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Long-Term Incentive Compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Long-Term Incentive Compensation LONG-TERM INCENTIVE COMPENSATION
The Southwestern Energy Company 2013 Incentive Plan was adopted in February 2013, approved by stockholders in May 2013 and amended and restated per stockholders’ approval in May 2016 and further amended in May 2017 and May 2019 (the “2013 Plan”).  The 2013 Plan provides for the compensation of officers, key employees and eligible non-employee directors of the Company and its subsidiaries.
The 2013 Plan provides for grants of options, stock appreciation rights, and shares of restricted stock and restricted stock units to employees, officers and directors that, in the aggregate, do not exceed 88,700,000 shares.  The types of incentives that may be awarded are comprehensive and are intended to enable the Company’s Board of Directors to structure the most appropriate incentives and to address changes in income tax laws which may be enacted over the term of the 2013 Plan.
The Company’s current long-term incentive compensation plans consist of a combination of stock-based awards that derive their value directly or indirectly from the Company’s common stock price, and cash-based awards that are fixed in amount but are subject to meeting annual performance thresholds.
The Company recorded the following costs related to long-term incentive compensation for the years ended December 31, 2021, 2020 and 2019:
(in millions)202120202019
Long-term incentive compensation – expensed$30 $17 $17 
Long-term incentive compensation – capitalized18 7 10 
Stock-Based Compensation
The Company’s stock-based compensation is classified as either equity or liability awards in accordance with GAAP.  The fair value of an equity-classified award is determined at the grant date and is amortized to general and administrative expense and capitalized expense on a straight-line basis over the vesting period of the award.  The fair value of a liability-classified award is determined on a quarterly basis beginning at the grant date until final vesting.  Changes in the fair value of liability-classified awards are recorded to general and administrative expense over the vesting period of the award.  A portion of this general and administrative expense is capitalized into natural gas and oil properties, included in property and equipment.  Generally, stock options granted to employees and directors vest ratably over three years from the grant date and expire seven years from the date of grant.  The Company issues shares of restricted stock or restricted stock units to employees and directors which generally vest over four years.  Restricted stock, restricted stock units and stock options granted to participants under the 2013 Plan, as amended and restated, immediately vest upon death, disability or retirement (subject to a minimum of three years of service). The Company issues performance units which have historically vested over three years to employees. The performance units granted in 2019, 2020 and 2021 cliff-vest at the end of three years.
As further discussed in Note 3, in December 2018, the Company closed the Fayetteville Shale sale.  As part of this transaction, most employees associated with those assets became employees of the buyer although the employment of some was terminated.  In February of 2021 and 2020, the Company notified employees of workforce reduction plans as a result of strategic realignments of the Company’s organizational structure. Employees affected by these events were offered a severance package, which included a one-time payment depending on length of service and, if applicable, the current value of unvested long-term incentive awards that were forfeited. Stock-based compensation costs recognized prior to the cancellation as either general and administrative expense or capitalized expense were reversed and the severance payments were subsequently recognized as restructuring charges for the years ended December 31, 2021, 2020 and 2019 on the consolidated statements of operations.
Equity-Classified Awards
Equity-Classified Stock Options
The Company recorded the following compensation costs related to equity-classified stock options for the years ended December 31, 2021, 2020 and 2019:
(in millions)202120202019
Stock options – general and administrative expense$— $— $1 
Stock options – capitalized expense$— $— $— 
The Company recorded less than $1 million deferred tax assets related to stock options for the years ended December 31, 2021 and 2019, compared to no deferred tax assets for the year ended December 31, 2020.  Additionally, the Company had no unrecognized compensation cost related to unvested stock options at December 31, 2021.
The fair value of stock options is estimated on the date of the grant using a Black-Scholes valuation model that uses the weighted average assumptions noted in the following table.  Expected volatility is based on historical volatility of the Company’s common stock and other factors.  The Company uses historical data on the exercise of stock options, post-vesting forfeitures and other factors to estimate the expected term of the stock-based payments granted.  The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. There were no equity-classified stock options granted or exercised in 2021, 2020 or 2019.
