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Stockholders' Equity
 3 Months Ended
Mar. 31, 2025
Share-Based Payment Arrangement [Abstract]  
Shareholders' Equity
Note 8 - Stockholders' Equity
Equity-Based Compensation
2024 Equity and Incentive Compensation Plan
The Company's 2024 Equity and Incentive Compensation Plan (the “2024 Plan”) became effective immediately prior to the consummation of the IPO. The 2024 Plan permits the grant of awards to the non-employee directors, officers, and other employees of BKV Corp and its controlled subsidiaries in order to provide incentives and rewards for service and/or performance. The Company may grant stock options, appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares, performance units, cash incentive awards, and certain other awards based on or related to shares of the Company's common stock. Under the 2024 Plan, the Company can issue up to 5,000,000 shares of its common stock, which are subject to adjustment to reflect any extraordinary cash dividend, stock dividend, split, or combination of the Company's common stock. The aggregate number of shares of the Company's common stock available for award under the 2024 Plan will be reduced by one share of the Company's common stock for every one share of its common stock subject to an award granted under the 2024 Plan. Each grant of an award under the 2024 Plan will be evidenced by an award agreement that includes terms and provisions, determined by the Company's Compensation Committee (or other committee of the board of directors designated by the board to administer the 2024 Plan), which outlines the number of shares of common stock, earning or vesting terms, and any other terms consistent with the 2024 Plan.
Any shares of common stock awarded under the 2024 Plan that have been canceled, forfeited, expired, settled for cash shares, or is unearned (in whole or part) will be added back to the aggregate number of shares of common stock available under the 2024 Plan, with the exception of the following: (i) shares of common stock withheld by the Company in payment of the exercise price of a stock option; (ii) shares of common stock tendered or otherwise used in payment of the exercise price of a stock option; (iii) shares of common stock withheld by the Company or tendered or otherwise used to satisfy a tax withholding obligation; (iv) shares of common stock subject to share-settled appreciation rights that are not actually issued in connection with the settlement of such appreciation right; and (v) shares of common stock reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of stock options. As of March 31, 2025, 2,873,158 shares were available for future grants under the 2024 Plan.
Performance-Based Restricted Stock Units
During the three months ended March 31, 2025, the Company granted 571,471 performance-based restricted stock units (“PRSUs”) under the 2024 Plan. These PRSUs cliff vest on December 31, 2026 and are subject to a performance period beginning January 1, 2024 and ending on December 31, 2026 (the “2024 PRSU Performance Period”). The table below summarizes the
PRSU activity for the three months ended March 31, 2025:
(in thousands, except per share amounts)Shares Weighted Average Grant Date Fair Value
Unvested PRSUs as of January 1, 2025703 $12.23 
Granted571 $18.58 
Vested(6)$12.23 
Forfeited(22)$12.14 
Unvested PRSUs as of March 31, 20251,246 $15.12 
These PRSUs are eligible to be earned based on three performance conditions: (i) annualized Total Shareholder Return (“aTSR”) of the Company's common stock during the 2024 PRSU Performance Period, weighted at 30%, (ii) relative Total Shareholder Return (“rTSR”) of the common stock of the Company's benchmark group during the 2024 PRSU Performance Period, weighted at 30%, and (iii) Return on Capital Employed (“ROCE”) based on the average annual performance over the 2024 PRSU Performance Period, weighted at 40%.
The aTSR and rTSR components of the awards are market-based conditions valued using the Monte-Carlo Simulation pricing model, which calculates multiple potential outcomes and establishes grant date fair value based on the most likely outcome. For purposes of the grant date fair value during the three months ended March 31, 2025, the aTSR and rTSR components assumed a risk free rate of 3.9%, a dividend yield of an immaterial amount, and volatility of 40% that used a combination of daily historical and implied volatility over a look back period commensurate with the remaining term of the assets. The weighted average grant date fair value of the aTSR and rTSR components of PRSU awards granted during the three months ended March 31, 2025 was $13.62 and $22.44, respectively.
ROCE is considered to be a non-market performance condition. Thus, the likelihood of achievement must be reassessed at every reporting period, and compensation expense is adjusted accordingly. As of March 31, 2025, management estimates ROCE performance for the post IPO grants to be lower than the target performance by approximately 18.1%, and for the grants that were issued during the three months ended March 31, 2025 to be greater than the target performance level by approximately 40.4%. The grant date fair value of the PRSUs presented in the activity for the three months ended March 31, 2025 takes into account the grant date fair value for ROCE, due to the non-market performance conditions being probable of achievement as of the respective modification date or grant date which establishes a grant date fair value. The weighted average grant date fair value of the ROCE component of PRSU awards granted during the three months ended March 31, 2025 was $19.40.
