Stock Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

The Company’s board of directors adopted the “Magnolia Oil & Gas Corporation Long Term Incentive Plan” (as amended, the “Plan”), effective as of July 17, 2018. A total of 16.8 million shares of Class A Common Stock have been authorized for issuance under the Plan as of December 31, 2023. The Company grants stock based compensation awards in the form of restricted stock units (“RSU”), performance restricted stock units (“PRSU”), and performance stock units (“PSU”) to eligible employees and directors to enhance the Company and its affiliates’ ability to attract, retain, and motivate persons who make important contributions to the Company and its affiliates by providing these individuals with equity ownership opportunities. Shares issued as a result of awards granted under the Plan are generally new shares of Class A Common Stock.

Stock based compensation expense is recognized net of forfeitures within “General and administrative expenses” and “Lease operating expenses” on the consolidated statements of operations and was $16.2 million, $13.3 million, and $11.7 million for the years ended December 31, 2023, 2022, and 2021. The Company has elected to account for forfeitures of awards granted under the Plan as

they occur in determining compensation expense. The total income tax benefit recognized for stock that vested during the years ended December 31, 2023, 2022, and 2021 was $5.3 million, $5.1 million, and $3.5 million, respectively.

The following table presents a summary of Magnolia’s unvested RSU, PRSU, and PSU activity for the year ended December 31, 2023.


	Restricted Stock Units			Performance Restricted Stock Units			Performance Stock Units
	Units	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Unvested, beginning of period	911,286	$	12.89	1,257,583	$	13.36	278,486	$	6.14
Granted(1)	724,908	22.78		15,524	22.28		232,700	24.69
Granted for performance multiple(2)	—	—		—	—		12,981	6.14
Vested	(503,308)	10.57		(318,984)	12.75		(291,467)	6.14
Forfeited	(58,000)	18.72		(10,549)	17.45		—	—
Unvested, end of period	1,074,886	$	20.32	943,574	$	13.66	232,700	$	24.69

(1) The weighted average grant date fair values of the RSUs granted during the years ended December 31, 2022 and 2021 were $21.14 and $10.98 per share, respectively. The weighted average grant date fair values of the PRSUs granted during the years ended December 31, 2022 and 2021 were $19.22 and $9.36 per share, respectively.

(2) Upon completion of the performance period for the PSUs granted in 2020, a performance multiple of 105% was applied to each of the grants resulting in additional grants of PSUs in 2023.

Restricted Stock Units

The Company grants service-based RSU awards to employees, which generally vest and settle ratably over a three-year or four-year service period, and to non-employee directors, which vest in full after one year. Non-employee directors may elect to defer the RSU settlement date. RSUs represent the right to receive shares of Class A Common Stock at the end of the vesting period equal to the number of RSUs that vest. RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases to be an employee or director of the Company prior to vesting of the award. Compensation expense for the service-based RSU awards is based upon the grant date market value of the award and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards. The aggregate fair values of RSUs that vested during the years ended December 31, 2023, 2022, and 2021 were $11.2 million, $13.8 million, and $12.6 million, respectively. Unrecognized compensation expense related to unvested RSUs as of December 31, 2023 was $14.4 million, which the Company expects to recognize over a weighted average period of 2.2 years.

Performance Restricted Stock Units and Performance Stock Units

The Company has granted PRSUs to certain employees. Each PRSU represents the contingent right to receive one share of Class A Common Stock once the PRSU is both vested and earned. PRSUs generally vest either ratably over a three-year service period or at the end of a three-year service period, in each case, subject to the recipient’s continued employment or service through each applicable vesting date. Each PRSU is earned based on whether Magnolia’s stock price achieves a target average stock price for any 20 consecutive trading days during the five-year performance period (“Performance Condition”). If PRSUs are not earned by the end of the five-year performance period, the PRSUs will be forfeited and no shares of Class A Common Stock will be issued, even if the vesting conditions have been met. Compensation expense for the PRSU awards is based upon grant date fair market value of the award, calculated using a Monte Carlo simulation, as presented below, and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards, as applicable. The aggregate fair value of PRSUs that vested during the years ended December 31, 2023 and 2022 were $7.1 million and $4.8 million, respectively. Unrecognized compensation expense related to unvested PRSUs as of December 31, 2023 was $3.1 million, which the Company expects to recognize over a weighted average period of 1.2 years.

Since the Performance Conditions for the PRSUs granted in 2022 and 2021 were met on March 28, 2022 and March 17, 2021, respectively, the fair value of the PRSUs granted after the Performance Conditions were met was based upon the grant date market value of the award. The fair value of the awards granted prior to the date the Performance Conditions were met was determined using a Monte Carlo simulation, the assumptions of which are summarized in the table below.

The Company has granted PSUs to certain employees. Each PSU, to the extent earned, represents the contingent right to receive one share of Class A Common Stock and the awardee may earn between zero and 150% of the target number of PSUs granted based on the total shareholder return (“TSR”) of the Class A Common Stock relative to the TSR achieved by a specific industry peer group over a three-year performance period. In addition to the TSR conditions, vesting of the PSUs is subject to the awardee’s continued employment through the date of settlement of the PSUs, which will occur within 60 days following the end of the

performance period. The aggregate fair value of PSUs that vested during the years ended December 31, 2023, 2022, and 2021 were $6.7 million, $5.5 million, and $4.0 million, respectively. Unrecognized compensation expense related to unvested PSUs as of December 31, 2023 was $4.0 million, which the Company expects to recognize over a weighted average period of 2.1 years.


	Years Ended
PRSU and PSU Grant Date Fair Value Assumptions	December 31, 2023	December 31, 2022	December 31, 2021
Expected term (in years)	2.88	3.55	3.64
Expected volatility	60.80%	59.58%	55.18%
Risk-free interest rate	4.15%	1.89%	0.56%
Dividend yield	1.93%	1.97%	—%