Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

On the Effective Date, the company's equity-based awards that were outstanding immediately before the Effective Date were cancelled. The cancellation of the awards resulted in an acceleration of unrecorded stock compensation expense during the predecessor period. Under the Plan, the company issued Warrants to holders of those equity-based awards that were outstanding immediately before the Effective Date who did not opt out of releases under the Plan. For further information, see Note 2 – Emergence From Voluntary Reorganization Under Chapter 11.

Also on the Effective Date, the Board adopted the Unit Corporation Long Term Incentive Plan (LTIP) to incentivize employees, officers, directors and other service providers of the Company and its affiliates. The LTIP provides for the grant, from time to time, at the discretion of the Board or a committee thereof, of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards, performance awards, substitute awards or any combination of the foregoing. Subject to adjustment in the event of certain transactions or changes of capitalization in accordance with the LTIP, 903,226 shares of new common stock of the reorganized Company, par value $0.01 per share (New Common Stock) have been reserved for issuance pursuant to awards under the LTIP. New Common Stock subject to an award that expires or is canceled, forfeited, exchanged, settled in cash or otherwise terminated without delivery of shares and shares withheld to pay the exercise price of, or to satisfy the withholding obligations with respect to, an award will again be available for delivery pursuant to other awards under the LTIP. The LTIP will be administered by the Board or a committee thereof.

The following table summarizes the amount recorded for stock-based compensation, which consisted of restricted stock awards and stock options, for the time periods shown:

	Predecessor
	Two Months Ended		Three Months Ended		Eight Months Ended		Nine Months Ended
	August 31,		September 30,		August 31,		September 30,
	2020		2019		2020		2019
	(In millions)
Recognized stock compensation expense (1)	$	2.0	$	4.5	$	6.1	$	13.0
Capitalized stock compensation cost for our oil and natural gas properties	—		0.7		—		2.0
Tax benefit on stock-based compensation	0.5		1.1		1.5		3.2

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1.When the company's equity-based awards were cancelled on the Effective Date, we immediately recognized the expense for the cancelled awards of $1.4 million as reorganization costs, net.

Our Second Amended and Restated Unit Corporation Stock and Incentive Compensation Plan effective May 6, 2015 (the amended plan) allowed us to grant stock-based and cash-based compensation to our employees (including employees of subsidiaries) and to non-employee directors. There were 7,230,000 shares of the company's common stock authorized for issuance to eligible participants under the amended plan with 2,000,000 shares being the maximum number of shares that could be issued as "incentive stock options." This plan was terminated under the Plan.

We did not grant any stock options during 2020 or 2019. We did not grant any restricted stock awards during 2020 or the three month period ending September 30, 2019. This table shows the fair value of restricted stock awards granted to employees and non-employee directors during the periods indicated:

	Nine Months Ended
	September 30, 2019
	Time Vested			Performance Vested
Shares granted:
Employees	927,173			424,070
Non-employee directors	72,784			—
	999,957			424,070
Estimated fair value (in millions): (1)
Employees	$	14.6		$	7.1
Non-employee directors	0.9			—
	$	15.5		$	7.1
Percentage of shares granted expected to be distributed:
Employees	95		%	52		%
Non-employee directors	100		%	N/A

_______________________

1.The performance shares represent 100% of the grant date fair value. (We recognize the grant date fair value minus estimated forfeitures.)

The time vested restricted stock awards granted during the first nine months of 2019 were being recognized over a three-year vesting period. During the first quarter of 2019, two performance vested restricted stock awards were granted to certain executive officers. The first cliff vests three years from the grant date based on the company's achievement of certain stock performance measures (TSR) at the end of the term and will range from 0% to 200% of the restricted shares granted as performance shares. The second vests, one-third each year, over a three-year vesting period subject to the company's achievement of cash flow to total assets (CFTA) performance measurement each year and will range from 0% to 200%. These awards were cancelled on the Effective Date. We recognized a reversal of expense previously recorded for the unvested awards of $2.2 million for these awards upon cancellation.