Quarterly report pursuant to Section 13 or 15(d)

Share-based Compensation

v3.22.1
Share-based Compensation
3 Months Ended
Mar. 31, 2022
Share-based Payment Arrangement [Abstract]  
Share-based Compensation

NOTE 16 – SHARE-BASED COMPENSATION

Share-based compensation expense consisted of the following:

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2022

 

 

2021

 

 

Restricted stock

 

$

736

 

 

$

825

 

 

Stock options

 

 

213

 

 

 

214

 

 

Deferred stock units

 

 

330

 

 

 

246

 

 

Pool A Awards

 

 

359

 

 

 

86

 

 

Pool B Awards

 

 

390

 

 

 

280

 

 

Total

 

$

2,028

 

(1)

$

1,651

 

(2)

 

(1)
For the three months ended March 31, 2022, $297 was presented as cost of services and $1,731 was presented as selling, general and administrative expenses in the condensed consolidated statement of operations.
(2)
For the three months ended March 31, 2021, $198 was presented as cost of services and $1,453 was presented as selling, general and administrative expenses in the condensed consolidated statement of operations.

Restricted Stock

Pursuant to the Amended and Restated U.S. Well Services, Inc. 2018 Stock Incentive Plan (as amended, the “LTIP”), the Company grants shares of restricted Class A common stock (“restricted stock”) to certain employees and directors. Restricted stock is subject to restrictions on transfer and is generally subject to a risk of forfeiture if the award recipient is no longer an employee or director of the Company prior to the lapse of the restriction. Restricted stock granted to employees generally vests over four years in equal installments each year on the anniversary of the grant date and grants to directors generally vest in full after one year. The grant date fair value of the restricted stock is determined using the closing price of the Company's Class A common stock on the grant date.

The following table summarizes the restricted stock activity for the three months ended March 31, 2022:

 

 

Shares

 

 

Weighted-
Average Grant-Date
Fair Value per
Share

 

Outstanding at December 31, 2021

 

 

388,886

 

 

$

24.55

 

Granted

 

 

-

 

 

 

-

 

Vested

 

 

(95,214

)

 

 

31.19

 

Forfeited

 

 

(4,360

)

 

 

31.19

 

Outstanding at March 31, 2022

 

 

289,312

 

 

$

22.27

 

As of March 31, 2022, the total unrecognized compensation cost related to restricted stock was $2.9 million which is expected to be recognized over a weighted-average period of 0.96 years.

Stock Options

The following table summarizes the stock option activity for the three months ended March 31, 2022:

 

 

Shares

 

 

Weighted-
Average
Exercise Price
per Share

 

 

Weighted-Average
Remaining
Contractual
Life (in years)

 

Outstanding at December 31, 2021

 

 

250,649

 

 

$

31.19

 

 

 

4.21

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited/Expired

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding at March 31, 2022

 

 

250,649

 

 

$

31.19

 

 

 

3.96

 

Exercisable at March 31, 2022

 

 

187,987

 

 

$

31.19

 

 

 

3.96

 

 

As of March 31, 2022, the total unrecognized compensation cost related to stock options was $0.8 million which is expected to be recognized over a weighted average period of 0.96 years.

Deferred Stock Units

The Company awards deferred stock units (“DSUs”) to certain key employees of the Company pursuant to the LTIP. Each DSU represents the right to receive one share of the Company’s Class A common stock. DSUs generally vest over three years in equal installments each year on the anniversary of the vesting effective date, subject to the grantee’s continuous service through each vesting period but settlement does not occur until the fifth anniversary of the grant date. The grant date fair value of the DSU is determined using the closing price of the Company's Class A common stock on the grant date.

The following table summarizes the DSUs activity for the three months ended March 31, 2022:

 

 

Units

 

 

Weighted-
Average Grant Date
Fair Value per
Unit

 

Outstanding at December 31, 2021

 

 

2,052,474

 

 

$

1.49

 

Granted

 

 

-

 

 

 

-

 

Vested

 

 

(958,850

)

 

 

1.40

 

Forfeited

 

 

(20,551

)

 

 

1.16

 

Outstanding at March 31, 2022

 

 

1,073,073

 

 

$

1.59

 

 

As of March 31, 2022, the total unrecognized compensation cost related to DSUs was $1.4 million which is expected to be recognized over a weighted average period of 1.24 years.

Pool A Performance Awards

The Company grants Pool A Performance Awards (“Pool A Awards”) to certain key employees of the Company. Each Pool A Award represents the right to receive, at the Company’s election, a fixed monetary amount either in cash or a variable number of shares of the Company’s Class A common stock based on its closing share price on the date of settlement. The Pool A Awards vest in full one year on the anniversary of the vesting effective date specified in the applicable award agreement but settlement does not occur until the fifth anniversary of the grant date. As of March 31, 2022, all Pool A Awards outstanding were fully vested.

The Company accounts for the Pool A Awards under liability accounting as a result of the fixed monetary amount that could be settled either in cash or a variable number of shares of the Company’s Class A common stock. Since the settlement will not occur until the fifth anniversary of the grant date, the Company considers the delayed settlement as a post-vesting restriction which would impact the determination of grant-date fair value of the award.

During the third quarter of 2021, the Company granted Pool A Awards that fully vested on January 1, 2022. As of March 31, 2022, the fair value of the Pool A Awards liabilities were remeasured to $7.1 million, which was estimated using a risk-adjusted discount rate reflecting the weighted-average cost of capital of similarly traded public companies.

As of March 31, 2022, the total unrecognized compensation cost related to Pool A Awards was $3.6 million, which is expected to be recognized over a weighted average period of 4.09 years.

Pool B Performance Awards

The Company grants Pool B Performance Awards (“Pool B Awards”) to certain key employees of the Company. Each Pool B Award represents the right to receive, at the Company’s election, either a cash payment calculated in accordance with the award agreement, or a fixed number of shares of the Company’s Class A common stock. The Pool B Awards vest over three years in equal installments each year on the anniversary of the vesting effective date specified in the applicable award agreement, subject to the grantee’s continuous services through each vesting period but settlement does not occur until the fifth anniversary of the grant date. The grant date fair value of the Pool B Awards is determined using the closing price of the Company's Class A common stock on the grant date.

The following table summarizes the Pool B Awards activity for the three months ended March 31, 2022:

 

 

Fair Value

 

Outstanding at December 31, 2021

 

$

3,672

 

Granted

 

 

-

 

Vested

 

 

(1,586

)

Forfeited

 

 

(27

)

Outstanding at March 31, 2022

 

$

2,059

 

As of March 31, 2022, the total unrecognized compensation cost related to Pool B Awards was $1.7 million, which is expected to be recognized over a weighted average period of 1.27 years.