common stock on the NASDAQ on the date of grant. SARs will be paid in cash or common stock at holder’s election once the SAR is vested. For the years ended December 31, 2019 and 2018, the Company recognized $(0.1) million and $0.3 million, respectively, of stock-based compensation expense for SARs. The liability for SARs on the accompanying consolidated balance sheet as of December 31, 2019 and 2018 was approximately $0.6 million and $0.6 million, respectively.

As of December 31, 2019, there was $0.1 million of total compensation cost to be recognized in future periods related to non-vested SAR grants. The cost is expected to be recognized over a weighted-average period of 0.7 years.

The following is a summary of the Company's SAR activity:



	Shares	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)
Outstanding at December 31, 2018	1,010,000	$	6.30	3.5
SARs vested and exercisable at December 31, 2018	280,000	7.20		3.2
Granted	—	—		0
Outstanding at December 31, 2019	1,010,000	$	6.30	2.5
SARs vested and exercisable at December 31, 2019	606,250	$	6.65	2.4