We have two active equity-based stock plans: our Amended and Restated 2005 Equity-Based Incentive Compensation Plan and our Amended and Restated 2019 Equity-Based Compensation Plan. Under these plans, various awards may be issued to non-employee directors and employees pursuant to decisions of the Compensation Committee, which is composed of only non-employee, independent directors.

Stock-based compensation represents amortization of restricted stock and performance units. Unlike the other forms of stock-based compensation, the mark-to-market adjustment of the liability related to the vested restricted stock held in our deferred compensation plan is directly tied to the change in our stock price and not directly related to the functional expenses and therefore, is not allocated to the functional categories. The following details the allocation of stock-based compensation to functional expense categories (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Direct operating expense	$	372	$	319	$	1,083	$	986
Brokered natural gas and marketing expense		663		446		1,868		1,339
Exploration expense		393		368		1,163		1,116
General and administrative expense		10,402		9,845		32,245		28,632
Total stock-based compensation expense	$	11,830	$	10,978	$	36,359	$	32,073

Restricted Stock Awards. We grant restricted stock units under our equity-based stock compensation plans. These restricted stock units, which we refer to as restricted stock Equity Awards, generally vest over a three-year period, contingent on the recipient’s continued employment. The grant date fair value of the Equity Awards is based on the fair market value of our common stock on the date of grant.

The Compensation Committee also grants restricted stock to certain employees and non-employee directors of the board of directors as part of their compensation. In addition, we also grant restricted stock to certain employees for retention purposes. Compensation expense is recognized over the balance of the vesting period, which is typically three years for employee grants and one year vesting for non-employee directors. In early 2021, vesting for new grants of restricted stock Liability Awards changed to a three-year cliff vesting from a ratable 30%-30%-40% vesting schedule. All restricted stock awards are issued at prevailing market prices at the time of the grant and the vesting is based upon an employee’s continued employment with us. Prior to vesting, all restricted stock award recipients have the right to vote such stock and receive dividends thereon. Upon grant of these restricted shares, which we refer to as restricted stock Liability Awards, the majority of these shares are generally placed in our deferred compensation plan and, upon vesting, withdrawals are allowed in either cash or in stock. These Liability Awards are classified as a liability and are remeasured at fair value each reporting period. This mark-to-market amount is reported in deferred compensation plan expense in the accompanying consolidated statements of operations. Historically, we have used authorized but unissued shares of stock when restricted stock is granted. However, we can also utilize treasury shares.

Stock-Based Performance Units. We grant three types of performance share awards: two based on internal performance conditions which are measured against internal performance metrics and one based on market conditions measured based on Range’s performance relative to a predetermined peer group (TSR Awards or TSR-PSUs). In first quarter 2021, our internal performance metrics were changed to focus on debt reduction and to include an environmental component. For shares granted in 2021, the performance conditions will be measured against internal metrics of Debt/EBITDAX (earnings before interest, taxes, depreciation, amortization and exploration expense) and emission intensity performance. For shares granted in first quarter 2022, the performance conditions will be measured against internal metrics of total net debt (total debt less cash on hand) and emission intensity performance.

Each unit granted represents one share of our common stock. These units are settled in stock and the amount of the payout is based on the vesting percentage, which can range from zero to 200% and (1) the internal performance achieved, which is determined by the Compensation Committee and (2) for our TSR Awards, the value of our common stock on the vesting date compared to our peers. Dividend equivalents accrue during the performance period and are paid in stock at the end of the performance period. The performance period is for three years. Prior to 2021, the performance period for the internal performance metrics was based on annual performance targets earned over a three-year period.

In first nine months 2022, we granted 1.4 million restricted stock Equity Awards to employees at an average grant date fair value of $18.59 which generally vest over a three-year period compared to 2.3 million at an average grant date fair value of $10.20 in first nine months 2021. We recorded compensation expense for these outstanding awards of $15.9 million in first nine months 2022 compared to $15.0 million in the same period of 2021. Restricted stock Equity Awards are not issued to employees until such time as they are vested. Employees do not have the option to receive cash.

