Shareholders' and Members' Equity

Shareholders' Equity

Class A Common Stock

Brigham Minerals has approximately 34.0 million shares of its Class A common stock outstanding as of December 31, 2019. Holders of Class A common stock are entitled to one vote per share on all matters to be voted upon by the stockholders and are entitled to ratably receive dividends when and if declared by the Company’s board of directors. Upon liquidation, dissolution, distribution of assets or other winding up, the holders of Class A common stock are entitled to receive ratably the assets available for distribution to the stockholders after payment of liabilities.

Class B Common Stock

Brigham Minerals has approximately 22.8 million shares of its Class B common stock outstanding as of December 31, 2019. Holders of the Class B common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Holders of Class A common stock and Class B common stock generally vote together as a single class on all matters presented to Brigham Minerals’ stockholders for their vote or approval. Holders of Class B common stock generally do not have any right to receive dividends or distributions upon a liquidation or winding up of Brigham Minerals.

Earnings per Share

Basic earnings per share (“EPS”) measures the performance of an entity over the reporting period. Diluted earnings per share measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. Brigham Minerals uses the “if-converted” method to determine the potential dilutive effect of exchanges of outstanding shares of Class B common stock (and corresponding Brigham LLC Units), and the treasury stock method to determine the potential dilutive effect of vesting of its outstanding RSAs, RSUs, PSUs and unvested Incentive Units. Brigham Minerals does not use the two-class method because the Class B common stock and the unvested share-based awards are nonparticipating securities. For the year ended December 31, 2019, the Class B common stock, the Incentive Units, RSAs and RSUs were not recognized in dilutive EPS calculations as the effect would have been antidilutive. There were no shares of Class A or Class B common stock outstanding for the years ended December 31, 2018 and 2017, therefore no earnings per share information has been presented for those periods.

For the year ended December 31, 2019, Brigham Minerals’ EPS calculation includes only its share of net income for the period subsequent to the IPO, and omits income or loss prior to the IPO. In addition, the basic weighted average shares outstanding calculation is based on the actual days in which the shares were outstanding from the IPO through December 31, 2019. The following table reflects the allocation of net income (loss) to common stockholders and EPS computations for the period indicated based on a weighted average number of common stock outstanding for the period:



	Years Ended December 31,
(In thousands, except per share data)	2019			2018		2017
Basic EPS
Numerator:
Basic net income attributable to Brigham Minerals, Inc. shareholders	$	6,901		$	—	$	—
Less: net income attributable to Brigham Minerals, Inc. shareholders pre-IPO	(848		)	—		—
Basic net income attributable to Brigham Minerals, Inc. shareholders post-IPO (1)	6,053			—		—

Denominator:
Basic weighted average shares outstanding (1)	22,870			—		—
Basic EPS attributable to Brigham Minerals, Inc. shareholders	$	0.26		$	—	$	—
Diluted EPS
Numerator:
Basic net income attributable to Brigham Minerals, Inc. shareholders post-IPO (1)	6,053			—		—
Diluted net income attributable to Brigham Minerals, Inc. shareholders	6,053			—		—
Denominator:
Basic weighted average shares outstanding (1)	22,870			—		—
Effect of dilutive securities:
Diluted weighted average shares outstanding	22,870			—		—
Diluted EPS attributable to Brigham Minerals, Inc. shareholders	$	0.26		$	—	$	—

(1) - Represents earnings per share of Class A common stock and weighted average shares of Class A common stock for the period from April 17, 2019 through December 31, 2019, the period following the IPO.

As of December 31, 2019, there were 753,546 shares related to PSUs (based on target), that could vest in the future dependent on predetermined performance goals. These units were not included in the computation of EPS for the year ended December 31, 2019, because the performance goals had not been met, assuming the end of the reporting period was the end of the contingency period.

Members' Equity

Series A Units

On April 5, 2013, Brigham Resources received subscriptions to purchase 64,840,000 Series A Units at a price of $10 per unit. The Series A Units may be purchased within a five-year period from April 5, 2013 to April 5, 2018. Brigham Resources’ management had the right, subject to the approval of its Board of Directors and certain of its investors, to send notice to the Series A Unit holders specifying the need for additional capital. All outstanding Series A Units were sold prior to December 31, 2015. Series A Unit holders are entitled to one vote per share on voting matters and have certain rights with respect to distributions declared by Brigham Resources’ Board of Directors pursuant to a distribution waterfall set forth in the Brigham Resources LLC Agreement. The Series A Units have a liquidation preference equal to total invested capital, plus a 7% cumulative return, compounded daily.

