Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.8
Stock-Based Compensation
3 Months Ended
Mar. 31, 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 16,779,323 shares are available for future grant under the Plan as of March 31, 2014.

 

Our stock-based compensation expense is as follows for the three months ended March 31, 2014 (in thousands):

 

Profits interests awards (see note 1)

$

28,689

 

Restricted stock awards

 

309

 

Stock options

 

139

 

Total expense

$

29,137

 

 

Restricted Stock and Restricted Stock Unit Awards

 

Restricted stock awards vest subject to the satisfaction of service requirements. The grant date fair value of these awards are determined based on the 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 three months ended March 31, 2014 is as follows:

 

 

 

Number of
shares

 

 

Weighted
average
grant date
fair value

 

 

Aggregate
intrinsic value
(in thousands)

 

Total granted and unvested, December 31, 2013

 

45,093

 

$

54.27

 

$

2,861

 

Granted

 

13,795

 

$

56.82

 

 

863

 

Vested

 

 

 

 

 

 

 

 

Forfeited

 

(2,050

)

$

55.63

 

 

(128

)

Total awarded and unvested—March 31, 2014

 

56,838

 

$

54.27

 

$

3,558

 

 

Unamortized expense of $2.3 million at March 31, 2014 is expected to be recognized over approximately 3 years.

 

Subsequent to March 31, 2014, the Company granted restricted stock unit awards for 1,902,889 shares at a grant date fair value of $123.8 million, which will be recognized as expense over vesting periods of approximately 3.5 to 4 years.

 

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 three months ended March 31, 2014 is as follows:

 

 

 

Stock
options

 

Weighted
average
exercise
price

 

Weighted
average
remaining
contractual
life

 

Intrinsic
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 March 31, 2014

 

70,339

$

54.15

 

9.54

$

594

 

Expected to vest as of March 31, 2014

 

70,339

$

54.15

 

9.54

$

594

 

Exercisable at March 31, 2014

 

 

 

 

 

 

 

 

 

We use a Black-Scholes option-pricing model to determine the 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 March 31, 2014, there was $1.2 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.