The following tables summarize stock option activity for the years 2021, 2020 and 2019, and provide information for options outstanding at December 31 of each year:
202120202019
Number
of Shares		Weighted Average Exercise Price
Number
of Shares
Weighted Average Exercise Price
Number
of Shares
Weighted Average Exercise Price
(in thousands) (in thousands) (in thousands) 
Options outstanding at January 13,850 $13.39 4,635 $15.26 5,178 $17.06 
Granted— $— — $— — $— 
Exercised— $— — $— — $— 
Forfeited or expired(844)$29.10 (785)$24.46 (543)$32.38 
Options outstanding at December 313,006 $8.98 3,850 $13.39 4,635 $15.26 
Options OutstandingOptions Exercisable
Range of
Exercise Prices
Options Outstanding at December 31, 2021Weighted Average Exercise PriceWeighted Average Remaining Contractual LifeOptions Exercisable at December 31, 2021Weighted Average Exercise PriceWeighted Average Remaining Contractual Life
(in thousands) (years)(in thousands) (years)
$7.74-$29.42
3,006 $8.98 1.33,006 $8.98 1.3
Equity-Classified Restricted Stock
The Company recorded the following compensation costs related to equity-classified restricted stock grants for the years ended December 31, 2021, 2020 and 2019:
(in millions)202120202019
Restricted stock grants – general and administrative expense$2 $3 $6 
Restricted stock grants – capitalized expense$— $1 $4 
The Company also recorded deferred tax asset of $1 million related to restricted stock for the year ended December 31, 2021, compared to a deferred tax asset of $2 million and a reduction in the deferred tax asset of less than $1 million for the years ended December 31, 2020 and 2019, respectively.  As of December 31, 2021, there was $1 million of total unrecognized compensation cost related to unvested shares of restricted stock that is expected to be recognized over a weighted-average period of 1.6 years.
The following table summarizes the restricted stock activity for the years 2021, 2020 and 2019, and provides information for restricted stock outstanding at December 31 of each year:
202120202019
Number of
Shares		Weighted Average Fair Value
Number of
Shares
Weighted Average Fair Value
Number of
Shares
Weighted Average Fair Value
(in thousands) (in thousands) (in thousands) 
Unvested shares at January 1697 $5.97 1,480 $7.00 2,717 $7.91 
Granted438 $5.18 584 $2.86 493 $3.06 
Vested(893)$5.81 (1,098)$5.26 (1,516)$7.16 
Forfeited— $8.59 (269)
(1)
$7.79 (214)
(2)
$8.38 
Unvested shares at December 31242 $5.12 697 $5.97 1,480 $7.00 
(1)Includes 171,813 shares forfeited as a result of the reduction in workforce for the year ended December 31, 2020.
(2)Includes 65,196 shares forfeited as a result of the reduction in workforce for the year ended December 31, 2019.
The fair values of the grants were $2 million for each of 2021, 2020 and 2019.  The total fair value of shares vested were $5 million for 2021, $6 million for 2020 and $11 million for 2019.
Equity-Classified Restricted Stock Units
As a result of the Merger with Montage, certain Montage employees became employees of Southwestern and retained their original equity awards. The amount of compensation costs related to these equity-classified restricted stock units recorded by the Company was immaterial for the years ended December 31, 2021 and 2020. As of December 31, 2021, there was less than $1 million of total unrecognized compensation cost related to unvested equity-classified restricted stock units that is expected to be recognized over a weighted-average period of approximately 1.2 years.
The following table summarizes equity-classified restricted stock unit activity to be paid out in Company stock for the years ended December 31, 2021 and 2020.
20212020
Number
of Units		Weighted Average
Fair Value		Number
of Units		Weighted Average
Fair Value
(in thousands)(in thousands)
Unvested Units at January 1134 $3.05 — $— 
Granted— $— 186 $3.05 
Vested(92)$3.05 (42)$3.05 
Forfeited(5)$3.05 (10)$3.05 
Unvested Units at December 3137 $3.05 134 $3.05 
Equity-Classified Performance Units
The Company recorded compensation costs related to equity-classified performance units for the years ended December 31, 2020 and 2019.  There have been no equity-classified performance units awarded since 2018. The performance units awarded in 2017 included a market condition based on relative Total Shareholder Return (“TSR”).  The grant date fair value is calculated using the closing price of the Company’s common stock at the grant date and a Monte Carlo model to estimate the TSR market condition.  The estimated fair value is amortized to compensation expense on a straight-line basis over the vesting period of the award.  There were no costs recognized for the year ended December 31, 2021 associated with equity-classified performance units, and the amounts recognized in 2020 were immaterial.
