STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

Unit Corporation Long Term Incentive Plan. 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 will be administered by the Board or a committee thereof and 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 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.

Predecessor Amended Plan and Non-Employee Directors Plan. The 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. We recognized a reversal of expense previously recorded for the unvested awards of $2.2 million for these awards upon cancellation.

Under the Unit Corporation 2000 Non-Employee Directors’ Stock Option Plan (Non-employee directors plan), on the first business day following each annual meeting of shareholders, each person who was then a member of our Board 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.

On the Effective Date, the company's equity-based awards outstanding immediately before the Effective Date were cancelled along with the Amended plan and the Non-employee directors plan. The cancellations resulted in an acceleration of unrecorded stock compensation expense during the eight months ended August 31, 2020. 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 – 2020 Emergence From Voluntary Reorganization Under Chapter 11.

The following table summarizes the stock-based compensation expense activity recognized during the following periods:

	Successor				Predecessor
	Year Ended December 31, 2021		Four Months Ended December 31, 2020		Eight Months Ended August 31, 2020 (1)
	(In thousands)
Recognized stock compensation expense	$	826	$	—	$	6,065
Capitalized stock compensation cost for our oil and natural gas properties	$	—	$	—	$	—
Tax benefit on stock-based compensation	$	202	$	—	$	1,486

_______________________

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.

Successor Period activity pertaining to nonvested RSUs under the LTIP is as follows:

	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2020 (Successor) (1)	—	$	—
Granted (2)	315,529	26.71
Vested	—	—
Forfeited	—	—
Nonvested at December 31, 2021 (Successor) (3)	315,529	$	26.71

_______________________

1.There was no activity during the four months ended December 31, 2020.

2.The grants had an aggregate grant date fair value of $8.4 million. Director grants will vest 25% on each of the following dates: May 27, 2022, September 3, 2022, September 3, 2023, and September 3, 2024. Employee grants will one-third vest on each of the following dates: November 21, 2022, October 1, 2023, and October 1, 2024.

3.The aggregate compensation cost related to nonvested RSUs not yet recognized as of December 31, 2021 was $7.9 million with a weighted average remaining service period of 1.7 years.

Successor Period activity pertaining to outstanding stock options under the LTIP is as follows:

	Number of Shares	Weighted Average Exercise Price
Outstanding at December 31, 2020 (Successor) (1)	—	$	—
Granted (2)	361,418	45.00
Exercised	—	—
Forfeited or expired	—	—
Outstanding at December 31, 2021 (Successor) (3)	361,418	$	45.00

_______________________

1.There was no activity during the four months ended December 31, 2020.

2.The grants had an aggregate grant date fair value of $4.1 million and will one-third vest on each of the following dates: October 1, 2022, October 1, 2023, and October 1, 2024. The options have a five year term from the grant date.

3.The stock options outstanding as of December 31, 2021 had a weighted average remaining contractual term of 4.8 years and no aggregate intrinsic value. None of the stock options outstanding as of December 31, 2021 were exercisable. The aggregate compensation cost related to outstanding options not yet recognized as of December 31, 2021 was $3.9 million with a weighted average remaining service period of 1.8 years.

Predecessor Period activity pertaining to nonvested RSUs 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 December 31, 2019 (Predecessor)	1,527,648	841,374	2,369,022	$	18.95
Granted	—	—	—	—
Vested	(677,076)	—	(677,076)	19.95
Forfeited	(272,396)	(503,809)	(776,205)	19.28
Nonvested at August 31, 2020 (Predecessor)	578,176	337,565	915,741	$	17.92
Cancelled	(578,176)	(337,565)	(915,741)	17.92
Nonvested at September 1, 2020 (Successor)	—	—	—	$	—

Non-Employee Directors	Number of Shares	Weighted Average Price
Nonvested at December 31, 2019 (Predecessor)	118,688	$	14.83
Granted	—	—
Vested	(48,475)	15.88
Forfeited	—	—
Nonvested at August 31, 2020 (Predecessor)	70,213	$	14.10
Cancelled	(70,213)	14.10
Nonvested at September 1, 2020 (Successor)	—	$	—

Predecessor Period activity pertaining to outstanding stock options under the Non-Employee Directors' Stock Option Plan for the identified periods is as follows:

	Number of Shares	Weighted Average Exercise Price
Outstanding at December 31, 2019 (Predecessor)	42,000	$	48.56
Granted	—	—
Exercised	—	—
Forfeited	(14,000)	41.21
Outstanding at August 31, 2020 (Predecessor)	28,000	$	52.24
Cancelled	(28,000)	52.24
Outstanding at September 1, 2020 (Successor)	—	$	—