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 Successor Common Stock for issuance under the Penn Virginia Corporation Management Incentive Plan for future share-based compensation awards. A total of 347,440 time-vested restricted stock units (“RSUs”) and 98,526 performance restricted stock units (“PRSUs”) have been granted as of December 31, 2018.

In the Predecessor period in 2016, we had outstanding equity-classified awards in the form of stock options, restricted stock units and deferred stock units. As discussed in Note 4, all Predecessor 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 (“Predecessor 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 periods as a non-cash item of expense. Because the Predecessor PBRSUs were payable in cash, they were 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 table summarizes our share-based compensation expense (benefit) recognized for the periods presented:



	Successor						Predecessor
					September 13 Through		January 1 Through
	Year Ended December 31,				September 30,		September 12,
	2018		2017		2016		2016
Equity-classified awards	$	4,618	$	3,809	$	81	$	1,511
Liability-classified awards	—		—				(19		)
	$	4,618	$	3,809	$	81	$	1,492

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 Predecessor board of directors. Generally, options vested over a three-year period, with one-third vesting in each year. In connection with our emergence from bankruptcy, all stock options 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 RSUs:



	Restricted Stock Units		Weighted-Average Grant Date Fair Value
Balance at beginning of year	259,990		$	41.32
Granted	42,459		$	65.96
Vested	(79,828	)	$	38.90
Forfeited	(14,581	)	$	43.64
Balance at end of year	208,040		$	47.35

As of December 31, 2018, we had $7.8 million of unrecognized compensation cost attributable to RSUs. We expect that cost to be recognized over a weighted-average period of 1.5 years. The total grant-date fair values of RSUs that vested in 2018 and 2017 was $3.3 million and $0.8 million, respectively. No RSUs vested during 2016. In connection with our emergence from bankruptcy, all Predecessor RSUs outstanding as of September 12, 2016 were canceled.

Predecessor Performance-Based Restricted Stock Units

In each of the years ended December 31, 2015, 2014 and 2013, we granted Predecessor PBRSUs to certain executive officers. Vested Predecessor 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 Predecessor PBRSUs vested ranged from 0% to 200% of the initial grant. The Predecessor PBRSUs did not have voting rights and did not participate in dividends. In connection with our emergence of bankruptcy, all Predecessor PBRSUs outstanding as of September 12, 2016 were canceled.

Successor Performance Restricted Stock Units

In the year ended December 31, 2017, we granted 98,526 PRSUs to members of our management. There were no PRSUs granted for the year ended December 31, 2018. The PRSUs were issued collectively in two to three separate tranches with individual three-year performance periods beginning in January 2017, 2018 and 2019, respectively. Vesting of the PRSUs can range from zero to 200% of the original grant based on the performance of our common stock relative to an industry index. Due to their market condition, the PRSUs are being charged to expense using graded vesting over a maximum of five years. The fair value of each PRSU award was estimated on their grant dates using a Monte Carlo simulation with a range of $47.70 to $65.28 per PRSU.

The ranges for the assumptions used in the Monte Carlo model for the PRSUs granted during 2017 are presented as follows:



Expected volatility	59.63% to 62.18%
Dividend yield	0.0% to 0.0%
Risk-free interest rate	1.44% to 1.51%

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



	Performance Restricted Stock Units		Weighted-Average Fair Value
Balance at beginning of year	98,526		$	57.81
Granted	—		$	—
Vested	(1,968	)	$	49.56
Forfeited	(7,487	)	$	49.56
Balance at end of year	89,071		$	58.69

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 $0.6 million, $0.5 million, $0.1 million and $0.5 million for the years ended December 31, 2018 and 2017, the Successor period from September 13, 2016 through December 31, 2016, and the Predecessor period from January 1, 2016 through September 12, 2016, 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 $0.3 million and $0.2 million are included in the “Accounts payable and accrued expenses” caption on our Consolidated Balance Sheets as of December 31, 2018 and 2017, 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 January 1, 2000. The combined expense recognized with respect to these plans was less than $0.1 million, $0.1 million, less than $0.1 million and less than $0.1 million for the years ended December 31, 2018 and 2017, the Successor period from September 13, 2016 through December 31, 2016 and the Predecessor period from January 1, 2016 through September 12, 2016, 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 $1.4 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, 2018 and 2017.