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Share-Based Compensation
 12 Months Ended
Dec. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
In connection with the Falcon Merger, the Company adopted the Sitio Royalties Corp. Long Term Incentive Plan (the “Plan”). An aggregate of 8,384,083 shares of Class A Common Stock are available for issuance under the Plan. The Plan permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), stock awards, dividend equivalents, other stock-based awards, cash awards, and substitute awards. Shares that are canceled, forfeited, exchanged, settled in cash or otherwise terminated will be available for delivery pursuant to other awards. Dividend equivalent rights (“DERs”) are also available for grant under the Plan, either alone or in tandem with other specific awards, which will entitle the recipient to receive an amount equal to dividends paid on a share of Class A Common Stock. Dividends paid in connection with the DERs are accounted for as a reduction in additional paid-in capital for those awards that are expected to vest. Awards that are forfeited could cause a reclassification of any previously recognized DERs payments from a reduction in additional paid-in capital to additional compensation cost. The Plan is administered by the Compensation Committee of the Board (the “Compensation Committee”). As of December 31, 2024, a total of 5,756,990 shares of Class A Common Stock remain available for future grant under the Plan.
Share-based compensation expense is included in general and administrative expense in the accompanying consolidated statements of operations. The following table summarizes the share-based compensation expense recorded for each type of award for the years ended December 31, 2024, 2023, and 2022, in thousands.
 Year Ended December 31,
 202420232022
 
RSUs$5,980 $6,606 $4,463 
PSUs12,810 7,646 2,223 
DSUs2,438 2,014 1,277 
Sitio OpCo Restricted Stock Awards2,258 2,252 1,284 
RSUs Converted in the Brigham Merger246 246 2 
PSUs Converted in the Brigham Merger104 103 1 
Total$23,836 $18,867 $9,250 
For the years ended December 31, 2024, 2023, and 2022 the Company paid $1.2 million, $1.0 million and $579,000 related to DERs, respectively.
Restricted Stock Units
In accordance with the Plan, the Compensation Committee is authorized to issue RSUs to eligible executive officers and employees. The Company estimates the fair value of the RSUs as the closing price of the Company’s Class A Common Stock on the grant date of the award, which is expensed over the applicable service period. RSUs granted by the Company include DERs, which entitle the holder to receive payments as if the unvested awards were shares of Class A Common Stock of record as of the dividend record dates. Such amounts are paid simultaneously with the general dividend to our stockholders.
The Company has granted RSUs to certain executive officers and employees, which represent the right to receive shares of Class A Common Stock at the end of the service periods in an amount equal to the number of RSUs that vest. The RSUs issued to employees generally vest in one-third increments over a three-year period. RSUs are subject to forfeiture if the award recipient ceases providing services to the Company prior to the date the award vests.
The following table summarizes activity related to unvested RSUs for the year ended December 31, 2024.
 Restricted Stock Units
 
Number of
Shares
Grant Date
Fair Value
Unvested at January 1, 2024468,112$25.65 
Granted423,156 20.91 
Forfeited(37,321)24.65 
Vested(200,405)29.58 
Unvested at December 31, 2024653,542$22.34 
As of December 31, 2024, there was approximately $11.4 million of unamortized equity-based compensation expense related to unvested RSUs. That expense is expected to be recognized over a weighted average period of approximately 2.2 years.
Deferred Share Units
In accordance with the Plan, the Compensation Committee is authorized to issue deferred share units (“DSUs”) to Eligible Persons (as defined in the Plan). DSUs represent the right to receive shares of Class A Common Stock upon a deferred settlement date in an amount equal to the number of DSUs that have previously vested. The Company estimates the fair value of the DSUs as the closing price of the Company’s Class A Common Stock on the grant date of the award, which is expensed over the applicable service period. DSUs generally vest in equal quarterly installments over the one-year period beginning on the grant date. Vested DSUs must be held for the duration of service and are settled in shares of Class A Common Stock when a recipient’s service relationship is terminated for any reason.
The following table summarizes activity related to unvested DSUs for the year ended December 31, 2024.
Deferred Share Units
Number of
Shares
Grant Date
Fair Value
Unvested at January 1, 202493,680$25.38 
Granted101,44024.12 
Forfeited—— 
Vested(144,400)20.70 
Unvested at December 31, 202450,720$24.12 
As of December 31, 2024, there was approximately $0.9 million of unamortized equity-based compensation expense related to unvested DSUs. That expense is expected to be recognized over a weighted average period of 0.4 years.
Performance Stock Units
In accordance with the Plan, the Compensation Committee is authorized to issue performance stock units (“PSUs”) to eligible executives and employees. The PSUs are eligible to be earned based on achievement of certain pre-established goals for annualized absolute Total Shareholder Return (“TSR”) over a three-year performance period.
The performance targets associated with the PSU awards are outlined below:
 
