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Long-Term Incentive Compensation
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Long-Term Incentive Compensation LONG-TERM INCENTIVE COMPENSATION
The Southwestern Energy Company 2022 Incentive Plan (the “2022 Plan”) was approved by stockholders on May 19, 2022 and replaced the Southwestern Energy Company 2013 Incentive Plan, as amended (the “2013 Plan”). The 2013 Plan terminated on May 20, 2022, and no new awards will be granted under the 2013 Plan. The 2022 Plan provides for the compensation of officers, key employees and eligible non-employee directors of the Company and its subsidiaries.
The 2022 Plan provides for grants of options, stock appreciation rights, shares of restricted stock, restricted stock units, cash-based awards and other equity-based or equity-related awards to employees, officers and non-employee directors that, in the aggregate, do not exceed 40,000,000 shares, minus any shares awarded under the 2013 Plan after March 21, 2022 through May 20, 2022. 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 2022 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, 2022, 2021 and 2020:
(in millions)202220212020
Long-term incentive compensation – expensed$30 $30 $17 
Long-term incentive compensation – capitalized20 18 7 
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 10 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 three years. 
Restricted stock, restricted stock units and stock options granted to participants under the 2022 Plan immediately vest upon death, disability or retirement (subject to a minimum of three years of service). To the extent no provision is made in connection with a “change in control” (as defined in the 2022 Plan) for the assumption of awards previously granted under the 2022 Plan substitution of such awards for new awards, then (i) outstanding time-based awards will become fully vested, and (ii) each outstanding performance-based award will vest with respect to the number of shares of common stock underlying such award or the amount of cash underlying the award eligible to vest based on performance during the performance period that includes the date of the change in control, prorated for the number of days which have elapsed during the performance period prior to the change in control. To the extent an award is assumed or substituted in connection with the change in control, if a participant is terminated by the Company without “cause” or the participant resigns for “good reason” (each as defined in the 2022 Plan) within 12 months following a change in control, then (i) each time-based award will become fully vested, and (ii) each outstanding performance-based award will vest based on performance during the performance period that includes the date of the change in control, prorated for the number of days which have elapsed during the performance period prior to such termination.
The Company issues performance units which have historically vested over three years to employees. The performance units granted in 2020, 2021 and 2022 cliff-vest at the end of three years.
As further discussed in Note 3, 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, and 2020 on the consolidated statements of operations.
Equity-Classified Awards
The Company recognized the following amounts in employee equity-classified stock-based compensation costs for the years ended December 31, 2022, 2021 and 2020:
(in millions)202220212020
Equity-classified awards – expensed$4 $2 $3 
Equity-classified awards – capitalized$3 $— $1 
Equity-Classified Stock Options
The Company recorded no compensation costs related to equity-classified stock options for the years ended December 31, 2022, 2021 and 2020.
The Company recorded a $1 million deferred tax liability related to stock options for the year ended December 31, 2022 and less than $1 million in deferred tax assets in 2021, and no deferred tax assets or liabilities for the year ended December 31, 2020. Additionally, the Company had no unrecognized compensation cost related to unvested stock options at December 31, 2022.
The following tables summarize stock option activity for the years 2022, 2021 and 2020, and provide information for options outstanding at December 31 of each year:
202220212020
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 13,006 $8.98 3,850 $13.39 4,635 $15.26 
Granted— $— — $— — $— 
Exercised(893)$7.80 — $— — $— 
Forfeited or expired(1,116)$10.26 (844)$29.10 (785)$24.46 
Options outstanding at December 31997 $8.59 3,006 $8.98 3,850 $13.39 
Options OutstandingOptions Exercisable
Range of
Exercise Prices
Options Outstanding at December 31, 2022Weighted Average Exercise PriceWeighted Average Remaining Contractual LifeOptions Exercisable at December 31, 2022Weighted Average Exercise PriceWeighted Average Remaining Contractual Life
(in thousands) (years)(in thousands) (years)
$8.59 - $8.60
997 $8.59 1.0997 $8.59 1.0
Equity-Classified Restricted Stock
The Company recorded the following compensation costs related to equity-classified restricted stock grants for the years ended December 31, 2022, 2021 and 2020:
(in millions)202220212020
Restricted stock grants – general and administrative expense$1 $2 $3 
Restricted stock grants – capitalized expense$— $— $1 
The Company also recorded deferred tax asset of $1 million related to restricted stock for the years ended December 31, 2022 and 2021, compared to a deferred tax asset of $2 million for the year ended December 31, 2020. As of December 31, 2022, there was less than $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 0.8 years.