(in millions)202120202019
Performance units – general and administrative expense$— $— $1 
Performance units – capitalized expense$— $— $— 
The Company recorded $2 million deferred tax assets related to equity-classified performance units for the year ended December 31, 2021. The Company recorded a deferred tax asset of less than $1 million and $1 million for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, there are no more equity-classified performance units outstanding.
The following table summarizes equity-classified performance unit activity to be paid out in Company stock for the years ended December 31, 2021, 2020 and 2019, and provides information for unvested units as of December 31, 2021, 2020 and 2019:
202120202019
Number of
Units (1)
Weighted
Average Fair Value
Number of
Units (1)
Weighted
Average Fair Value
Number of
Units (1)
Weighted
Average Fair Value
(in thousands)(in thousands)(in thousands)
Unvested units at January 1— $— 178 $10.47 598 $10.01 
Granted— $— — $— — $— 
Vested— $— (178)$10.47 (378)$9.59 
Forfeited— $— — 

$— (42)
(2)
$10.47 
Unvested shares at December 31— $— — $— 178 $10.47 
(1)These amounts reflect the number of performance units granted in thousands.  The actual payout of shares ranged from a minimum of zero shares to a maximum of two shares per unit contingent upon TSR.  The performance units had a three-year vesting term and the actual disbursement of shares, if any, was determined during the first quarter following the end of the three-year vesting period.
(2)Included 41,761 units related to the reduction in workforce for the year ended December 31, 2019.
Liability-Classified Awards
Liability-Classified Restricted Stock Units
In the first quarter of each year beginning with 2018, the Company granted restricted stock units that vest over a period of four years and are payable in either cash or shares at the option of the Compensation Committee of the Company’s Board of Directors.  The awards granted in 2021 vest over a period of three years. The Company has accounted for these as liability-classified awards, and accordingly changes in the market value of the instruments will be recorded to general and administrative expense and capitalized expense over the vesting period of the award.
The Company recorded the following compensation costs related to liability-classified restricted stock unit grants for the years ended December 31, 2021, 2020 and 2019:
(in millions)202120202019
Restricted stock units – general and administrative expense$12 $5 $7 
Restricted stock units – capitalized expense$8 $2 $5 
The Company also recorded deferred tax assets of $1 million for the year ended December 31, 2021, compared to $1 million and less than $1 million related to liability-classified restricted stock units for the years ended 2020 and 2019, respectively.  As of December 31, 2021, there was $19 million of total unrecognized compensation cost related to liability-classified restricted stock units that is expected to be recognized over a weighted-average period of 1.7 years.  The amount of unrecognized compensation cost for liability-classified awards will fluctuate over time as they are marked to market.
The following table summarizes restricted stock unit activity to be paid out in cash or Company stock for the years ended December 31, 2021, 2020 and 2019 and provides information for unvested units as of December 31, 2021, 2020 and 2019:
202120202019
Number
of Units		Weighted Average Fair ValueNumber
of Units		Weighted Average Fair ValueNumber
of Units		Weighted Average Fair Value
(in thousands) (in thousands)(in thousands)
Unvested units at January 111,613 $2.67 12,992 $2.42 8,202 $3.41 
Granted1,486 $4.23 6,172 $1.41 8,659 $4.34 
Vested(4,522)$3.40 (3,960)$1.43 (2,624)$4.09 
Forfeited(640)
(1)
$4.56 (3,591)
(2)
$2.67 (1,245)
(3)
$3.48 
Unvested units at December 317,937 $4.08 11,613 $2.67 12,992 $2.42 
(1)Includes 360,253 units related to the reduction in workforce for the year ended December 31, 2021.
(2)Includes 2,010,196 units related to the reduction in workforce for the year ended December 31, 2020.
(3)Includes 400,056 units related to the reduction in workforce for the year ended December 31, 2019.
Liability-Classified Performance Units
In each of the last four years, the Company granted performance units that vest at the end of, or over, a three-year period and are payable in either cash or shares at the option of the Compensation Committee of the Company’s Board of Directors.  The Company has accounted for these as liability-classified awards, and accordingly changes in the fair market value of the instruments will be recorded to general and administrative expense and capitalized expense over the vesting period of the awards.  The performance unit awards granted in 2018 include a performance condition based on cash flow per debt-adjusted share and two market conditions, one based on absolute TSR and the other on relative TSR as compared to a group of the Company’s peers.  The performance unit awards granted in 2019 include a performance condition based on return on average capital employed and two market conditions, one based on absolute TSR and the other on relative TSR. The performance unit awards granted in 2020 include a performance condition based on return on average capital employed and a market condition based on relative TSR. In 2021, two types of performance unit awards were granted. One type of award includes a performance condition based on return on capital employed and a performance condition based on a reinvestment rate, and the second type of award includes one market condition based on relative TSR. The fair values of all market conditions discussed above are calculated by Monte Carlo models on a quarterly basis.
