Share-Based Compensation and Other Benefit Plans

Share-Based Compensation

We recognize share-based compensation expense related to our share-based compensation plans as a component of “General and administrative” expense in our Condensed Consolidated Statements of Operations.

In the Predecessor periods in 2016 and 2015 we had outstanding equity-classified awards in the form of stock options, restricted stock units and deferred stock unit. As discussed in Notes 3 and 4, all remaining equity-classified share-based compensation awards were canceled in connection with our emergence from bankruptcy. On the Effective Date, we authorized 749,600 shares of New Common Stock for future share-based compensation awards, none of which were outstanding as of September 30, 2016.

With the exception of performance-based restricted stock units (“PBRSUs”), all of our Predecessor’s share-based compensation awards were classified as equity instruments because they would result in the issuance of common stock on the date of grant, upon exercise or were otherwise payable in common stock upon vesting, as applicable. The compensation cost attributable to these awards was measured at the grant date and recognized over the applicable vesting period as a non-cash item of expense. Because the PBRSUs were payable in cash, they were typically considered liability-classified awards and were included in “Accounts payable and accrued liabilities” (current portion) and “Other liabilities” (noncurrent portion) on our Condensed Consolidated Balance Sheets of the Predecessor. Compensation cost associated with the PBRSUs was measured at the end of each reporting period and recognized based on the period of time that had elapsed during each of the individual performance periods. Similar to the equity-classified awards referenced above, all outstanding PBRSUs were canceled as well upon our emergence from bankruptcy.

The following tables summarize our share-based compensation expense (benefit) recognized for the periods presented:



	Successor		Predecessor
	Period from September 13,		Period from July 1,
	2016 through September		2016 through September		Three Months Ended
	30, 2016		12, 2016		September 30, 2015

Equity-classified awards	$	—	$	5,433	$	1,263
Liability-classified awards	—		—		(851		)
	$	—	$	5,433	$	412



	Successor		Predecessor
	Period from September 13,		Period from January 1,
	2016 through September		2016 through September			Nine Months Ended
	30, 2016		12, 2016			September 30, 2015

Equity-classified awards	$	—	$	1,511		$	3,369
Liability-classified awards	—		(19		)	(686		)
	$	—	$	1,492		$	2,683

The equity-classified share-based compensation expense for the Predecessor periods from July 1, 2016 and January 1, 2016, each through September 12, 2016, include an adjustment of $5.3 million to correct for an error that occurred in the reporting of equity-classified share-based compensation expense for the three months ended June 30, 2016. We have assessed the quantitative and qualitative factors with respect to this error as well as the effect of the correcting adjustment being recorded in the Predecessor period from July 1, 2016 through September 12, 2016 and determined that the amount and timing of the adjustment is not material to the Condensed Consolidated Financial Statements taken as a whole for any of the subject periods.

The substance of the error was attributable to the accounting for the voluntary cancellation of certain restricted stock unit awards that were scheduled to vest immediately prior to the Petition Date. While we believe the dollar amount of the error is not insignificant, the non-cash nature of the underlying compensation expense and the overall variability of all of our share-based compensation awards as a component of general and administrative expenses are factors to which we gave strong consideration in our assessment. In general and specifically in the industry in which we operate, non-cash share-based compensation expense is generally viewed independently of traditional cash-based general and administrative expenses. Accordingly, significant variability of such expense in any discrete period is not indicative of a trend in general and administrative expenses that would influence a user of our financial statements. Furthermore, the Condensed Consolidated Financial Statements that included the original error were issued approximately two and one-half months after we entered bankruptcy. Accordingly, we do not believe that the error which occurred within and was subsequently corrected in a sequential Predecessor period would influence any current users of our financial statements as the subject compensations plans were ultimately canceled and we are a substantially different company, particularly with respect to total employee headcount, as the Successor from an overall general and administrative cost perspective.

Other Benefit Plans

We maintain the Penn Virginia Corporation and Affiliated Companies Employees 401(k) Plan (the “401(k) Plan”), a defined contribution plan, which covers substantially all of our employees. We recognized $0.4 million for the period January 1, 2016 through September 12, 2016, less then $0.1 million for the period September 13, 2016 through September 30, 2016 and $0.6 million of expense attributable the 401(k) Plan for the nine months ended September 30, 2015.

We maintain unqualified legacy defined benefit pension and defined benefit postretirement plans that cover a limited number of former employees, all of whom retired prior to 2000. The combined expense recognized with respect to these plans was less than $0.1 million for the period January 1, 2016 through September 12, 2016, less than $0.1 million for the period September 13, 2016 through September 30, 2016 and $0.1 million for the nine months ended September 30, 2015.