The following table summarizes the restricted stock activity for the years 2022, 2021 and 2020, and provides information for restricted stock outstanding at December 31 of each year:
202220212020
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 1242 $5.12 697 $5.97 1,480 $7.00 
Granted231 $6.92 438 $5.18 584 $2.86 
Vested(262)$6.15 (893)$5.81 (1,098)$5.26 
Forfeited— $— — $8.59 (269)
(1)
$7.79 
Unvested shares at December 31211 $5.81 242 $5.12 697 $5.97 
(1)Includes 171,813 shares forfeited as a result of the reduction in workforce for the year ended December 31, 2020.
The fair values of the grants were $2 million for each of 2022, 2021 and 2020. The total fair value of shares vested were $2 million for 2022, $5 million for 2021 and $6 million for 2020.
Equity-Classified Restricted Stock Units
The Company recorded the following compensation costs related to equity-classified restricted stock units for the years ended December 31, 2022, 2021 and 2020:
(in millions)202220212020
Restricted stock units – general and administrative expense$2 $— $— 
Restricted stock units – capitalized expense$2 $— $— 
As of December 31, 2022, there was $5 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 1.8 years.
The following table summarizes equity-classified restricted stock unit activity to be paid out in Company stock for the years ended December 31, 2022, 2021 and 2020.
202220212020
Number
of Units		Weighted Average
Fair Value		Number
of Units		Weighted Average
Fair Value		Number
of Shares		Weighted Average
Fair Value
(in thousands)(in thousands)(in thousands)
Unvested Units at January 137 $3.05 134 $3.05 — $— 
Granted1,699 $4.45 — $— 186 $3.05 
Vested(22)$3.05 (92)$3.05 (42)$3.05 
Forfeited(69)$4.37 (5)$3.05 (10)$3.05 
Unvested Units at December 311,645 $4.44 37 $3.05 134 $3.05 
Equity-Classified Performance Units
In each year beginning with 2018, 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. The performance units granted from 2019 through 2021 were accounted for as liability-classified awards as further described below. In 2022, two types of performance units were granted. The first type was liability-classified given the awards are payable in cash as prescribed under the compensation agreements. The second type of awards granted during 2022 have been accounted for as equity-classified awards given the intention to settle in stock and accordingly are recognized at their fair value as of the grant date and amortized throughout the vesting period. The 2022 performance units include a market condition based on relative TSR (as defined below). The fair values of the market conditions were calculated by Monte Carlo models as of the grant date. As of December 31, 2022, there was $4 million of total unrecognized compensation costs related to the Company’s unvested equity-classified performance units. This cost is expected to be recognized over a weighted-average of 2.1 years. 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)202220212020
Performance units – general and administrative expense$1 $— $— 
Performance units – capitalized expense$1 $— $— 
The Company recorded $3 million deferred tax assets related to equity-classified performance units for the year ended December 31, 2022. The Company recorded a deferred tax asset of $2 million and less than $1 million for the years ended December 31, 2021 and 2020, respectively.
The following table summarizes equity-classified performance unit activity to be paid out in Company stock for the years ended December 31, 2022, 2021 and 2020, and provides information for unvested units as of December 31, 2022, 2021 and 2020:
202220212020
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 
Granted850 $6.04 — $— — $— 
Vested— $— — $— (178)$10.47 
Forfeited(33)$6.04 — 

$— — $— 
Unvested shares at December 31817 $6.04 — $— — $— 
(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.
Liability-Classified Awards
The Company recognized the following amounts in employee liability-classified stock-based compensation costs for the years ended December 31, 2022, 2021 and 2020:
(in millions)202220212020
Liability-classified stock-based compensation – expensed$20 $24 $12 
Liability-classified stock-based compensation awards – capitalized$11 $14 $4 
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 liability-classified 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 restricted stock units granted in 2022 were classified as equity awards.
