Share-Based Compensation and Other Benefit Plans

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

We reserved 749,600 shares of New Common Stock for issuance under the Penn Virginia Corporation Management Incentive Plan for future share-based compensation awards. A total of 107,563 shares of time-vested restricted stock units had been granted as of December 31, 2016.

In the Predecessor periods in 2016, 2015 and 2014, we had outstanding equity-classified awards in the form of stock options, restricted stock units and deferred stock units. As discussed in Notes 4 and 5, all remaining equity-classified share-based compensation awards were canceled in connection with our emergence from bankruptcy.

With the exception of our Predecessor performance-based restricted stock units (“PBRSUs”), all of our Successor and Predecessor share-based compensation awards are classified as equity instruments because they result in the issuance of common stock on the date of grant, upon exercise or are otherwise payable in common stock upon vesting, as applicable. The compensation cost attributable to these awards has been measured at the grant date and recognized over the applicable vesting period as a non-cash item of expense. Because the Predecessor 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 the Consolidated Balance Sheets of the Predecessor. Compensation cost associated with the Predecessor 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.

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



	Successor		Predecessor
	Period From		Period From
	September 13, 2016 Through		January 1, 2016 Through			Year Ended December 31,
	December 31, 2016		September 12, 2016			2015			2014
Equity-classified awards	$	81	$	1,511		$	4,540		$	3,627
Liability-classified awards	—		(19		)	(711		)	4,520
	$	81	$	1,492		$	3,829		$	8,147

Stock Options

The exercise price of all stock options granted under our Predecessor incentive compensation plans was equal to the fair value of our common stock on the date of the grant. Options could be exercised at any time after vesting and prior to ten years following the date of grant. Options vested upon terms established by the compensation and benefits committee of our board of directors (the “Committee”). Generally, options vested over a three-year period, with one-third vesting in each year.

The fair value of each option award was estimated on the date of grant using the Black-Scholes-Merton option-pricing formula. Expected volatilities were based on historical changes in the market value of our stock. Separate groups of employees that had similar historical exercise behavior were considered separately to estimate expected lives. Options granted had a maximum term of ten years. We based the risk-free interest rate on the U.S. Treasury rate for the week of the grant having a term equal to the expected life of the option.

The ranges for the assumptions used in the Black-Scholes-Merton pricing formula for the Predecessor stock options granted in the periods presented were as follows:



	Predecessor
	Year Ended December 31,
	2015	2014
Expected volatility	64.6% to 69.4%	56.2% to 63.7%
Dividend yield	0.00% to 0.00%	0.00% to 0.00%
Expected life	3.5 to 4.6 years	3.5 to 4.6 years
Risk-free interest rate	0.87% to 1.54%	0.82% to 1.63%

The following table summarizes activity for our most recent fiscal year with respect to stock options:



	Shares Under Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Balance as of January 1, 2016 (Predecessor)	3,083,821		$	16.05
Granted	—		—
Exercised	—		—
Forfeited or expired	—		—
Canceled	(3,083,821	)	$	16.05
Balance as of December 31, 2016 (Successor)	—		$	—	—	$	—
Exercisable as of end of year (Successor)	—		$	—	—	$	—

The weighted-average grant-date fair value of options granted during the Predecessor years ended December 31, 2015 and 2014, respectively, was $3.15 and $7.46 per option. The total intrinsic value of options exercised during the Predecessor year ended December 31, 2014 was $2.3 million. There were no options exercised during 2015 and 2016. The total grant-date fair values of stock options that vested in Predecessor years 2015 and 2014 were $1.3 million and $1.8 million, respectively.

In connection with our emergence from bankruptcy, all stock options outstanding as of September 12, 2016 were canceled.

Common Stock

A portion of the compensation paid to certain non-employee members of our Predecessor board of directors was paid in common stock. Each share of common stock granted as compensation vested immediately upon issuance. In 2015 and 2014 respectively, we granted 195,395 and 15,501 shares of common stock to our non-employee directors at a weighted-average grant date fair value of $1.33 and $11.61 per share. No shares were granted during the Successor or Predecessor periods in 2016.

In connection with our emergence from bankruptcy, all shares granted to the non-employee members of our Predecessor board of directors as of September 12, 2016 were canceled.

Deferred Common Stock Units

A portion of the compensation paid to certain non-employee members of our Predecessor board of directors was paid in deferred common stock units. Each deferred common stock unit represented one share of common stock, vested immediately upon issuance, and was available to the holder upon termination or retirement from our board of directors. Deferred common stock units awarded to directors received all cash or other dividends we paid on shares of our common stock.

