EQUITY

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

EQUITY

EQUITY

Stock-based Compensation

During the nine months ended September 30, 2022, the Company granted awards to certain of its employees of 226,238 service-based restricted stock units to be settled in cash, which are liability instruments, 230,251 performance-based stock units and 226,656 service-based shares of restricted stock, which are equity instruments. The performance-based stock units vest in an amount between zero and 200% of the target units granted based on the Company’s relative total shareholder return over the three-year period ending December 31, 2024, as compared to a designated peer group. The service-based restricted stock and restricted stock units vest over a three-year period. The fair value of these awards was approximately $35.2 million on the grant date.

In April 2022, the Company’s Board of Directors (the “Board”) adopted, subject to shareholder approval, the first amendment to the 2019 Long-Term Incentive Plan, authorizing an additional 3.7 million shares of common stock for issuance to employees, directors, contractors or advisors of the Company. In June 2022, the Company’s shareholders approved such amendment.

Employee Stock Purchase Plan

In April 2022, the Board adopted, subject to shareholder approval, an Employee Stock Purchase Plan (the “ESPP”). The purpose of the ESPP is to encourage and enable the Company’s eligible employees to acquire an interest in the Company through the ownership of common stock. In June 2022, the Company’s shareholders approved the ESPP. A maximum of 4.0 million shares of common stock may be purchased under the ESPP.

Common Stock Dividend

The Board declared a quarterly cash dividend of $0.05 per share of common stock in both the first and second quarters of 2022. The dividend, which totaled $5.9 million in each quarter, was paid on March 14, 2022 and June 3, 2022. In June 2022, the Board amended the Company’s dividend policy to increase the quarterly dividend to $0.10 per share of common stock. In the third quarter of 2022, the Board declared a quarterly cash dividend of $0.10 per share of common stock, which totaled $11.8 million and was paid on September 1, 2022. In October 2022, the Board declared a quarterly cash dividend of $0.10 per share of common stock payable on December 1, 2022 to shareholders of record as of November 10, 2022.

San Mateo Distributions and Contributions

During the three months ended September 30, 2022 and 2021, San Mateo distributed $23.5 million and $17.6 million, respectively, to the Company and $22.5 million and $16.9 million, respectively, to a subsidiary of Five Point Energy LLC (“Five Point”), the Company’s joint venture partner in San Mateo. During the nine months ended September 30, 2022 and 2021, San Mateo distributed $70.1 million and $47.7 million, respectively, to the Company and $67.4 million and $45.8 million, respectively, to Five Point. During the three and nine months ended September 30, 2022 and 2021, there were no contributions to San Mateo by either the Company or Five Point.

Performance Incentives

No performance incentives were paid by Five Point to the Company during the three months ended September 30, 2022. Five Point paid to the Company $6.0 million in performance incentives during the three months ended September 30, 2021. Five Point paid to the Company $22.8 million and $37.6 million in performance incentives during the nine months ended September 30, 2022 and 2021, respectively. These performance incentives are recorded when received, net of the $4.8 million and $1.3 million deferred tax impact to Matador for the nine months ended September 30, 2022 and 2021, respectively, in “Additional paid-in capital” in the Company’s interim unaudited condensed consolidated balance sheets. These performance incentives for the nine months ended September 30, 2022 and 2021 are also denoted as “Contributions related to formation of San Mateo” under “Financing activities” in the Company’s interim unaudited condensed consolidated statements of cash flows and changes in shareholders’ equity.