Quarterly report pursuant to Section 13 or 15(d)

Equity-Based Compensation and Cash Awards

v3.21.1
Equity-Based Compensation and Cash Awards
3 Months Ended
Mar. 31, 2021
Equity-Based Compensation and Cash Awards  
Equity-Based Compensation and Cash Awards

(9) Equity-Based Compensation and Cash Awards

On June 17, 2020, Antero Resources’ stockholders approved the Antero Resources Corporation 2020 Long-Term Incentive Plan (the “2020 Plan”), which replaced the Antero Resources Corporation Long-Term Incentive Plan (the “2013 Plan”), and the 2020 Plan became effective as of such date. The 2020 Plan provides for grants of stock options (including incentive stock options), stock appreciation rights, restricted stock awards, RSU awards, vested stock awards, dividend equivalent awards, and other stock-based and cash awards. The terms and conditions of the awards granted are established by the Compensation Committee of Antero Resources’ Board of Directors. Employees, officers, non-employee directors and other service providers of the Company and its affiliates are eligible to receive awards under the 2020 Plan. No further awards will be granted under the 2013 Plan on or after June 17, 2020.

The 2020 Plan provides for the reservation of 10,050,000 shares of the Company’s common stock, plus the number of certain shares that become available again for delivery from the 2013 Plan in accordance with the share recycling provisions described below. The share recycling provisions allow for all or any portion of an award (including an award granted under the 2013 Plan that was outstanding as of June 17, 2020) that expires or is cancelled, forfeited, exchanged, settled for cash, or otherwise terminated without actual delivery of the shares to be considered not delivered and thus available for new awards under the 2020 Plan. Further, any

shares withheld or surrendered in payment of any taxes relating to awards that were outstanding under either the 2013 Plan as of June 17, 2020 or are granted under the 2020 Plan (other than stock options and stock appreciation rights) will again be available for new awards under the 2020 Plan.

A total of 7,928,770 shares were available for future grant under the 2020 Plan as of March 31, 2021.

Antero Midstream Partners LP’s (“Antero Midstream Partners”) general partner was authorized to grant up to 10,000,000 common units representing limited partner interests in Antero Midstream Partners under the Antero Midstream Partners LP Long-Term Incentive Plan (the “AMP Plan”) to non-employee directors of its general partner and certain officers, employees, and consultants of Antero Midstream Partners and its affiliates (which include Antero Resources). Antero Resources deconsolidated Antero Midstream Partners on March 12, 2019, and on such date each outstanding phantom unit award under the AMP Plan, was assumed by Antero Midstream Corporation and converted into 1.8926 RSUs under the Antero Midstream Corporation Long Term Incentive Plan (the “AMC Plan”). Each RSU award under the AMC Plan represents a right to receive one share of Antero Midstream Corporation common stock.

The Company’s equity-based compensation expense, by type of award, was as follows for the three months ended March 31, 2020 and 2021 (in thousands):

Three Months Ended March 31,

   

2020

2021

RSU awards

$

1,878

3,238

PSU awards

922

1,536

Antero Midstream Partners phantom unit awards (1)

160

518

Equity awards issued to directors

369

350

Total expense

$

3,329

5,642

(1) Antero Resources recognized compensation expense for equity awards granted under both the 2013 Plan and the AMP Plan because the awards under the AMP Plan are accounted for as if they are distributed by Antero Midstream Partners to Antero Resources. Antero Resources allocates a portion of equity-based compensation expense related to grants prior to the deconsolidation of Antero Midstream Partners on March 12, 2019 to Antero Midstream Partners based on its proportionate share of Antero Resources’ labor costs.

(a)

Restricted Stock Unit Awards

A summary of RSU award activity for the three months ended March 31, 2021 is as follows:

Weighted

Average

Number of

Grant Date

  

Shares

  

Fair Value

Total awarded and unvested—December 31, 2020

8,432,397

$

4.06

Granted

14,738

7.26

Vested

(1,906,286)

2.70

Forfeited

(83,359)

4.82

Total awarded and unvested—March 31, 2021

6,457,490

$

4.46

As of March 31, 2021, there was approximately $20 million of unamortized equity-based compensation expense related to unvested RSUs. That expense is expected to be recognized over a weighted average period of approximately 2.1 years.

(b)

Stock Options

A summary of stock option activity for the three months ended March 31, 2021 is as follows:

Weighted

Weighted

Average

Average

Remaining

Intrinsic

Stock

Exercise

Contractual

Value

  

Options

  

Price

  

Life

  

(in thousands)

Outstanding—December 31, 2020

432,461

$

50.64

4.1

$

Granted

Exercised

Forfeited

Expired

(5,000)

50.00

Outstanding—March 31, 2021

427,461

$

50.65

3.8

$

Vested—March 31, 2021

427,461

$

50.65

3.8

$

Exercisable —March 31, 2021

427,461

$

50.65

3.8

$

Intrinsic values are based on the exercise price of the options and the closing price of Antero Resources’ common stock on the referenced dates.

As of March 31, 2021, all stock options were fully vested resulting in no unamortized equity-based compensation expense.

(c)

Performance Share Unit Awards

A summary of PSUs activity for the three months ended March 31, 2021 is as follows:

Weighted

Number of

Average Grant

   

Units

   

Date Fair Value

Total awarded and unvested—December 31, 2020

2,547,798

$

12.66

Granted

Forfeited

(23,283)

9.26

Cancelled (unearned)

(133,334)

25.64

Total awarded and unvested—March 31, 2021

2,391,181

$

11.97

As of March 31, 2021, there was approximately $6 million of unamortized equity-based compensation expense related to unvested PSUs. That expense is expected to be recognized over a weighted average period of approximately 1.2 years.

(d)

Cash Awards

In January 2020, the Company granted cash awards of approximately $3.3 million to certain executives under the 2013 Plan, and compensation expense for these awards is recognized ratably over the vesting period for each of three tranches through January 20, 2023. In July 2020, the Company granted additional cash awards in the aggregate of $2.6 million to certain non-executive employees under the 2020 Plan that vest ratably over four years. As of March 31, 2021, the Company has recorded approximately $2.4 million in Other liabilities in the unaudited condensed consolidated balance sheet related to cash awards.

(e)

Antero Midstream Corporation Restricted Stock Unit Awards

A summary of Antero Midstream Corporation RSU awards for the three months ended March 31, 2021 is as follows:

Weighted

Average

Number of

Grant Date

   

Units

   

Fair Value

Total awarded and unvested—December 31, 2020

296,390

$

15.06

Granted

Vested

(10,122)

15.81

Forfeited

Total awarded and unvested—March 31, 2021

286,268

$

15.04

As of March 31, 2021, there was approximately $1.6 million of unamortized equity-based compensation expense related to unvested phantom unit awards. That expense is expected to be recognized over a weighted average period of approximately less than 1.0 year, and the Company’s proportionate share will be allocated to it as it is recognized.