Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.8
Stock-Based Compensation
9 Months Ended
Sep. 30, 2014
Stock-Based Compensation  
Stock-Based Compensation

(5)Stock-Based Compensation

 

The Company is authorized to grant up to 16,906,500 stock-based compensation awards to employees and directors of the Company under the Antero Resources Corporation Long-Term Incentive Plan (the “Plan”). The Plan allows stock-based compensation awards to be granted in a variety of forms, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, dividend equivalent awards, and other types of awards. The terms and conditions of the awards granted are established by the Compensation Committee of the Company’s Board of Directors. A total of 14,839,533 shares are available for future grant under the Plan as of September 30, 2014.

 

Our stock-based compensation expense is as follows for the nine months ended September 30, 2014 (in thousands):

 

 

 

 

 

 

 

Profits interests awards (see note 1)

    

$

68,456 

 

Restricted stock awards

 

 

16,993 

 

Stock options

 

 

372 

 

Total expense

 

$

85,821 

 

 

Restricted Stock and Restricted Stock Unit Awards

 

Restricted stock and restricted stock unit awards vest subject to the satisfaction of service requirements. We recognize expense related to restricted stock and restricted stock unit awards on a straight-line basis over the requisite service period. The grant date fair values of these awards are determined based on the closing price of the Company’s common stock on the date of the grant. A summary of restricted stock and restricted stock unit awards activity during the nine months ended September 30, 2014 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted
average

 

Aggregate

 

 

    

Number of
shares

    

grant date
fair value

    

intrinsic value
(in thousands)

  

Total awarded and unvested, December 31, 2013

 

45,093 

 

$

54.27 

 

$

2,861 

 

Granted

 

1,954,815 

 

$

64.92 

 

$

107,300 

 

Vested

 

(139)

 

$

53.52 

 

$

(8)

 

Forfeited

 

(4,549)

 

$

59.60 

 

$

(250)

 

Total awarded and unvested—September 30, 2014

 

1,995,220 

 

$

64.74 

 

$

109,518 

 

 

Unamortized expense of $111.8 million at September 30, 2014 is expected to be recognized over approximately 3 to 4 years.  Intrinsic values are based on the closing price of the Company’s stock on the referenced dates.

 

Stock Options

 

Stock options granted under the Plan to date vest over periods from one to four years and have a maximum contractual life of 10 years. We recognize expense related to stock options on a straight-line basis over the requisite service period, less awards expected to be forfeited. Stock options are granted with an exercise price equal to the market price of our common stock on the date of grant. A summary of stock option activity for the nine months ended September 30, 2014 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Weighted
average

 

average
remaining

 

Intrinsic

 

 

    

Stock
options

    

exercise
price

    

contractual
life

    

value
(in thousands)

  

Outstanding at December 31, 2013

 

70,339 

 

$

54.15 

 

9.79 

 

$

653 

 

Options granted

 

 

 

 

 

 

 

Options exercised

 

 

 

 

 

 

 

Options cancelled

 

 

 

 

 

 

 

Options expired

 

 

 

 

 

 

 

Outstanding at September 30, 2014

 

70,339 

 

$

54.15 

 

9.04 

 

$

52 

 

Expected to vest as of  September 30, 2014

 

70,339 

 

$

54.15 

 

9.04 

 

$

52 

 

Exercisable at September 30, 2014

 

 

 

 

 

 

 

 

Intrinsic value is based on the exercise price of the options and the closing price of the Company’s stock on the referenced dates.

 

We use a Black-Scholes option-pricing model to determine the grant-date fair value of our stock options. Expected volatility was derived from the volatility of the historical stock prices of a peer group of similar publicly traded companies’ stock prices. The risk-free interest rate was determined using the implied yield currently available for zero-coupon U.S. government issues with a remaining term approximating the expected life of the options. We assumed no dividend yield.

 

The following table presents information regarding the weighted average fair value for options granted and the assumptions used to determine fair value.

 

 

 

 

 

 

 

Dividend yield

    

 

%  

Volatility

 

 

35 

%  

Risk-free interest rate

 

 

1.48 

%  

Expected life (years)

 

 

6.17 

 

Weighted average fair value of options granted

 

$

20.20 

 

 

As of September 30, 2014, there was $0.9 million of unrecognized stock-based compensation expense related to nonvested stock options. That expense is expected to be recognized over a weighted average period of 3 years.