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Share-based Compensation
9 Months Ended
Sep. 30, 2017
Share-based Compensation.  
Share-based Compensation

Note 8 — Share-based Compensation

We recognize share-based compensation at fair value on the date of grant. The fair value is recognized as expense (net of any capitalization) over the requisite service period. For equity-classified share-based compensation awards (which include grants of stock and restricted stock to employees), compensation cost is recognized based on the grant-date fair value using the quoted market price of our common stock and not subsequently remeasured. The fair value is recognized as expense (net of any capitalization) using the straight-line basis for awards that vest based on service conditions and using the graded-vesting attribution method for awards that vest based on performance conditions. We estimate the service periods for performance awards utilizing a probability assessment based on when we expect to achieve the performance conditions. For liability classified share-based compensation awards (which include grants of stock and restricted stock to non-employees), compensation cost is initially recognized on the grant date using estimated payout levels. Compensation cost is subsequently adjusted quarterly to reflect the updated estimated payout levels based on the changes in the Company’s stock price.

As discussed in Note 2 – Merger, the stockholders of the Company approved the issuance of Additional Shares upon the achievement of the Additional Share Milestones.  In aggregate, 2,429,396 shares and 287,388 Additional Shares will be awarded to management and consultants, respectively, upon the achievement of the Additional Share Milestones.

In addition, in connection with the Merger, the stockholders of the Company also approved the issuance of restricted shares of our common stock to certain employees and consultants (“Restricted Shares”) in an amount based on the number of shares of common stock outstanding at the time of achieving each of the milestones.  In aggregate, we estimate that total Restricted Shares to vest upon achievement of the milestones below to employees and consultants are 3,942,455 shares and 1,495,414 shares, respectively, with vesting percentage by milestone as follows:

 

 

Milestone 1 — 6.25% upon the execution by the Company of a final agreement with an engineering, procurement and construction contractor for an LNG facility.

 

 

 

 

 

Milestone 2 — 25.00% upon the execution of one or more binding LNG sale and purchase or tolling agreements, with customary conditions precedent, providing for an aggregate of at least 3.825 million tons per annum.

 

 

Milestone 3 — 68.75% upon reaching a positive final investment decision for the Terminal.

 

Total share-based compensation consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

September 30, 

 

September 30, 

 

    

2017

    

2016

    

2017

    

2016

Share-based compensation:

 

 

  

 

 

  

 

 

  

 

 

  

Equity awards

 

$

8,830

 

$

 —

 

$

8,830

 

$

 —

Liability awards

 

 

2,305

 

 

 —

 

 

2,305

 

 

 —

Total share-based compensation

 

 

11,135

 

 

 —

 

 

11,135

 

 

 —

Capitalized share-based compensation

 

 

(659)

 

 

 —

 

 

(659)

 

 

 —

Total share-based compensation expense

 

$

10,476

 

$

 —

 

$

10,476

 

$

 —

 

During each of the three and nine months ended September 30, 2017, the weighted average grant date fair value of equity-classified awards was $10.26 per share, and the total grant date fair value of equity-classified awards was $65.4 million.  The total unrecognized compensation costs at September 30, 2017 relating to equity-classified awards and liability-classified awards were $56.6 million and $15.7 million, respectively, which is expected to be recognized over a weighted average period of 1.75 years.