In first nine months 2022, we granted 603,000 shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $20.43 which generally vest at the end of a three-year period and 47,000 shares were granted to non-employee directors at an average price of $27.52 with vesting at the end of one year. In first nine months 2021, we granted 1.2 million shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $9.30 with vesting generally at the end of a three-year period and 102,000 shares were granted to non-employee directors at an average price of $12.49 with vesting at the end of one year. We recorded compensation expense for these Liability Awards of $10.3 million in first nine months 2022 compared to $8.4 million in first nine months 2021. The majority of these awards are held in our deferred compensation plan, are classified as a liability and are remeasured at fair value each reporting period. This mark-to-market amount is reported as deferred compensation expense in our consolidated statements of operations (see additional discussion below). The following is a summary of the status of our non-vested restricted stock outstanding at September 30, 2022:


	Restricted Stock Equity Awards					Restricted Stock Liability Awards
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		2,674,777		$	7.39		796,629		$	6.49
Granted		1,392,660			18.59		649,739			20.94
Vested		(1,724,828	)		8.89		(812,203	)		12.13
Forfeited		(59,912	)		10.29		—			—
Outstanding at September 30, 2022		2,282,697		$	13.01		634,165		$	14.08

Internal Performance Metric Awards. These awards vest at the end of the three-year performance period. The performance metrics are set by the Compensation Committee. If the performance metric for the applicable period is not met, that portion is considered forfeited and there is an adjustment to the expense recorded. See additional information above for shares granted in first nine months 2021 and 2022. The following is a summary of our non-vested internal performance awards outstanding at September 30, 2022:


	Number of Units			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		1,095,355		$	7.80
Units granted (a)		153,089			20.38
Vested and issued (b)		(243,482	)		9.64
Forfeited		—			—
Outstanding at September 30, 2022		1,004,962		$	9.27


(a)	Amounts granted reflect the number of performance units granted; however, the actual payout of shares will be between zero and 200% depending on achievement of specifically identified performance targets. Units granted in first quarter 2022 were to our CEO, CFO and COO only.
(b)	For the awards issued during 2019, the aggregate payout was approximately 116% of target with a positive performance adjustment of 158,793 shares.

We recorded compensation expense for these awards of $5.3 million in first nine months 2022 compared to expense of $3.8 million in first nine months 2021.

TSR Awards. TSR-PSUs granted are earned, or not earned, based on the comparative performance of Range’s common stock measured against a predetermined group of companies in the peer group over a three-year performance period. The fair value of the TSR-PSUs is estimated on the date of grant using a Monte Carlo simulation model which utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. The fair value is recognized as stock-based compensation expense over the three-year performance period. Expected volatilities utilized in the model were estimated using a combination of a historical period consistent with the remaining performance period of three years and option implied volatilities. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the life of the grant. The following assumptions were used to estimate the fair value of TSR-PSUs granted during first nine months 2022 and 2021:


	Nine Months Ended September 30,
	2022			2021
Risk-free interest rate		1.4	%		0.2	%
Expected annual volatility		68	%		75	%
Grant date fair value per unit	$	27.90		$	12.58

The following is a summary of our non-vested TSR-PSUs award activities:


	Number of Units			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		1,147,994		$	7.60
Units granted (a)		111,828			27.90
Vested and issued (b)		(314,152	)		11.34
Forfeited		—			—
Outstanding at September 30, 2022		945,670		$	8.76

We recorded TSR-PSUs compensation expense of $2.3 million in first nine months 2022 compared to $1.9 million in the same period of 2021. Fair value is amortized over the performance period with no adjustment to the expense recorded for actual targets achieved.

Our deferred compensation plan gives non-employee directors and officers the ability to defer all or a portion of their salaries, bonuses or director fees and invest in Range common stock or make other investments at the individual’s discretion. Range provides a partial matching contribution to officers which vests over three years. In early 2021, vesting for the matching contribution was changed to a three-year cliff vesting schedule. The assets of the plan are held in a grantor trust, which we refer to as the Rabbi Trust, and are therefore available to satisfy the claims of our general creditors in the event of bankruptcy or insolvency. Our common stock held in the Rabbi Trust is treated as a liability award as employees are allowed to take withdrawals from the Rabbi Trust either in cash or in Range stock. The liability for the vested portion of the stock held in the Rabbi Trust is reflected as deferred compensation liability in the accompanying consolidated balance sheets and is adjusted to fair value each reporting period by a charge or credit to deferred compensation plan expense on our consolidated statements of operations. The assets of the Rabbi Trust, other than our common stock, are invested in marketable securities and reported at their market value as other assets in the accompanying consolidated balance sheets. The deferred compensation liability reflects the vested market value of the marketable securities and Range stock held in the Rabbi Trust. Changes in the market value of the marketable securities and changes in the fair value of the deferred compensation plan liability are charged or credited to deferred compensation plan expense each quarter. We recorded a mark-to-market loss of $5.8 million in third quarter 2022 compared to a mark-to-market loss of $34.3 million in third quarter 2021. We recorded mark-to-market loss of $59.9 million in first nine months 2022 compared to mark-to-market loss of $89.6 million in first nine months 2021. The Rabbi Trust held 5.7 million shares (5.1 million of which were vested) of Range stock at September 30, 2022 compared to 6.2 million shares (5.4 million of which were vested) at December 31, 2021.