The following table summarizes activity for our most recent fiscal year with respect to awarded deferred common stock units:



	Deferred Common Stock Units		Weighted-Average Grant Date Fair Value
Balance as of January 1, 2016 (Predecessor)	447,498		$	7.75
Granted	—		—
Converted	—		—
Canceled	(447,498	)	$	7.75
Balance as of December 31, 2016 (Successor)	—		$	—

As of December 31, 2015, our Predecessor shareholders’ deficit included deferred compensation obligations of $3.4 million and corresponding amounts for treasury stock.

In connection with our emergence from bankruptcy, all deferred common stock units outstanding as of September 12, 2016 were canceled.

Time-Vested Restricted Stock Units

A restricted stock unit entitles the grantee to receive a share of common stock upon the vesting of the restricted stock unit. The grant date fair value of our time-vested restricted stock unit awards are recognized on a straight-line basis over the applicable vesting period.

The following table summarizes activity for our most recent fiscal year with respect to awarded restricted stock units:



	Restricted Stock Units		Weighted-Average Grant Date Fair Value
Balance as of January 1, 2016 (Predecessor)	468,986		$	6.97
Granted	107,563		23.15
Vested	—		—
Forfeited	—		—
Canceled	(468,986	)	$	6.97
Balance as of December 31, 2016 (Successor)	107,563		$	23.15

As of December 31, 2016, we had $2.4 million of unrecognized compensation cost attributable to Successor unvested restricted stock units. We expect that cost to be recognized over a weighted-average period of 1.5 years. The Predecessor total grant-date fair values of restricted stock units that vested in 2015 and 2014 were $2.2 million and $0.6 million, respectively. No restricted stock units vested during 2016.

In connection with our emergence from bankruptcy, all outstanding restricted stock units as of September 12, 2016 were canceled.

Predecessor Performance-Based Restricted Stock Units

In May 2015, May 2014 and May 2013, we granted PBRSUs to certain executive officers. Vested PBRSUs were payable solely in cash on the third anniversary of the date of grant based upon the achievement of specified market-based performance metrics with respect to each of a one-year, two-year and three-year performance period, in each case commencing on the date of grant. The number of PBRSUs vested ranged from 0% to 200% of the initial grant. The PBRSUs did not have voting rights and did not participate in dividends.

The compensation cost of the PBRSUs was based on the fair value derived from a Monte Carlo model. The Monte Carlo model is a binomial valuation model that utilizes certain assumptions, including expected volatility, dividend yield, risk-free interest rates and a measure of total shareholder return.

The ranges for the assumptions used in the Monte Carlo model for the Predecessor PBRSUs granted in the periods presented were as follows:



	Predecessor
	Year Ended December 31,
	2015	2014
Expected volatility	66.5% to 97.7%	52.6% to 72.3%
Dividend yield	0.0% to 0.0%	0.0% to 0.0%
Risk-free interest rate	0.01% to 1.31%	0.02% to 1.07%

The following table summarizes activity for our most recent fiscal year with respect to PBRSUs:



	Performance-Based Restricted Stock Units		Weighted-Average Fair Value
Balance as of January 1, 2016 (Predecessor)	941,097		$	9.19
Granted	—		—
Forfeited	—		—
Canceled	(941,097	)	$	9.19
Balance as of December 31, 2016 (Successor)	—		$	—

In connection with our emergence of bankruptcy, all outstanding PBRSUs as of September 12, 2016 were canceled.

Defined Contribution Plan

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 provide matching contributions on our employees’ elective deferral contributions up to six percent of compensation up to the maximum statutory limits. The 401(k) Plan also provides for discretionary employer contributions. The expense recognized with respect to the 401(k) Plan was $0.1 million, $0.5 million, $0.9 million and $1.7 million for the Successor period from September 13, 2016 through December 31, 2016, the Predecessor period from January 1, 2016 through September 12, 2016, and the Predecessor years ended December 31, 2015, and 2014, respectively, and is included as a component of “General and administrative expenses” in our Statements of Operations. Amounts representing accrued obligations to the 401(k) Plan of $0.1 million and $0.2 million are included in the “Accounts payable and accrued expenses” caption on our Consolidated Balance Sheets as of December 31, 2016 and 2015, respectively.

Defined Benefit Pension and Postretirement Health Care Plans

We maintain unqualified legacy defined benefit pension and defined benefit postretirement health care plans which cover a limited population of former employees that retired prior to 2000. The combined expense recognized with respect to these plans was less than $0.1 million, less than $0.1 million, $0.1 million and $0.1 million for the Successor period from September 13, 2016 through December 31, 2016, the Predecessor period from January 1, 2016 through September 12, 2016, and the Predecessor years ended December 31, 2015 and 2014, respectively, and is included as a component of “General and administrative expenses” in our Statements of Operations. The combined unfunded benefit obligations under these plans were $1.7 million and $2.1 million and are included within the “Accounts payable and accrued expenses” (current portion) and “Other liabilities” (noncurrent) captions on our Consolidated Balance Sheets as of December 31, 2016 and 2015, respectively.