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LONG-TERM INCENTIVE COMPENSATION
 3 Months Ended
Mar. 31, 2024
Share-Based Payment Arrangement, Noncash Expense [Abstract]  
LONG-TERM INCENTIVE COMPENSATION LONG-TERM INCENTIVE COMPENSATION
The Company’s 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 subject to meeting annual performance thresholds.
Stock-Based Compensation
The Company’s stock-based compensation is classified as either equity awards 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 on a straight-line basis 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. 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 and capitalized expense over the vesting period of the award. 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. However, the Company has not granted stock options since 2017. The Company issues shares of restricted stock and restricted stock units to employees and directors which generally vest over three years.
Restricted stock, restricted stock units and stock options granted under the Southwestern Energy Company 2022 Incentive Plan (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 or there is no 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 unit awards to employees which historically have vested at or over three years. The performance units granted in 2021, 2022, and 2023 cliff-vest at the end of three years. There were no performance unit awards granted as of March 31, 2024.
The Company recognized the following amounts in total related to long-term incentive compensation costs for the three months ended March 31, 2024 and 2023:
For the three months ended March 31,
(in millions)20242023
Long-term incentive compensation – expensed$11 $4 
Long-term incentive compensation – capitalized$6 $3 
Equity-Classified Awards
The Company recognized the following amounts in employee equity-classified stock-based compensation costs for the three months ended March 31, 2024 and 2023:
For the three months ended March 31,
(in millions)20242023
Equity-classified awards – expensed$7 $1 
Equity-classified awards – capitalized$3 $1 
Equity-Classified Stock Options
The following table summarizes equity-classified stock option activity for the three months ended March 31, 2024 and provides information for options outstanding and options exercisable as of March 31, 2024:
Number
of Options		Weighted Average
Exercise Price
(in thousands) 
Outstanding at December 31, 2023820 $8.59 
Granted— $— 
Exercised— $— 
Forfeited or expired(820)$8.59 
Outstanding at March 31, 2024— $— 
Exercisable at March 31, 2024— $— 
Equity-Classified Restricted Stock
As of March 31, 2024, there was less than $1 million of total unrecognized compensation cost related to the Company’s unvested equity-classified restricted stock grants. This cost is expected to be recognized over a weighted-average period of 0.1 year. The following table summarizes equity-classified restricted stock activity for the three months ended March 31, 2024 and provides information for unvested shares as of March 31, 2024:
Number
of Shares		Weighted Average
Fair Value
(in thousands) 
Unvested shares at December 31, 2023169 $5.09 
Granted— $— 
Vested(54)$4.90 
Forfeited— $— 
Unvested shares at March 31, 2024115 $5.17 
Equity-Classified Restricted Stock Units
As of March 31, 2024, there was $20 million of total unrecognized compensation cost related to the Company’s unvested equity-classified restricted stock units. This cost is expected to be recognized over a weighted-average period of 2.4 years. The following table summarizes equity-classified restricted stock units for the three months ended March 31, 2024 and provides information for unvested units as of March 31, 2024.
Number
of Shares		Weighted Average
Fair Value
(in thousands)
Unvested units at December 31, 20232,706 $4.74 
Granted3,182 $7.10 
Vested(1,084)$4.69 
Forfeited— $— 
Unvested units at March 31, 20244,804 $6.32 
Equity-Classified Performance Units
In each year from 2018 to 2023, 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 2020 through 2021 were accounted for as liability-classified awards as further described below. In 2022 and 2023, two types of performance units were granted. The first type of awards were liability-classified given the awards are payable only in cash as prescribed under the compensation agreements. The second type of awards granted during 2022 and 2023 have been accounted for as equity-classified awards given the intention to settle these awards in stock. The equity-classified awards were recognized at their fair value as of the grant date and are amortized throughout the vesting period. The 2022 and 2023 performance unit awards include a market condition based on relative TSR (as defined below). No performance units were granted as of March 31, 2024. The fair values of the market conditions were calculated by Monte Carlo models as of the grant date. As of March 31, 2024, there was $5 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 period of 1.6 years.
Number
of Shares		Weighted Average
Fair Value
(in thousands)
Unvested units at December 31, 20231,757 $6.08 
Granted— $— 
Vested— $— 
Forfeited— $— 
Unvested units at March 31, 20241,757 $6.08 
Liability-Classified Awards
The Company recognized the following amounts in employee liability-classified stock-based compensation costs for the three months ended March 31, 2024:
For the three months ended March 31,
(in millions)20242023
Liability-classified stock-based compensation cost – expensed$1 $1 
Liability-classified stock-based compensation cost – capitalized$— $— 
Liability-Classified Restricted Stock Units
In each year from 2018 to 2020, 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. 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. As of March 31, 2024, the liability-classified restricted stock units fully vested.
Number
of Units		Weighted Average
Fair Value
(in thousands) 
Unvested units at December 31, 20231,741 $4.67 
Granted— $— 
Vested(1,741)$6.93 
Forfeited— $— 
Unvested units at March 31, 2024— $— 
Liability-Classified Performance Units
In each year from 2018 to 2023, 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 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. Both award types have been accounted for as liability-classified awards. The Company granted two types of performance units in 2022 and 2023 that vest over a three-year period. For both 2022 and 2023, one type of award 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. No performance units were granted as of March 31, 2024. Changes in the fair market value of the instruments for liability-classified awards are recorded to general and administrative expense and capitalized expense over the vesting period of the awards. 
The performance units granted in 2020 include a performance condition based on return on average capital employed and a market condition based on relative total shareholder return (“TSR”). In 2021, of the two types of performance units granted, the first type of award includes a performance condition based on return on capital employed and a performance condition based on reinvestment rate, and the second type of award includes one market condition based on relative TSR. The liability-classified performance units granted in 2022 and 2023 include performance conditions based on return on capital employed and reinvestment rate. The fair values of all market conditions discussed above are calculated by Monte Carlo models on a quarterly basis. 
As of March 31, 2024, there was $3 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 1.8 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 these performance measures.
Number
of Units		Weighted Average
Fair Value
(in thousands) 
Unvested units at December 31, 202312,152 $0.94 
Granted— $— 
Vested
(3,365)$1.59 
Forfeited— $— 
Unvested units at March 31, 20248,787 $0.55 
Cash-Based Compensation
The Company recognized the following amounts in performance cash award compensation costs for the three months ended March 31, 2024 and 2023:
For the three months ended March 31,
(in millions)20242023
Performance cash awards – expensed$3 $2 
Performance cash awards – capitalized$3 $2 
Performance Cash Awards
From 2020 through 2022 the Company granted performance cash awards that vest over a four-year period and are payable in cash on an annual basis. In 2023 and 2024, the Company granted performance cash awards that vest over a three-year period and are payable in cash on an annual basis. The value of each unit of the award equals one dollar. The Company recognizes the cost of these awards as general and administrative expense and capitalized expense over the vesting period of the awards. The performance cash awards granted from 2020 through 2024 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. As of March 31, 2024, there was $54 million of total unrecognized compensation cost related to performance cash awards. This cost is expected to be recognized over a weighted-average period of 2.3 years. The final value of the performance cash awards is contingent upon the Company’s actual performance against these performance measures.
Number
of Units		Weighted Average Fair Value
(in thousands)
Unvested units at December 31, 202349,678 $1.00 
Granted28,202 $1.00 
Vested(20,232)$1.00 
Forfeited(364)$1.00 
Unvested units at March 31, 202457,284 $1.00