Equity-based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Equity-based Compensation

Equity‑based Compensation

Restricted Stock Awards and Restricted Stock Units

Our Long-Term Incentive Plan (“LTIP”) provides for the granting of incentive awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units, among other award types. In June 2023, the Company’s stockholders approved the Amended and Restated Kosmos Energy Ltd. LTIP, which authorized an additional 17.0 million shares of common stock available for issuance under the LTIP. The LTIP as amended provides for the issuance of 78.5 million shares pursuant to awards under the LTIP. As of December 31, 2023, the Company had approximately 18.6 million shares that remain available for issuance under the LTIP.

The Company granted restricted stock units with service vesting criteria and with a combination of market and service vesting criteria under the LTIP. Substantially, all of these awards vest over a three year period. Upon vesting, restricted stock units become issued and outstanding stock.

The following table reflects the outstanding restricted stock units as of December 31, 2023:

	Service Vesting Restricted Stock Units	Weighted- Average Grant-Date Fair Value		Market / Service Vesting Restricted Stock Units	Weighted-Average Grant-Date Fair Value
	(In thousands)			(In thousands)
Outstanding at December 31, 2020:	4,840	$	5.34	7,859	$	8.11
Granted(1)	2,905	2.57		6,744	3.91
Forfeited(1)	(649)	4.05		(1,998)	5.50
Vested	(2,400)	5.19		(1,372)	9.95
Outstanding at December 31, 2021:	4,696	3.88		11,233	5.28
Granted(1)	2,820	4.70		3,388	6.98
Forfeited(1)	(147)	3.92		(389)	6.21
Vested	(2,453)	4.21		(2,191)	5.98
Outstanding at December 31, 2022:	4,916	4.18		12,041	5.61
Granted(1)	2,809	7.61		3,482	12.26
Forfeited(1)	(240)	5.65		(203)	8.17
Vested	(2,775)	3.86		(2,950)	8.22
Outstanding at December 31, 2023:	4,710	5.77		12,370	6.59

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(1)The restricted stock units with a combination of market and service vesting criteria may vest between 0% and 200% of the originally granted units depending upon market performance conditions. Awards vesting over or under target shares of 100% results in additional shares granted or forfeited, respectively, in the period the market vesting criteria is determined.

As of December 31, 2023, total equity‑based compensation to be recognized on unvested restricted stock units is $27.8 million over a weighted average period of 1.8 years.

For restricted stock units with a combination of market and service vesting criteria, the number of common shares to be issued is determined by comparing the Company’s total shareholder return with the total shareholder return of a predetermined group of peer companies over the performance period and can vest in up to 200% of the awards granted. The grant date fair value ranged from $1.06 to $13.06 per award. The Monte Carlo simulation model utilizes multiple input variables that determined the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. The expected volatility utilized in the model was estimated using our historical volatility and the historical volatilities of our peer companies and ranged from 50.0% to 105.0%. The risk‑free interest rate was based on the U.S. treasury rate for a term commensurate with the expected life of the grant ranged from 0.2% to 3.7%. The expected quarterly dividends ranged from $0.000 to $0.050 commensurate with our current dividend experience.

In January 2024, we granted 2.4 million service vesting restricted stock units and 3.0 million market and service vesting restricted stock units to our employees under our long-term incentive plan. We expect to recognize approximately $41.4 million of non-cash compensation expense related to these grants over the next three years.

We record equity-based compensation expense in General and administrative expenses in our consolidated statement of operations equal to the grant date fair value of share‑based payments over the vesting periods of the LTIP awards. The following table summarizes certain information related to our share-based payments:

	Years Ended December 31,
	2023		2022		2021
	(In thousands)
Share-based compensation expense	$	42,693	$	34,546	$	31,651
Total tax benefit	7,482		5,933		5,786
Net tax shortfall (windfall)	(3,201)		673		6,307
Fair value of awards vested	45,098		22,205		9,435