Annual report pursuant to Section 13 and 15(d)

Share-Based Compensation and Other Benefit Plans

v3.20.4
Share-Based Compensation and Other Benefit Plans
12 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement [Abstract]  
Share-based Compensation and Other Benefit Plans Share-Based Compensation and Other Benefit Plans
We reserved 1,424,600 shares of Common Stock for issuance under the Penn Virginia Corporation Management Incentive Plan (the “Incentive Plan”) for future share-based compensation awards. A total of 641,997 time-vested restricted stock units (“RSUs”) and 258,991 performance restricted stock units (“PRSUs”) have been granted as of December 31, 2020 including 57,500 RSUs and 57,500 PRSUs that were issued as an inducement award outside of the Incentive Plan.
We recognized $3.3 million, $4.1 million and $4.6 million of share-based compensation expense for the years ended December 31, 2020, 2019 and 2018, respectively. All of our share-based compensation awards are classified as equity instruments because they result in the issuance of common stock on the date of grant, upon exercise or are otherwise payable in common stock upon vesting, as applicable. The compensation cost attributable to these awards has been measured at the grant date and recognized over the applicable vesting periods as a non-cash item of expense.
Time-Vested Restricted Stock Units 
A restricted stock unit entitles the grantee to receive a share of common stock upon the vesting of the restricted stock unit. The grant date fair value of our time-vested restricted stock unit awards are recognized on a straight-line basis over the applicable vesting period.
The following table summarizes activity for our most recent fiscal year with respect to awarded RSUs:
Restricted Stock
Units
Weighted-Average
Grant Date
Fair Value
Balance at beginning of year 136,876  $ 49.76 
Granted 281,382  $ 4.49 
Vested (63,916) $ 43.30 
Forfeited (35,062) $ 27.83 
Balance at end of year 319,280  $ 13.56 
As of December 31, 2020, we had $3.0 million of unrecognized compensation cost attributable to RSUs. We expect that cost to be recognized over a weighted-average period of 1.0 years. The total grant-date fair values of RSUs that vested in 2020, 2019 and 2018 was $2.8 million, $3.0 million and $3.3 million, respectively.
Performance Restricted Stock Units
In the years ended December 31, 2020 and December 31, 2019, we granted 145,399 and 15,066 PRSUs, respectively to members of our management. There were no PRSUs granted for the year ended December 31, 2018. The PRSUs were issued collectively in separate tranches with individual performance periods beginning in January 2019, 2020 and 2021, respectively. Vesting of the PRSUs can range from zero to 200% of the original grant based on the performance of our common stock relative to an industry index or for those granted in 2019 and 2020, a peer group of companies. Due to their market condition, the PRSUs are being charged to expense using graded vesting over a maximum of five years. The fair value of each PRSU award was estimated on their grant dates using a Monte Carlo simulation with $34.02 per PRSU for the 2019 grant and a range of $2.40 to $16.02 for the 2020 grants.
The ranges for the assumptions used in the Monte Carlo model for the PRSUs granted during 2020, 2019 and 2017 are presented as follows:
2020 2019
Expected volatility
101.32% to 117.71%
49.9  %
Dividend yield 0.0% 0.0%
Risk-free interest rate
0.18% to 0.51%
1.66  %
The following table summarizes activity for our most recent fiscal year with respect to PRSUs:
Performance Restricted Stock
Units
Weighted-Average Grant Date
Fair Value
Balance at beginning of year 79,914  $ 52.73 
Granted 145,399  $ 7.79 
Vested (31,146) $ 58.35 
Forfeited (20,635) $ 55.99 
Balance at end of year 173,532  $ 13.68 
As of December 31, 2020, we had $1.5 million of unrecognized compensation cost attributable to PRSUs. We expect that cost to be recognized over a weighted-average period of 1.3 years.
Executive Transition and Retirement
In August 2020, we appointed Darrin Henke our new president and chief executive officer, or CEO, and director following the retirement of John Brooks. We incurred incremental G&A costs of approximately $1.2 million, in connection with Mr. Henke’s appointment and Mr. Brooks’ separation. In addition to those incremental costs, we recognized $0.7 million during the year ended December 31, 2020 for the accelerated vesting of certain share-based compensation awards of Mr. Brooks in connection with his retirement.
In December 2019, Steven A. Hartman separated from the Company. In accordance with his separation and transition agreement (“Hartman Separation Agreement”), we recorded a charge of $0.5 million for severance and other cash benefits that were paid in the first quarter of 2020. The Hartman Separation Agreement also provided for the accelerated vesting of certain share-based compensation awards for which we recognized accelerated expense of $0.2 million during the year ended December 31, 2019. Effective February 28, 2018, Mr. Harry Quarls retired from his position as a director and Executive Chairman of the Company. In connection with his retirement, we entered into a separation and consulting agreement (“Quarls Separation Agreement”) whereby Mr. Quarls agreed to provide transition and support services to us through December 31, 2018. We paid Mr. Quarls $0.3 million under the Quarls Separation Agreement. The Quarls Separation Agreement included a general release of claims and provided for the accelerated vesting of certain share-based compensation awards for which we recognized accelerated expense of $0.6 million during the year ended December 31, 2018. The costs associated with the Hartman and Quarls Separation Agreements, including the share-based compensation charges, were included as a component of “G&A expenses” in our Consolidated Statements of Operations for the years ended December 31, 2019 and 2018, respectively.
Defined Contribution Plan
We maintain the Penn Virginia Corporation and Affiliated Companies Employees 401(k) Plan (the “401(k) Plan”), a defined contribution plan, which covers substantially all of our employees. We provide matching contributions on our employees’ elective deferral contributions up to six percent of compensation up to the maximum statutory limits. The 401(k) Plan also provides for discretionary employer contributions. The expense recognized with respect to the 401(k) Plan was $0.9 million, $0.9 million, $0.6 million for the years ended December 31, 2020, 2019 and 2018, respectively, and is included as a component of “General and administrative expenses” in our Statements of Operations. Amounts representing accrued obligations to the 401(k) Plan of $0.2 million and $0.3 million are included in the “Accounts payable and accrued expenses” caption on our Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.
Defined Benefit Pension and Postretirement Health Care Plans
We maintain unqualified legacy defined benefit pension and defined benefit postretirement health care plans which cover a limited population of former employees that retired prior to January 1, 2000. The combined expense recognized with respect to these plans was less than $0.1 million for each year ended December 31, 2020, 2019 and 2018, and is included as a component of “Other, net” in our Statements of Operations. The combined unfunded benefit obligations under these plans were $1.3 million and are included within the “Accounts payable and accrued expenses” (current portion) and “Other liabilities” (noncurrent portion) captions on our Consolidated Balance Sheets as of December 31, 2020 and 2019.