We use share-based payments to compensate employees and non-employee directors. We grant incentive awards in the form of restricted stock units (a small portion of which are subject to the achievement of performance conditions) and performance unit awards (which are subject to the achievement of performance conditions). Certain of these incentive awards are share-settled, and certain of these incentive awards are cash-settled. We recognize the cost of share-based payments under the fair-value-based method.

The 2021 Plan was originally approved by our stockholders on June 3, 2021. Following a series of amendments to increase the number of shares available for issuance under the 2021 Plan, approximately 39.1 million shares of Common Stock are authorized for grant under the 2021 Plan.

In connection with the NexTier merger, we assumed the NexTier Plan and the NexTier Oilfield Solutions Inc. (Former C&J Energy) Management Incentive Plan (the “Former C&J Energy Plan” and, together with the NexTier Plan, the “Assumed Plans”) and certain awards outstanding thereunder, which, in connection with the NexTier merger, were converted into share-based awards in respect of shares of Patterson-UTI Energy, Inc. common stock.


Plan Name	Shares Authorized for Grant	Shares Underlying Awards Outstanding	Shares Available for Grant
2021 Plan	39,074,510	8,821,122	9,144,162
NexTier Plan	—	145,631	—
Former C&J Energy Plan	—	406,405	—
2014 Plan	—	1,062,475	—


	Shares	Weighted Average Exercise Price Per Share
Outstanding at beginning of year	1,794,005	$	22.26

Exercised	—	$	—
Expired	(656,800)	$	20.01
Outstanding at end of year	1,137,205	$	23.56
Exercisable at end of year	1,137,205	$	23.56

Options outstanding and exercisable at December 31, 2025 have no intrinsic value and a weighted-average remaining contractual term of 0.70 years. No options became vested or were exercised during the years ended December 31, 2025, 2024 and 2023.

Restricted Stock Units (Equity Based) — For all restricted stock unit awards made to date, shares of common stock are not issued until the units vest. Restricted stock units are subject to forfeiture for failure to fulfill service conditions and, in certain cases, performance conditions. Forfeitable dividend equivalents are accrued on certain restricted stock units and are payable upon vesting. Dividend equivalents are recognized as reductions of retained earnings for the portion of restricted stock units expected to vest. We use the straight-line method to recognize periodic compensation cost over the vesting period.


	Time Based	Performance Based	Weighted Average Grant Date Fair Value Per Share

Non-vested restricted stock units outstanding at beginning of year	5,427,657	452,514	$	11.34
Granted	4,448,229	—	$	6.04
Vested	(2,952,115)	—	$	11.41
Performance based restricted stock units settled (1)	—	(39,100)	$	13.04
Forfeited	(249,933)	(3,524)	$	8.95
Non-vested restricted stock units outstanding at end of year	6,673,838	409,890	$	8.06

As of December 31, 2025, approximately 6.5 million non-vested restricted stock units outstanding are expected to vest. Additional information as of December 31, 2025 with respect to these non-vested restricted stock units follows (dollars in thousands):

Restricted Stock Units (Liability Based) — We previously converted NexTier’s cash-settled performance based units into our cash-settled restricted stock units in connection with our merger with NexTier. We settled the NexTier cash-settled performance based units in January 2025, with a cash payment of $3.3 million. In addition, a portion of the annual restricted stock unit awards granted in 2025 are cash-settled. These awards are accounted for as liability classified awards and remeasured at fair value at each reporting period. Compensation expense is recorded over the vesting period and is initially based on the fair value at the award grant date or conversion date. Compensation expense is subsequently remeasured at each reporting date during the vesting period based on the change in our stock price. Dividend cash equivalents are not paid on cash-settled units.


			Time Based

Non-vested cash settled restricted stock units outstanding at beginning of year			13,134
Granted			619,417
Vested			(4,376)
Forfeited			—
Non-vested cash-settled restricted stock units outstanding at end of year			628,175

As of December 31, 2025, we had unrecognized compensation cost related to our unvested cash-settled restricted stock units totaling $3.0 million. The weighted-average remaining vesting period for these unvested cash-settled restricted stock units was 2.33 years as of December 31, 2025.

