Refer to Note 10 of the Notes to the Consolidated Financial Statements in the Form 10-K for further description of the various types of stock-based compensation awards, their valuations and their award terms. Stock-based compensation represents amortization of restricted stock and performance units. The following details the allocation of stock-based compensation to functional expense categories (in thousands):


	Three Months Ended March 31,
	2025		2024
Direct operating expense	$	537	$	497
Brokered natural gas and marketing expense		840		708
Exploration expense		347		324
General and administrative expense		10,111		9,978
Total stock-based compensation expense	$	11,835	$	11,507

The mark-to-market adjustment of the liability related to the restricted stock Liability Awards held in our deferred compensation plan is directly tied to the change in our stock price and not directly related to the functional expenses and, therefore, is not allocated to the functional categories above.

Time-based - Equity Awards. These awards ("Equity Awards") are expensed ratably over the service period associated with the awards based on fair value. Fair value is based on prevailing market price on the date of grant and is expensed over a service period up to three years. We recorded compensation expense for these outstanding Equity Awards of $10.1 million in first three months 2025 compared to $9.7 million in the same period of 2024.

Time-based - Liability Awards. These awards ("Liability Awards") are recognized ratably over the service period associated with the awards based on the grant date fair value of the award but marked-to-market every period due to the option of cash conversion upon distribution. These awards are contributed into the Deferred Compensation Plan (discussed below). We recorded compensation expense for these restricted stock Liability Awards of $191,000 in first three months 2025 compared to $460,000 in the same period of 2024. Beginning in 2023, time-based equity awards were granted in lieu of liability-based equity awards for certain employees.

Performance-based TSR Awards ("TSRs" or "TSR Awards"). The fair value of the TSR Awards is estimated on the date of grant using a Monte Carlo simulation model which utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. Expected volatilities utilized in the model were estimated using a combination of a historical period consistent with the remaining performance period of three years and option-implied volatilities. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the life of the grant. We recorded compensation expense of $1.3 million in first three months 2025 compared to $808,000 in the same period of 2024. Fair value is amortized over the performance period with no adjustment to the expense recorded for actual targets achieved. The following assumptions were used to estimate the fair value of the TSR Awards granted during first three months 2025 and 2024:


	Three Months Ended March 31,
	2025			2024
Risk-free interest rate		4.2	%		4.1	%
Expected annual volatility		46	%		56	%
Grant date fair value per unit	$	44.39		$	31.84

The following is a summary of the activity for our time-based and performance-based stock awards for the three months ended March 31, 2025:


	Time-Based Equity Awards					Time-Based Liability Awards					Performance-Based Stock Awards
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value		Number of Units (a)			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2024		1,275,962		$	28.37		18,492		$	28.98		664,859		$	27.45
Granted		992,157			40.45		4,098			39.33		220,266			44.39
Vested		(316,360	)		30.56		(10,645	)		27.09		(264,917	)		23.55
Forfeited		(17,875	)		29.21		—			—		—			—
Outstanding at March 31, 2025		1,933,884		$	34.20		11,945		$	34.21		620,208		$	35.13

(a)

Amounts granted reflect performance units initially granted. The actual payout will be between zero and 200% depending on achievement of either total stockholder return ranking compared to our peers over the performance period or on the achievement of internal performance targets.

The assets of our deferred compensation plan are held in a grantor trust, which we refer to as the Rabbi Trust, and are therefore available to satisfy the claims of our general creditors in the event of bankruptcy or insolvency. Our common stock held in the Rabbi Trust is accounted for as Liability Awards and is adjusted to fair value each reporting period by a charge or credit to deferred compensation plan expense on our consolidated statements of income. We recorded a mark-to-market loss of $2.9 million in first quarter 2025 compared to a mark-to-market loss of $6.4 million in first quarter 2024. The Rabbi Trust held 621,000 shares (609,000 vested shares) of Range common stock at March 31, 2025 compared to 742,000 shares (724,000 vested shares) at December 31, 2024.

Trading securities. Our trading securities held in the deferred compensation plan are accounted for using the mark-to-market accounting method and are included in other assets in the accompanying consolidated balance sheets. We elected to adopt the fair value option to simplify our accounting for the investments in our deferred compensation plan. Interest, dividends, and mark-to-market gains or losses are included in the changes in our deferred compensation assets (reported in Other Assets) and liabilities on the accompanying consolidated balance sheets. For first quarter 2025, interest and dividends were $133,000 and the mark-to-market adjustment was a loss of $928,000 compared to interest and dividends of $195,000 and a mark-to-market gain of $4.2 million in first quarter 2024.