Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

For restricted stock awards, we had:


	2019		2018		2017
	(In millions)
Recognized stock compensation expense	$	12.8	$	17.8	$	13.3
Capitalized stock compensation cost for our oil and natural gas properties	2.4		2.1		1.8
Tax benefit on stock based compensation	3.1		4.4		5.0

The remaining unrecognized compensation cost related to unvested awards at December 31, 2019 is approximately $13.1 million of which $1.9 million is anticipated to be capitalized. The weighted average period of time over which this cost will be recognized is 0.7 of a year.

The Second Amended and Restated Unit Corporation Stock and Incentive Compensation Plan effective May 6, 2015 (the amended plan) allows us to grant stock-based and cash-based compensation to our employees (including employees of subsidiaries) and to non-employee directors. A total of 7,230,000 shares of the company's common stock is authorized for issuance to eligible participants under the amended plan with 2.0 million shares being the maximum number of shares that can be issued as “incentive stock options.” Awards under this plan may be granted in any one or a combination of the following:

•incentive stock options under Section 422 of the Internal Revenue Code;

•non-qualified stock options;

•performance shares;

•performance units;

•restricted stock;

•restricted stock units;

•stock appreciation rights;

•cash based awards; and

•other stock-based awards.

This plan also contains various limits as to the amount of awards that can be given to an employee in any fiscal year. All awards are generally subject to the minimum vesting periods, as determined by our Compensation Committee and included in the award agreement.

Expected volatilities are based on the historical volatility of our stock. We use historical data to estimate option exercise and termination rates within the model and aggregate groups that have similar historical exercise behavior for valuation purposes. To date, we have not paid dividends on our stock. The risk free interest rate is computed from the United States Treasury Strips rate using the term over which it is anticipated the grant will be exercised.

SARs

In 2017, all of the remaining SARs were forfeited. There were no SARs granted or vested during 2019, 2018, or 2017. The SARs expired after 10 years from the date of the grant, and there were no outstanding shares at December 31, 2019.

Restricted Stock

Activity pertaining to restricted stock awards granted under the amended plan is as follows:


Employees	Number of Time Vested Shares	Number of Performance Vested Shares	Total Number of Shares	Weighted Average Price
Nonvested at January 1, 2017	929,737	372,128	1,301,865	$	23.32
Granted	485,799	173,373	659,172	26.07
Vested	(455,570)	(62,119)	(517,689)	29.87
Forfeited	(44,408)	(34,953)	(79,361)	38.87
Nonvested at December 31, 2017	915,558	448,429	1,363,987	21.25
Granted	844,498	390,445	1,234,943	20.52
Vested	(470,171)	(209,643)	(679,814)	24.30
Forfeited	(21,002)	(21,106)	(42,108)	19.80
Nonvested at December 31, 2018	1,268,883	608,125	1,877,008	19.70
Granted	927,173	500,256	1,427,429	16.09
Vested	(570,107)	(233,835)	(803,942)	15.56
Forfeited	(98,301)	(33,172)	(131,473)	19.36
Nonvested at December 31, 2019	1,527,648	841,374	2,369,022	$	18.95


Non-Employee Directors	Number of Shares	Weighted Average Price
Nonvested at January 1, 2017	111,816	$	17.21
Granted	49,104	17.92
Vested	(43,206)	21.24
Forfeited	—	—
Nonvested at December 31, 2017	117,714	$	16.03
Granted	44,312	19.86
Vested	(54,981)	17.08
Forfeited	—	—
Nonvested at December 31, 2018	107,045	$	17.07
Granted	72,784	12.09
Vested	(61,141)	15.49
Forfeited	—	—
Nonvested at December 31, 2019	118,688	$	14.83

The time vested restricted stock awards granted are being recognized over a three year vesting period. Each year, there were two different performance vested restricted stock awards granted to certain executive officers. The first will cliff vest three years from the grant date based on the company's achievement of certain stock performance measures at the end of the term and will range from 0% to 200% of the restricted shares granted as performance shares. The second will vest, one-third each year, over a three year vesting period based on the company's achievement of cash flow to total assets (CFTA) performance measurement each year and will range from 0% to 200%. Based on a probability assessment of the selected performance criteria at December 31, 2019, the participants are estimated to receive 3% of the 2019, 45% of the 2018, and 0% of the 2017 performance based shares. The CFTA performance measurement at December 31, 2019 for the one-third vesting in 2019 was assessed to vest at 100%. The CFTA performance measurement for future years was assessed to vest at target or 100%.

The fair value of the restricted stock granted in 2019, 2018, and 2017 at the grant date was $22.6 million, $24.7 million, and $17.4 million, respectively. The aggregate intrinsic value of the 865,083 shares of restricted stock that vested in 2019 on their vesting date was $11.9 million. The aggregate intrinsic value of the 2,487,710 shares of restricted stock outstanding subject to vesting at December 31, 2019 was $1.7 million with a weighted average remaining life of 1.0 of a year.

Non-Employee Directors' Stock Option Plan

Under the Unit Corporation 2000 Non-Employee Directors’ Stock Option Plan, on the first business day following each annual meeting of shareholders, each person who was then a member of our Board of Directors and who was not then an employee of the company or any of its subsidiaries was granted an option to purchase 3,500 shares of common stock. The option price for each stock option was the fair market value of the common stock on the date the stock options were granted. The term of each option is 10 years and cannot be increased and no stock options were to be exercised during the first six months of its term except in case of death.

Activity pertaining to the Directors’ Plan is as follows:


	Number of Shares	Weighted Average Exercise Price
Outstanding at January 1, 2017	108,500	$	52.56
Granted	—	—
Exercised	—	—
Forfeited	(21,000)	57.63
Outstanding at December 31, 2017	87,500	51.34
Granted	—	—
Exercised	—	—
Forfeited	(21,000)	73.26
Outstanding at December 31, 2018	66,500	44.42
Granted	—	—
Exercised	—	—
Forfeited	(24,500)	37.31
Outstanding at December 31, 2019	42,000	$	48.56


	Outstanding and Exercisable Options at December 31, 2019
Weighted Average Exercise Price	Number of Shares	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$41.21	17,500	0.3 years	$	41.21
$53.81	24,500	1.3 years	$	53.81

There was no aggregate intrinsic value of the shares outstanding subject to options at December 31, 2019. The remaining weighted average remaining contractual term is 0.9 years.