Performance Unit Awards — We have granted performance unit awards to certain employees (the “Performance Units”). The Performance Units generally vest over a three-year period based on the achievement of performance goals. Historically, Performance Units have been tied to total shareholder return (“TSR”) achievement as compared to the TSR of a designated peer group, and allow for a payout ranging between 0% and 200% of the target payout. With respect to the Performance Units granted in May 2025, (i) one-half are cash-settled and are otherwise structured similarly to the Performance Units issued in 2024 with vesting tied to our TSR over 1-, 2- and 3-year performance periods (the “2025 TSR Performance Units”), and (ii) one-half are share-settled and tied to our relative free cash flow return over the three-year period commencing January 1, 2025 as compared to the free cash flow return of a designated peer group (“FCF”), and allow for a payout ranging between 0% and 200% of the target payout (the “2025 FCF Performance Units”).

Share-settled Performance Units, excluding the 2025 FCF Performance Units, have vesting terms subject to a market condition and are measured at fair value on the date of grant using a Monte Carlo simulation model and compensation expense is recognized over the vesting period. The Share-settled Performance Units with a market condition do not allow for the reversal of previously recognized expense, even if the market metric is not achieved and no Share-Settled Performance Units ultimately vest. The 2025 TSR

Performance Units are cash-settled and are accounted for as liability classified awards and remeasured at fair value using a Monte Carlo simulation model at each reporting period. For the years ended December 31, 2025, 2024 and 2023, the grant date fair value of the Performance Units subject to a market condition, calculated using a Monte Carlo simulation, was $4.5 million, $10.9 million and $8.4 million, respectively. The grant date fair value calculations for these Performance Units granted during the years ended December 31, 2025, 2024 and 2023 were based on the following weighted-average assumptions set forth below:

The 2025 FCF Performance Units are share‑settled awards subject to an operational performance condition based on relative FCF Return. The grant‑date fair value of these awards is based on the closing price of our common stock on the grant date, and compensation cost is recognized over the three‑year performance period based on the number of units expected to vest. The expected vesting amount is updated each reporting period based on management’s assessment of the probability of achieving the performance condition. If it becomes probable that the performance condition will not be achieved, previously recognized compensation cost is reversed.


	Performance Units Share-Settled (at target)	Weighted Average Grant Date Fair Value Per Share		Performance Units Cash-Settled (at target)
Non-vested Performance Units outstanding at beginning of year	1,869,400	$	15.62	—
Granted	743,800	$	5.86	743,800
Performance Units settled (1)	(398,500)	$	25.95	—
Forfeited	—	$	—	—
Non-vested Performance Units outstanding at end of year	2,214,700	$	10.49	743,800

As of December 31, 2025, we had unrecognized compensation cost of $11.4 million related to our unvested Performance Units. The weighted-average remaining vesting period for these unvested Performance Units was 1.55 years as of December 31, 2025.

The following table summarizes the Performance Units that, during the years ended December 31, 2025, 2024 and 2023, vested and did not vest as a result of the company’s performance during the applicable performance period:


	Years Ended December 31,
	2025		2024		2023
Vesting multiplier	—	%	87.9	%	200	%
Target	398,500		817,500		500,500
Vested at the end of the performance period	—		718,581		1,001,000
Did not vest at the end of the performance period	398,500		98,919		—

Stock-Based Compensation Expense — Expense associated with restricted stock units and Performance Unit awards is included in “Direct operating costs” and “Selling, general and administrative” in our consolidated statements of operations. The following table presents stock-based compensation expense for the years ended December 31, 2025, 2024 and 2023:


	Years Ended December 31,
Share-settled awards		2025		2024		2023
Restricted stock units		$	30,978	$	37,207	$	38,257
Performance Units – TSR		7,141		9,145		8,493
Performance Units – FCF		1,167		—		—
Total share-settled awards		39,286		46,352		46,750

Cash-settled awards
Cash-settled restricted stock units		857		19		—
Cash-settled Performance Units		581		563		5,048
Phantom units		—		—		(975)
Total cash-settled awards		1,438		582		4,073
Stock-based compensation expense		$	40,724	$	46,934	$	50,823