As of March 31, 2025, there was $17.8 million of unrecognized compensation expense related to the PRSU awards, which will be amortized over a weighted average period of 2.2 years.
Equity-based compensation related to PRSUs was $1.2 million for the three months ended March 31, 2025, which is included in general administrative expenses in the condensed consolidated statements of operations.
Time-Based Restricted Stock Units
During the three months ended March 31, 2025, the Company granted 380,887 time-based restricted stock units (“TRSUs”) under the 2024 Plan. Under the applicable provisions of the 2024 Plan, the TRSU incentive award vests annually over three anniversary dates in equal portions with the first tranche vesting on January 1, 2025, subject to continued employment with the Company and board of director approval. The table below summarizes the TRSU activity for the three months ended March 31,
2025:
(in thousands, except per share amounts)Shares Weighted Average Grant Date Fair Value
Unvested TRSUs as of January 1, 2025469 $18.05 
Granted381 $19.40 
Vested(156)$18.05 
Forfeited(14)$18.32 
Unvested TRSUs as of March 31, 2025680 $18.80 
As of March 31, 2025, there was $11.9 million of unrecognized compensation expense related to the 2024 TRSU awards, which will be amortized over a weighted average period of 2.4 years.
Equity-based compensation related to TRSUs was $0.9 million for the three months ended March 31, 2025, which is included in general administrative expenses in the condensed consolidated statements of operations.
Employee Stock Purchase Plan
The Company's Employee Stock Purchase Plan (the “ESPP”) became effective immediately prior to the consummation of the IPO. A total of 500,000 shares of the Company's common stock are available for awards under the ESPP and only permits eligible employees to purchase shares of the Company's common stock through payroll deductions, which cannot exceed 10% of the employee's eligible compensation. The ESPP will be implemented through a series of offerings of up to a period of 27 months, which will consist of one offering period. During the offering period, payroll contributions will accumulate without interest and, on the last trading day of the offering period, accumulated payroll deductions will be used to purchase shares of the Company's common stock. For the three months ended March 31, 2025, the Company did not recognize any equity-based compensation expense related to the ESPP.
2021 Equity and Incentive Compensation Plan
On January 1, 2021, the BKV Corporation Long-Term Incentive Plan (the “2021 Plan”) was established. Upon consummation of the IPO, 7,724,499 RSUs were considered to have been granted under ASC 718 - Compensation-Stock Compensation (“ASC 718”), when taking into consideration performance RSUs at the maximum performance level and TRSUs anticipated to be legally granted in the three years following inception. As of December 31, 2024, the awards considered granted under ASC 718 since inception equaled the number of RSUs legally granted. Prior to the Company's IPO, RSUs under the 2021 Plan were recognized in mezzanine equity on the condensed consolidated statements of stockholders' equity and mezzanine equity and were valued using unobservable inputs. See Note 4 - Fair Value Measurements for further detail.
Performance-Based Restricted Stock Units
PRSUs cliff vest and were subject to a vesting or performance period beginning January 1, 2021 and ending on December 31, 2023 (the “Performance Period”). As of December 31, 2023, or the Performance Period, the Company achieved its goals as follows: TSR met its threshold at 136%, ROCE met its threshold at 131%, and IPO readiness met its threshold at 200%. In February 2024, the Plan’s committee approved the Company’s goals and the PRSUs outstanding as of December 31, 2023 vested with some being forfeited prior to the Plan’s approval.
The following table summarizes the PRSU activity under the 2021 Plan for the three months ended March 31, 2024:
(in thousands, except per share amounts)Shares Weighted Average Grant Date Fair Value
Unvested PRSUs as of January 1, 20243,967 $19.02 
Vested(3,963)$19.02 
Forfeited(4)$19.02 
Unvested PRSUs as of March 31, 2024— $— 
Time-Based Restricted Stock Units
The following table summarizes the TRSU activity under the 2021 Plan for the three months ended March 31, 2024:
(in thousands, except per share amounts)Shares Weighted Average Grant Date Fair Value
Unvested TRSUs as of December 31, 2023727 $22.37 
Vested(258)$22.12 
Forfeited(12)$12.12 
Unvested TRSUs as of March 31, 2024457 $22.37 
For the three months ended March 31, 2024, equity-based compensation expense related to the TRSUs under the 2021 Plan was $1.1 million, which is included in general and administrative expenses in the condensed consolidated statements of operations. Upon consummation of the IPO, the remaining TRSUs from the 2021 Plan vested.