The Company recorded the following compensation costs related to liability-classified performance unit grants for the years ended December 31, 2021, 2020 and 2019:
(in millions)202120202019
Liability-classified performance units – general and administrative expense$12 $7 $2 
Liability-classified performance units – capitalized expense$6 $2 $1 
The Company also recorded deferred tax assets of $4 million related to liability-classified performance units for the year ended December 31, 2021, compared to a deferred tax asset of $2 million and a reduction of deferred tax asset of less than $1 million for the years ended 2020 and 2019, respectively.  As of December 31, 2021, there was $14 million of total unrecognized compensation cost related to liability-classified performance units.  This cost is expected to be recognized over a weighted-average period of 1.6 years.  The amount of unrecognized compensation cost for liability-classified awards will fluctuate over time as they are marked to market. The final value of the performance unit awards is contingent upon the Company’s actual performance against the Performance Measures.
The following table summarizes liability-classified performance unit activity to be paid out in cash or stock for the years ended December 31, 2021, 2020 and 2019 and provides information for unvested units as of December 31, 2021, 2020 and 2019:
202120202019
Number
of Units		Weighted Average
Fair Value		Number
of Units		Weighted Average
Fair Value		Number
of Units		Weighted Average
Fair Value
(in thousands) (in thousands)(in thousands)
Unvested units at January 18,699 $2.57 5,142 $2.42 2,803 $3.41 
Granted3,580 $4.14 6,172 $1.41 2,757 $4.34 
Vested(2,020)$4.05 — $— (43)$2.42 
Forfeited(744)$3.40 (2,615)
(1)
$3.05 (375)
(2)
$3.12 
Unvested units at December 319,515 $2.88 8,699 $2.57 5,142 $2.42 
(1)Includes 518,450 units related to the reduction in workforce for the year ended December 31, 2020.
(2)Includes 375,086 units related to the reduction in workforce for the year ended December 31, 2019.
Cash-Based Compensation
Performance Cash Awards
In 2021 and 2020, the Company granted performance cash awards that vest over a four-year period and are payable in cash on an annual basis. The value of each unit of the award equal one dollar. The Company recognizes the cost of these awards as general and administrative expense, operating expense and capitalized expense over the vesting period of the awards. The performance cash awards granted in 2021 and 2020 include a performance condition determined annually by the Company. For both years, the performance measure is a targeted discretionary cash flow amount. If the Company, in its sole discretion, determines that the threshold was not met, the amount for that vesting period will not vest and will be cancelled.
The Company recorded the following compensation costs related to performance cash awards for the years ended December 31, 2021 and 2020:
(in millions)20212020
Performance cash awards – general and administrative expense$4 $2 
Performance cash awards – capitalized expense$4 $2 
The Company also recorded deferred tax assets of $1 million related to performance cash awards for each of the years ended December 31, 2021 and 2020. As of December 31, 2021 there was $21 million of total unrecognized compensation cost related to performance cash awards. This cost is expected to be recognized over a weighted average 2.7 years. The final value of the performance cash awards is contingent upon the Company's actual performance against these performance measures.
The following table summarizes performance cash award activity to be paid out in cash for the years ended December 31, 2021 and 2020 and provides information for unvested units as of December 31, 2021 and 2020:
20212020
Number
of Units		Weighted Average
Fair Value		Number
of Units		Weighted Average
Fair Value
(in thousands)(in thousands)
Unvested units at January 118,353 $1.00 — $— 
Granted18,546 $1.00 20,044 $1.00 
Vested(4,955)$1.00 (100)$1.00 
Forfeited(3,672)
(1)
$1.00 (1,591)
(2)
$1.00 
Unvested Units at December 3128,272 $1.00 18,353 $1.00 
(1) Includes 1,241,000 units related to the reduction in workforce for the year ended December 31, 2021.
(2) Includes 945,500 units related to the reduction in workforce for the year ended December 31, 2020.