In March of 2021, stockholders approved the PHX Minerals Inc. 2021 Long-Term Incentive Plan (the “LTIP”). The LTIP expressly prohibits the payment of dividends or dividend equivalents on any award before the date on which the award vests. Awards under the LTIP will be subject to any clawback or recapture policy that the Company may adopt from time to time or any clawback or recapture provisions set forth in an award agreement.

The fair value of the restricted stock (time-based) was based on the closing price of the shares on their grant date and will be recognized as compensation expense ratably over the vesting period. The fair value of the performance shares (market-based) was estimated on the grant date using a Monte Carlo valuation model that factors in information, including the historical volatility, risk-free interest rate and the probable outcome of the market condition, over the expected life of the performance shares. Vesting of these performance shares is based on the performance of the market price of the Common Stock over the vesting period. Compensation expense for the performance shares is a fixed amount determined at the grant date and is recognized over the vesting period regardless of whether performance shares are awarded at the end of the vesting period. Upon vesting, shares are expected to be issued out of shares held in treasury or the Company’s authorized but unissued shares. Compensation expense for the restricted stock awards is recognized in G&A. Forfeitures of awards are recognized when they occur.

On January 31, 2023, the Company granted shares of Common Stock in the form of time-based and market-based restricted stock to the employees and officers of the Company. Officers were awarded 299,900 market-based shares with a fair value on their award date of $1,541,893. Upon vesting, the market-based shares that do not meet certain performance criteria are forfeited. Both employees and certain officers were also awarded 97,053 time-based shares with a fair value on the award date of $350,362. The shares issued to employees time-vest ratably over a three-year period ending in December of 2025, and the shares awarded to the officers cliff vest at the end of a three-year period ending in December of 2025. All shares granted on January 31, 2023 have voting rights during the vesting period.

On April 20, 2023, the Company granted 92,544 shares of Common Stock in the form of time-based restricted stock to the non-employee directors of the Company, which had a fair value of $243,390. The shares of restricted stock fully vested in December 2023 and had voting rights during the vesting period.

On December 21, 2023, the Company granted 482,339 shares of Common Stock in the form of time-based and market-based restricted stock to the employees and officers of the Company. Officers were awarded 369,114 market-based shares with a fair value on their award date of $1,678,599. Upon vesting, the market-based shares that do not meet certain performance criteria are forfeited. Both employees and certain officers were also awarded 113,225 time-based shares with a fair value on the award date of $381,571. The shares issued to employees time-vest ratably over a three-year period ending in December of 2026, and the shares awarded to the officers cliff vest at the end of a three-year period ending in December of 2026. All shares granted on December 21, 2023 have voting rights during the vesting period.

On December 21, 2023, the Company granted 116,904 shares of Common Stock in the form of time-based restricted stock to the non-employee directors of the Company, which had a fair value of $393,967. The shares of restricted stock fully vested in December 2024 and had voting rights during the vesting period.

On December 16, 2024, the Company granted 465,649 shares of Common Stock in the form of time-based and market-based restricted stock to the employees and officers of the Company. Officers were awarded 347,818 market-based shares with a fair value on their award date of $1,786,802. Upon vesting, the market-based shares that do not meet certain performance criteria are forfeited. Both employees and certain officers were also awarded 117,831 time-based shares with a fair value on the award date of $467,790. The shares issued to employees time-vest ratably over a three-year period ending in December of 2027, and the shares awarded to the officers cliff vest at the end of a three-year period ending in December of 2027. All shares granted on December 16, 2024 have voting rights during the vesting period.

On December 16, 2024, the Company granted 82,695 shares of Common Stock in the form of time-based restricted stock to the non-employee directors of the Company, which had a fair value of $328,300. The shares of restricted stock fully vest in December 2025 and have voting rights during the vesting period.

The following table summarizes the Company’s pre-tax compensation expense for the years ended December 31, 2024 and 2023 related to the Company’s market-based, time-based and performance-based restricted stock:


	Year Ended December 31,
	2024		2023
Market-based, restricted stock	$	1,624,134	$	1,722,814
Time-based, restricted stock		663,793		483,096
Total compensation expense	$	2,287,927	$	2,205,910

A summary of the Company’s unrecognized compensation cost for its unvested market-based and time-based restricted stock and the weighted-average periods over which the compensation cost is expected to be recognized are shown in the following table:


	Unrecognized Compensation Cost		Weighted Average Period (in years)
Market-based, restricted stock	$	2,605,320		1.75
Time-based, restricted stock		1,080,882		2.02
Total	$	3,686,202

Upon vesting, shares are expected to be issued out of shares held in treasury or authorized but unissued shares.

A summary of the status of, and changes in, unvested shares of restricted stock awards is presented below:


	Market-Based Unvested Restricted Awards			Weighted Average Grant-Date Fair Value		Time-Based Unvested Restricted Awards			Weighted Average Grant-Date Fair Value
Unvested shares as of December 31, 2022		705,835		$	3.55		153,224		$	5.09

Granted		669,014			4.81		419,726			3.26
Vested		(303,750	)		2.72		(147,495	)		5.17
Forfeited		-			-		(7,919	)		3.41
Unvested shares as of December 31, 2023		1,071,099		$	4.57		417,536		$	3.26

Granted		458,465			4.89		210,651			3.92
Vested		(502,608	)		4.18		(172,165	)		3.15
Forfeited		(21,962	)		4.81		(60,658	)		3.36
Unvested shares as of December 31, 2024		1,004,994		$	4.91		395,364		$	3.64

The fair value of the vested shares for the years ended December 31, 2024 and 2023 was $2,558,348 and $1,539,424, respectively.