The Company recorded the following compensation costs related to liability-classified restricted stock unit grants for the years ended December 31, 2022, 2021 and 2020:
(in millions)202220212020
Restricted stock units – general and administrative expense$9 $12 $5 
Restricted stock units – capitalized expense$6 $8 $2 
The Company also recorded deferred tax liabilities of $1 million related to liability-classified restricted stock units for the year ended December 31, 2022, compared to deferred tax assets of $1 million for the years ended December 31, 2021 and 2020. As of December 31, 2022, there was $8 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 1.0 year. 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, 2022, 2021 and 2020 and provides information for unvested units as of December 31, 2022, 2021 and 2020:
202220212020
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 17,937 $4.08 11,613 $2.67 12,992 $2.42 
Granted— $— 1,486 $4.23 6,172 $1.41 
Vested(3,817)$4.48 (4,522)$3.40 (3,960)$1.43 
Forfeited(170)$6.83 (640)
(1)
$4.56 (3,591)
(2)
$2.67 
Unvested units at December 313,950 $4.81 7,937 $4.08 11,613 $2.67 
(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.
Liability-Classified Performance Units
In each year beginning with 2018, 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. The performance units granted in 2019 and 2020 vest over a three-year period and are payable in cash as prescribed under the compensation agreements and have been accounted for as liability-classified awards. The Company granted two types of performance units in 2021 that vest over a three-year period. One type is payable in cash as prescribed under the compensation agreements and the other type is payable in either cash or stock at the option of the Compensation Committee of the Company’s Board of Directors. Both award types have been accounted for as liability-classified awards. The Company granted two types of performance units in 2022 that vest over a three-year period. One type is payable in cash as prescribed under the compensation agreements and has been liability-classified while the other type is equity-classified as further discussed above. Changes in the fair market value of the instruments for liability-classified awards will be recorded to general and administrative expense and capitalized expense over the vesting period of the awards.
The performance units granted in 2019 include performance conditions based on return on average capital employed and two market conditions, one based on absolute TSR and the other on relative TSR. The performance units granted in 2020 include a performance condition based on return on average capital employed and a market condition based on relative TSR. In 2021, of the two types of performance units that were granted, the first 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 liability classified performance units granted in 2022 include performance conditions based on return of capital employed and reinvestment rate. 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, 2022, 2021 and 2020:
(in millions)202220212020
Liability-classified performance units – general and administrative expense$11 $12 $7 
Liability-classified performance units – capitalized expense$5 $6 $2 
The Company also recorded deferred tax assets of $4 million related to liability-classified performance units for the years ended December 31, 2022 and 2021, compared to a deferred tax asset of $2 million for the year ended December 31, 2020. As of December 31, 2022, there was $7 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 1.5 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, 2022, 2021 and 2020 and provides information for unvested units as of December 31, 2022, 2021 and 2020:
202220212020
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 19,515 $2.88 8,699 $2.57 5,142 $2.42 
Granted3,798 $1.00 3,580 $4.14 6,172 $1.41 
Vested(1,910)$6.45 (2,020)$4.05 — $— 
Forfeited(421)$6.70 (744)$3.40 (2,615)
(1)
$3.05 
Unvested units at December 3110,982 $2.25 9,515 $2.88 8,699 $2.57 
(1)Includes 518,450 units related to the reduction in workforce for the year ended December 31, 2020.
Cash-Based Compensation
Performance Cash Awards
In 2022, 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 2022, 2021 and 2020 include a performance condition determined annually by the Company. For all 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, 2022 and 2021:
(in millions)202220212020
Performance cash awards – general and administrative expense$6 $4 $2 
Performance cash awards – capitalized expense$6 $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, 2022, 2021 and 2020. As of December 31, 2022, there was $29 million of total unrecognized compensation cost related to performance cash awards. This cost is expected to be recognized over a weighted average 2.8 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, 2022 and 2021 and provides information for unvested units as of December 31, 2022 and 2021:
202220212020
Number
of Units		Weighted Average
Fair Value		Number
of Units		Weighted Average
Fair Value		Number
of Shares		Weighted Average
Fair Value
(in thousands)(in thousands)
Unvested units at January 128,272 $1.00 18,353 $1.00 — $— 
Granted24,416 $1.00 18,546 $1.00 20,044 $1.00 
Vested(8,786)$1.00 (4,955)$1.00 (100)$1.00 
Forfeited(3,908)$1.00 (3,672)
(1)
$1.00 (1,591)
(2)
$1.00 
Unvested Units at December 3139,994 $1.00 28,272 $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.