We have an equity incentive compensation plan for our officers, independent contractors, employees and non-employee directors which is designed to encourage stock ownership by such persons. We may grant both time-vesting and performance-vesting awards, which are earned on the achievement of certain performance criteria. The following types of awards may be granted under our incentive plan:

Pursuant to the terms of the Plan, the Diamond Offshore Drilling, Inc. 2021 Long-Term Stock Incentive Plan (or the Equity Incentive Plan) was adopted and approved on the Effective Date. The Equity Incentive Plan provides for the grant of stock options, SARs, restricted stock, RSUs, performance awards, and other stock-based awards or any

combination thereof to eligible participants. Vesting conditions and other terms and conditions of awards under the Equity Incentive Plan are determined by our Board of Directors (or Board) or the compensation committee of our Board, subject to the terms of the Equity Incentive Plan. RSUs and restricted stock awards may be issued with performance-vesting or time-vesting features and, except for restricted stock awards issued to our Chief Executive Officer, they are not participating securities. The aggregate number of shares of Common Stock initially available for issuance pursuant to awards under the Equity Incentive Plan was 11,111,111.

During the Successor period from April 24, 2021 through December 31, 2021, we recognized compensation expense of $10.8 million and a related tax benefit of $2.0 million in relation to the time- and performance-vesting awards described below. As of December 31, 2021, there was $26.9 million of total unrecognized compensation cost related to non-vested awards under the Equity Incentive Plan, which we expect to recognize over a weighted average period of two years. The fair value of time- and performance-vesting RSUs and time-vesting restricted stock awards granted under the Equity Incentive Plan was estimated based on the fair market value of our Common Stock on the date of grant.

RSUs. RSUs are contractual rights to receive shares of our Common Stock in the future if the applicable vesting conditions are met. During the Successor period, we granted an aggregate 337,662 time-vesting RSU awards to our non-employee members of the Board (or Board RSUs). The Board RSUs vest and become non-forfeitable with respect to 30% of the RSUs on the first anniversary of the grant date and 70% of the RSUs on the second anniversary of the grant date, subject to the recipient’s continuous service through the applicable vesting date. The vested Board RSUs will be issued at the earliest of (i) the fifth anniversary of the grant date, (ii) a separation from service, or (iii) a change in control. The recipients may elect, with respect to up to 40% of the vested and non-forfeitable Board RSUs, to receive cash equal to the fair market value of those RSUs instead of shares. Accordingly, 40% of the Board RSUs are considered liability-classified awards, which are remeasured each period. The remaining 60% of the Board RSUs are equity-classified awards, for which the fair value was estimated based on the fair market value of our Common Stock on the date of grant.

Effective July 1, 2021, the Board approved a new key employee retention and incentive plan covering executive officers and certain non-executive key employees. In connection with this plan, we granted 1,916,043 time-vesting RSUs during the second half of 2021 that vest annually over three years.

Restricted Stock. Pursuant to the terms of the Equity Incentive Plan, we granted 222,222 shares of time-vesting restricted stock awards to our Chief Executive Officer. One-third of the time-vesting awards were issued and immediately vested on the May 8, 2021 grant date and the remaining two-thirds vest in equal installments on the first and second anniversaries of the grant date, subject to his continuous service or employment. Holders of restricted stock have all privileges of a stockholder of the Company with respect to the restricted stock, including without limitation the right to vote any shares underlying such restricted stock and to receive dividends or other distributions in respect thereof.

The fair value of time-vesting RSUs and restricted stock awards granted under the Equity Incentive Plan was estimated based on the fair market value of our Common Stock on the date of grant.

A summary of time-vesting RSU and restricted stock award activity under the Successor Equity Incentive Plan as of December 31, 2021 and changes for the period from April 24, 2021 through December 31, 2021 is as follows:


	Number of Awards			Weighted -Average Grant Date Fair Value Per Share
Nonvested awards at April 24, 2021		—		$	—
Granted		2,475,927		$	8.75
Vested		(74,074	)	$	8.75
Cancelled		—		$	—
Forfeited		(223,163	)	$	8.75
Nonvested awards at December 31, 2021		2,178,690		$	8.75

The total fair value of the restricted stock awards that vested during the Successor period from April 24, 2021 through December 31, 2021 was $0.6 million.

RSUs. During the Successor period from April 24, 2021 through December 31, 2021, we granted 1,733,404 performance-vesting RSU awards, in connection with the key employee retention and incentive plan approved on July 1, 2021. These RSUs vest annually over three years. The fair value of performance-vesting RSUs granted was estimated based on the fair market value of our Common Stock on the date of grant.

A summary of performance-vesting RSU activity under the Successor Equity Incentive Plan as of December 31, 2021 and changes during the period from April 24, 2021 through December 31, 2021 is as follows:


	Number of Awards			Weighted -Average Grant Date Fair Value Per Share
Nonvested awards at April 24, 2021		—		$	—
Granted		1,733,404		$	8.75
Vested		—		$	—
Cancelled		—		$	—
Forfeited		(292,763	)	$	8.75
Nonvested awards at December 31, 2021		1,440,641		$	8.75

Restricted Stock. During the Successor period from April 24, 2021 through December 31, 2021, we granted 777,777 shares of performance-vesting restricted stock awards to our Chief Executive Officer pursuant to the terms of the Equity Incentive Plan. These awards vest upon achievement of both a market and performance condition, and any awards that have not vested by May 8, 2027 will be forfeited. The vesting is contingent upon certain conditions (as defined in the award agreement under the Equity Incentive Plan) that, as of December 31, 2021, had not been satisfied and were not considered probable. Therefore, we have not recognized compensation cost associated with the performance-vesting awards. These awards were valued using a Monte Carlo simulation assuming a Geometric Brownian Motion in a risk-neutral framework and using the following assumptions:


