Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Effective as of October 31, 2019, the Company (i) amended and restated the Keane Group, Inc. Equity and Incentive Award Plan under the name NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan (“Equity and Incentive Award Plan”), and (ii) assumed and amended and restated the C&J Energy Services, Inc. 2017 Management Incentive Plan under the name NexTier Oilfield Solutions Inc. (Former C&J Energy) Management Incentive Plan ( “Management Incentive Plan”, and collectively with the Equity and Incentive Award Plan, the “Equity Award Plans”). As part of the C&J Merger, the Company assumed the award agreements outstanding under the Management Incentive Plan on the terms set forth in the Merger agreement.

As of June 30, 2020, the Company has four types of stock-based compensation under its Equity Award Plans: (i) deferred stock awards for three executive officers, (ii) restricted stock awards issued to independent directors and certain executives and

employees, (iii) restricted stock units issued to executive officers and key management employees and (iv) non-qualified stock options issued to executive officers.

The following table summarizes stock-based compensation costs for the three and six months ended June 30, 2020 and 2019 (in thousands of dollars):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Restricted stock awards	$	361	$	381	$	786	$	621
Restricted stock time-based unit awards	7,554		4,171		12,714		7,224
Non-qualified stock options	468		675		704		1,355
Restricted stock performance-based unit awards	1,140		410		2,199		437
Equity-based compensation cost	9,523		5,637		16,403		9,637
Tax Benefit	(2,287)		(1,360)		(3,938)		(2,341)
Equity-based compensation cost, net of tax	$	7,236	$	4,277	$	12,465	$	7,296

Performance-based RSU awards

During the first quarter of 2020, the Company issued 1,033,936 of performance-based RSUs to executive officers under its Equity Award Plans, which were fair valued at $8.5 million using a Monte Carlo simulation method. 50% of the performance-based RSUs vest after two years (the "two-year performance-based RSUs"), while the remaining 50% vest after three years (the "three-year performance-based RSUs"). Each vesting is subject to a payout percentage based on the Company's annualized total stockholder return ranking relative to its total stockholder return peer group achieved during the performance period. The number of shares that may be earned at the end of the vesting period ranges from 50% to 200% of the target award amount, if the threshold performance criteria is met. These performance-based RSUs will be settled in the Company's common stock and are classified as equity awards. The compensation expense associated with these performance-based RSUs will be amortized into earnings on a straight-line basis. As of June 30, 2020, total unamortized compensation cost related to unvested performance-based RSUs was $5.9 million, which the Company expects to recognize over the weighted-average period of 2.51 years.

During the three months ended June 30, 2020, the Company issued 405,541 of performance-based RSUs to executive officers under its Equity Award Plans, with an estimated value of $1.2 million, based on a 100% target value. The performance RSUs issued by the Company have service and performance conditions. The number of shares that may be earned at the end of the vesting period ranges from 0% to 150% of the target award amount, if the performance criteria is met. These performance-based RSUs will be settled in the Company's common stock and are classified as equity awards. The compensation expense associated with these performance-based RSUs will be amortized into earnings on a straight-line basis. As of June 30, 2020, total unamortized compensation cost related to unvested performance-based RSUs was $1.1 million, which the Company expects to recognize over the weighted-average period of 1.50 years.