Incentive Plans

9 Months Ended

Sep. 30, 2020

Incentive PlansIn connection with the Parsley Acquisition, the Company assumed all rights and obligations under the Amended and Restated Parsley Energy, Inc. 2014 Long Term Incentive Plan (the "2014 Parsley Plan") and the Jagged Peak Energy Inc. 2017 Long Term Incentive Plan (the "Jagged Peak Plan") and together with the 2014 Parsley Plan, (the "Parsley Plans"). The awards outstanding under the Parsley Plans were assumed by the Company and were automatically converted into an award with the right to receive a number of shares of Pioneer common stock that is equal to the product of the number of shares of Parsley common stock subject to such award under the Parsley Plans as of the acquisition date and the Exchange Ratio (0.1252). As a result, 37,299 shares of Pioneer common stock are issuable by the Company upon settlement of the outstanding awards granted under the 2014 Parsley Plan and 1,166 shares of Pioneer common stock are issuable by the Company upon settlement of the outstanding awards granted under the Jagged Peak Plan.

The number of shares available for grant pursuant to the awards issued under the Company's Amended and Restated 2006 Long-Term Incentive Plan ("LTIP") is as follows:


			As of September 30, 2021
Approved and authorized awards			12,600,000
2014 Parsley Plan awards available to the LTIP (a)			879,575
Awards issued under the plan			(9,459,418)
Awards available for future grant			4,020,157

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(a) Under New York Stock Exchange rules, the Company added the shares that were available under the 2014 Parsley Plan to the LTIP. These shares can only be used for grants to employees who were not employed or engaged by Pioneer or any of its subsidiaries immediately before the Parsley Acquisition and such awards may only be granted through May 22, 2024, the date that the 2014 Parsley Plan would have otherwise expired.

Stock-based compensation expense is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

	(in millions)
Restricted stock - equity awards	$	11	$	15	$	32	$	37
Restricted stock - liability awards (a)	3		4		12		7
Restricted stock and performance units - Parsley awards (b)	—		—		33		—
Performance unit awards	6		6		20		15
Employee stock purchase plan	1		—		2		2

	$	21	$	25	$	99	$	61

______________________

(a)Liability Awards are expected to be settled on their vesting date in cash. As of September 30, 2021 and December 31, 2020, accounts payable – due to affiliates included $4 million and $7 million, respectively, of liabilities attributable to Liability Awards.

(b)Represents the accelerated vesting of Parsley restricted stock equity awards and performance units upon completion of the Parsley Acquisition, which was recorded to other expense in the consolidated statements of operations.

As of September 30, 2021, there was $105 million of unrecognized stock-based compensation expense related to unvested share-based compensation awards, including $25 million attributable to stock-based awards that are expected to be settled on their vesting date in cash, rather than in equity shares. The unrecognized compensation expense will be recognized on a straight-line basis over the remaining vesting periods of the awards, which is a period of less than three years on a weighted average basis.

Activity for restricted stock awards, performance units and stock options is as follows:


	Nine Months Ended September 30, 2021
	Restricted Stock Equity Awards	Restricted Stock Liability Awards	Performance Units	Stock Options
Beginning incentive compensation awards	765,981	221,353	207,430	86,332
Awards granted	304,142	71,870	173,423	—
Awards assumed (a) (c)	255,379	—	100,056	—
Awards forfeited	(7,329)	(5,848)	—	—
Awards vested (b) (c)	(562,752)	(100,956)	(100,056)	—
Options exercised	—	—	—	(55,173)
Options expired	—	—	—	(415)
Ending incentive compensation awards	755,421	186,419	380,853	30,744

______________________

(a)Awards assumed as a result of the Parsley Acquisition.

(b)Per the terms of award agreements and elections, the issuance of common stock may be deferred for certain restricted stock equity awards, performance units and stock options that vest during the period.

(c)The amounts presented include the assumption and accelerated vesting of 216,914 Parsley restricted stock equity awards and 100,056 of Parsley performance units, both of which vested upon completion of the Parsley Acquisition.