	Year Ended
	December 31, 2021
Expected life of awards (in years)		3
Expected volatility		70.00	%
Risk-free interest rate		0.29	%

A summary of performance-vesting restricted stock activity under the Successor Equity Incentive Plan as of December 31, 2021 and changes during the period from April 24, 2021 through December 31, 2021 is as follows:


	Number of Awards		Weighted -Average Grant Date Fair Value Per Share
Nonvested awards at April 24, 2021		—	$	—
Granted		777,777	$	6.89
Vested		—	$	—
Cancelled		—	$	—
Forfeited		—	$	—
Nonvested awards at December 31, 2021		777,777	$	6.89

Under the Predecessor's Equity Incentive Compensation Plan (or the Predecessor Equity Plan), we had a maximum of 7,500,000 shares of our common stock initially available for the grant or settlement of awards, subject to adjustment for certain business transactions and changes in capital structure. RSUs under the Predecessor Equity Plan were issued with performance-vesting or time-vesting features. Except for RSUs issued to our Chief Executive Officer, RSUs were not participating securities, and the holders of such awards had no right to receive regular dividends if or when declared. However, we have not paid a dividend to stockholders since 2015.

On May 27, 2020, the Bankruptcy Court approved a new key employee retention plan and a new non-executive incentive plan covering certain non-executive key employees. On June 23, 2020, the Bankruptcy Court approved a key employee incentive plan covering certain additional key employees, including our executive officers. Upon the participating employee’s acceptance of an award under the new compensation plans, all outstanding unvested incentive awards previously granted to the employee under our Predecessor Equity Plan, consisting of RSUs and/or SARs, were canceled. Any remaining outstanding awards under the Predecessor Equity Plan were cancelled on the Effective Date.

Total compensation cost recognized for all awards under the Predecessor Equity Plan for the years ended December 31, 2020 and 2019 was $5.6 million and $6.2 million, respectively. Tax benefits recognized for the years ended December 31, 2020 and 2019 related thereto were $0.2 million and $0.5 million, respectively. Due to the cancellation of the awards under the Predecessor Equity Plan described above, there is no remaining compensation cost to be recognized in future periods related to unvested or outstanding awards.

SARs. SARs awarded under the Predecessor Equity Plan generally vested immediately and expired in ten years. The exercise price per share of SARs awarded under the Predecessor Equity Plan could not be less than the fair market value of our common stock on the date of grant.

The fair value of SARs granted under the Predecessor Equity Plan (or its predecessor) during the years ended December 31, 2020 and 2019 was estimated using the Black Scholes pricing model with the following weighted average assumptions:


	Year Ended December 31,
	2020			2019
Expected life of SARs (in years)		8			7
Expected volatility		127.65	%		39.35	%
Risk-free interest rate		1.85	%		2.11	%

The expected life of SARs and expected volatility were based on historical data. Risk-free interest rates were determined using the U.S. Treasury yield curve at time of grant with a term equal to the expected life of the SARs.

A summary of SARs activity under the Predecessor Equity Plan as of April 23, 2021 and changes during the period from January 1, 2021 through April 23, 2021 is as follows:


	Number of Awards			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (In Thousands)
Awards outstanding at January 1, 2021		612,700		$	43.84
Granted		—		$	—
Cancelled		(529,400	)	$	56.57
Expired		(83,300	)	$	63.55
Awards outstanding at April 23, 2021		—		$	—		—	$	—
Awards exercisable at April 23, 2021		—		$	—		—	$	—

The weighted-average grant date fair values per share of awards granted during the Predecessor years ended December 31, 2020 and 2019 were $6.64 and $3.75, respectively.

RSUs. In 2019, we granted an aggregate of 310,700 time-vesting RSUs, with one-half set to vest two years from the date of grant and the remaining 50% to vest three years from the date of grant, conditioned upon continued employment through the applicable vesting date. The fair value of time-vesting RSUs granted under the Predecessor Equity Plan was estimated based on the fair market value of our common stock on the date of grant.

A summary of activity for time-vesting RSUs under the Predecessor Equity Plan as of April 23, 2021 and changes during the period from January 1, 2021 through April 23, 2021 is as follows:


	Number of Awards			Weighted -Average Grant Date Fair Value Per Share
Nonvested awards at January 1, 2021		11,000		$	11.49
Granted		—		$	—
Vested		(6,175	)	$	12.09
Cancelled		(4,825	)	$	10.49
Forfeited		—		$	—
Nonvested awards at April 23, 2021		—		$	—

The total fair value of time-vesting RSUs that vested during the Predecessor periods from January 1, 2021 through April 23, 2021, and the years ended December 31, 2020 and 2019 was $0, $0.2 million and $1.9 million, respectively.

RSUs. In 2019, we granted an aggregate of 190,634 performance-vesting RSUs which were set to vest upon achievement of certain performance goals as set forth in the individual award agreements over the three-year performance period beginning on January 1 in the year of grant. The fair value of performance-vesting RSUs granted under the Predecessor Equity Plan was estimated based on the fair market value of our common stock on the date of grant.

All performance-vesting RSUs under the Predecessor Equity Plan were cancelled or forfeited in 2020 and therefore, there was no activity during the year ended December 31, 2021. The total fair value of performance-vesting RSUs that vested during the Predecessor years ended December 31, 2020 and 2019 was $1.2 million and $2.3 million, respectively.