Annualized
Absolute TSR
Goal
Percentage of
Target
PSUs Earned
Base of Range
Less than 0%
0 %
Threshold0 %50 %
Target10 %100 %
Maximum20 %200 %
For purposes of determining our annualized absolute TSR over the performance period, the beginning stock price is based on our 20-day volume weighted average stock price immediately preceding the first day of the performance period. The ending price is generally based on the 20-day volume weighted average stock price ending on the last day of the performance period. PSU payouts for results that fall in between a stated threshold will be interpolated linearly.
The grant date fair values of the PSUs were determined using Monte Carlo simulations, which use a probabilistic approach for estimating the fair value of the awards. The expected volatility was derived from the historical volatility of Falcon and Sitio. The risk-free interest rate was determined using the yield for zero-coupon U.S. Treasury bills that is commensurate with the performance measurement periods. The PSU award agreements provide that TSR will be calculated assuming dividends distributed will be reinvested over the performance period. As such, we have applied a dividend yield of 0.00%, which is mathematically equivalent to reinvesting dividends.
The following table summarizes the assumptions used to determine the fair values of the PSUs:
Grant YearAverage Expected VolatilityRisk-Free Interest RateExpected Dividend Yield
2022
67.23% - 67.30%
2.89% - 4.18%
0.00%
2023
43.57% - 52.71%
3.97% - 4.60%
0.00%
2024
38.38% - 41.09%
4.23% - 4.48%
0.00%
The following table summarizes activity related to unvested PSUs for the year ended December 31, 2024.
 Performance Stock Units
 
Number of
Shares
Grant Date
Fair Value
Unvested at January 1, 2024830,188$30.82 
Granted586,12324.57 
Forfeited(10,848)32.86 
Vested—— 
Unvested at December 31, 20241,405,463$28.20 
As of December 31, 2024, there was approximately $17.0 million of unamortized equity-based compensation expense related to unvested PSUs. That expense is expected to be recognized over a weighted average period of 1.5 years.
Restricted Stock Units Converted in the Brigham Merger
In connection with the Brigham Merger, several legacy Brigham employees joined Sitio. Legacy Brigham RSUs held by such legacy Brigham employees were converted to Sitio RSUs at an exchange ratio of 1.133 Sitio RSUs for each Brigham RSU. These RSUs retain the original vesting schedules of the Brigham RSUs, which vest in one-third increments on the anniversaries of the original grant dates of the Brigham RSUs. The Company estimated the fair value of the RSUs as
the closing price of the Company’s Class A Common Stock on the grant date of the award, which is expensed over the applicable service period.
The following table summarizes activity related to unvested RSUs converted in the Brigham Merger for the year ended December 31, 2024.
 
Restricted Stock Units Converted in Brigham Merger
 
Number of
Shares
Grant Date
Fair Value
Unvested at January 1, 202411,040$30.15 
Granted—— 
Forfeited—— 
Vested(5,518)30.15 
Unvested at December 31, 20245,522$30.15 
As of December 31, 2024, there was approximately $53,000 of unamortized equity-based compensation expense related to unvested RSUs converted in the Brigham Merger. That expense is expected to be recognized over a weighted average period of approximately 0.2 years.
Performance Stock Units Converted in the Brigham Merger
Brigham PSUs held by legacy Brigham employees who joined Sitio were converted to Sitio PSUs at an exchange ratio of 1.133 Sitio PSUs for each Brigham PSU. The converted PSUs retain and carry over the remainder of the initial vesting periods. The performance targets associated with the Brigham PSUs were deemed to have been achieved at 200% as of the date of the Brigham Merger. Because all performance targets were achieved prior to conversion and the number of Class A Common Shares to be issued upon satisfaction of the service requirements is known, the Company estimated the fair value of the converted PSUs as the closing price of the Company’s Class A Common Stock on the grant date of the awards, which is expensed over the applicable service period.
The following table summarizes activity related to unvested PSUs converted in the Brigham Merger for the year ended December 31, 2024.
Performance Stock Units
Converted in Brigham Merger
Number of
Shares
Grant Date
Fair Value
Unvested at January 1, 20247,638$30.15 
Granted——
Forfeited— — 
Vested——
Unvested at December 31, 20247,638$30.15 
As of December 31, 2024, there was approximately $22,000 of unamortized equity-based compensation expense related to unvested PSUs. That expense is expected to be recognized over a weighted average period of 0.2 years.
Sitio OpCo Restricted Stock Awards
In connection with the Falcon Merger, legacy Desert Peak owners (the “Falcon Merger Sponsors”), desired to assign, transfer and convey their rights to receive a portion of their Falcon Merger Consideration to our executive officers as an incentive to continue to serve as executive officers following the Falcon Merger. The Falcon Merger Consideration consists of Sitio Royalties OpCo Partnership Units and an equal number of shares of Class C Common Stock. The conveyance of Falcon Merger Consideration, which consists of Class C Common Stock, is deemed to be a grant of restricted stock awards (each, an “RSA”) to our executive officers. Each Sitio OpCo RSA is expected to vest in equal installments on the first four anniversaries of June 6, 2022. The Company estimated the fair value of the RSAs as the closing price of the Company’s Class A Common Stock on the grant date of the award, which is expensed over the applicable service period.
The following table summarizes activity related to unvested Sitio OpCo RSAs for the year ended December 31, 2024.
Sitio OpCo
Restricted Stock Awards
Number of
Shares
Grant Date
Fair Value
Unvested at January 1, 2024232,145$29.12 
Granted—— 
Forfeited—— 
Vested(77,382)29.12 
Unvested at December 31, 2024154,763$29.12 
As of December 31, 2024, there was approximately $3.2 million of unamortized equity-based compensation expense related to the unvested Sitio OpCo RSAs. That expense is expected to be recognized over a weighted average period of approximately 1.4 years.