Series A-M Units

Brigham Resources has authorized 460,000 Series A-M Units for issuance at a price of $10 per unit. On April 5, 2013, 160,000 Series A-M Units were issued in connection with the formation of Brigham Resources. The remaining 300,000 Series A-M Units were available for issuance to a related party if certain capital call funding thresholds were met (the “Contingent A-M Units”) and subject to achievement of certain time-based vesting conditions. During 2014, all 300,000 Contingent A-M Units were issued, and as of December 31, 2017, 100% of the Series A-M Units were vested. Series A-M Unit holders have no voting rights and have certain rights with respect to distributions declared by Brigham Resources’ Board of Directors pursuant to a distribution waterfall set forth in the Brigham Resources LLC Agreement. The Series A-M Units have a liquidation preference equal to the total invested capital, plus a 7% cumulative return, compounded daily.

Series A-Z Units

On May 8, 2015, Brigham Resources received subscriptions to purchase 41,176,471 Series A-Z Units at a price of $8.50 per unit. The Series A-Z Units were available to be issued at any time between May 8, 2015 and April 5, 2018. Brigham Resources’ management had the right, subject to the approval of its Board of Directors and certain of its investors, to send notice to the Series A-Z Unit holders specifying the need for additional capital (a “Series A-Z Capital Call”). During the years ended December 31, 2018 and 2017, Brigham Resources issued Series A-Z Capital Calls for gross proceeds of $45,999,995, representing the sale of 5,411,764 Series A-Z Units, and of $37,000,002, representing the sale of 4,352,941 Series A-Z Units, respectively. Series A-Z Unit holders are entitled to one vote per share on voting matters and have certain rights with respect to distributions declared by Brigham Resources’ Board of Directors pursuant to a distribution waterfall set forth in the Brigham Resources LLC Agreement. The Series A-Z Units have a liquidation preference equal to the total invested capital, plus a 7% cumulative return, compounded daily.

In connection with the IPO, all of the outstanding membership interests in Brigham Resources were converted into a single class of common units in Brigham Resources and Brigham Resources became a wholly-owned subsidiary.

Restricted Units

Brigham Resources has authorized 120,000 restricted incentive units (“Restricted Units”) for issuance to management, independent directors, employees and consultants. The Restricted Units vest 20% upon issuance and 20% on each of the four anniversary dates following the date of issuance. The Restricted Units participate in certain distribution events following the sale, merger or other transaction involving Brigham Resources or its assets only after certain return thresholds are met by the holders of Series A Units, Series A-Z Units and Series A-M Units. There are eight classes of Restricted Units, including Series M-1, Series M-2, Series M-3 and Series M-4 (collectively, “Series M Units”) and Series Z-1, Series Z-2, Series Z-3 and Series Z-4 (collectively, “Series Z Units”). Brigham Resources is authorized to issue 10,000 units of each class of Series M Units and Series Z Units. A summary of the Restricted Units issued and outstanding is as follows:



	Series M Units
	M-1		M-2		M-3		M-4		Total
Beginning balance	7,520		7,520		7,520		7,520		30,080
2017 issuances	—		—		—		—		—
2017 forfeitures	—		—		—		—		—

Outstanding at December 31, 2017	7,520		7,520		7,520		7,520		30,080
2018 issuances	1,030		1,030		1,030		1,030		4,120
2018 forfeitures	—		—		—		—		—
Outstanding at December 31, 2018	8,550		8,550		8,550		8,550		34,200

	Series Z Units
	Z-1		Z-2		Z-3		Z-4		Total
Beginning balance	4,328		4,328		4,328		4,328		17,312
2017 issuances	—		—		—		—		—
2017 forfeitures	(15	)	(15	)	(15	)	(15	)	(60	)

Outstanding at December 31, 2017	4,313		4,313		4,313		4,313		17,252
2018 issuances	485		485		485		485		1,940
2018 forfeitures	(105	)	(105	)	(105	)	(105	)	(420	)
Outstanding at December 31, 2018	4,693		4,693		4,693		4,693		18,772

As of December 31, 2018, 7,726 of each class of Series M Units (30,904 total) and 3,808 of each class of Series Z Units (15,232 total) had vested. As of December 31, 2017, 7,520 of each class of Series M Units (30,080 total) and 2,596 of each class of Series Z Units (10,386 total) had vested. The Series M-1 Units were issued with a threshold value of $0.00; the Series M-2 Units were issued with a threshold value of $2.25; the Series M-3 Units were issued with a threshold value of $6.50; and the Series M-4 Units were issued with a threshold value of $14.00. The Series Z-1 Units were issued with a threshold value of $0.00; the Series Z-2 Units were issued with a threshold value of $1.91; the Series Z-3 Units were issued with a threshold value of $5.53; and the Series Z-4 Units were issued with a threshold value of $11.90.

In connection with the 2018 corporate reorganizations and the corporate reorganization consummated in connection with Brigham Minerals’ IPO, these Restricted Units were converted into Incentive Units. See "Note 10.—Share-Based Compensation—LLC Incentive Units" for further discussion of this transaction.