We use share-based payments to compensate employees and non-employee directors. We recognize the cost of share-based payments under the fair-value-based method. Share-based awards include equity instruments in the form of stock options, restricted stock or restricted stock units that have included service conditions and, in certain cases, performance conditions. Our share-based awards also include share-settled performance unit awards. Share-settled performance unit awards are accounted for as equity awards. In 2020, we granted performance-based cash-settled phantom units, which are accounted for as a liability classified award. We issue shares of common stock when vested stock options are exercised, when restricted stock is granted and when restricted stock units and share-settled performance unit awards vest.

The Patterson-UTI Energy, Inc. 2014 Long-Term Incentive Plan (the “2014 Plan”) was originally approved by our stockholders effective as of April 17, 2014 and authorized 9.1 million shares for issuance. The Board of Directors adopted a resolution that no future grants would be made under any of our other previously existing plans. On June 29, 2017, our stockholders approved the amendment and restatement of the 2014 Plan (the “Amended and Restated Plan”) to increase the number of shares available under the plan by 9.8 million shares. On June 6, 2019, our stockholders approved an amendment to the Amended and Restated Plan to increase the number of shares available for issuance under the plan by 9.5 million shares and to extend the latest date on which awards may be granted under the Amended and Restated Plan to June 6, 2029 (the “Amendment” and the Amended and Restated Plan, as amended by the Amendment, the “Plan”). The aggregate number of shares of our common stock authorized for grant under the Plan is 28.4 million.

Shares Underlying

Authorized

Awards

Available

Plan Name

for Grant

Outstanding

for Grant

Amended and Restated Plan

28,400,000

6,634,513

4,986,392

Patterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan, as amended

—

1,793,500

—

Options granted under the Patterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan typically vested over one year for non-employee directors and three years for employees. All options were granted with an exercise price equal to the fair market value of the related common stock at the time of grant.

Stock Options — We estimate the grant date fair values of stock options using the Black-Scholes-Merton valuation model. Volatility assumptions are based on the historic volatility of our common stock over the most recent period equal to the expected term of the options as of the date such options are granted. The expected term assumptions are based on our experience with respect to employee stock option activity. Dividend yield assumptions are based on the expected dividends at the time the options are granted. The risk-free interest rate assumptions are determined by reference to United States Treasury yields. No options were granted during the years ended December 31, 2020, 2019 and 2018.

				Weighted Average
	Shares			Exercise Price Per Share
Outstanding at beginning of year		4,766,150		$	20.62
Exercised		—		$	—
Expired		(740,000	)	$	15.10
Outstanding at end of year		4,026,150		$	21.63
Exercisable at end of year		4,011,150		$	21.64

Options outstanding at December 31, 2020 have no intrinsic value and a weighted-average remaining contractual term of 3.22 years. Options exercisable at December 31, 2020 have no intrinsic value and a weighted-average remaining contractual term of 3.21 years. Additional information with respect to options granted, vested and exercised during the years ended December 31, 2020, 2019 and 2018 follows (in thousands, except per share data):

	2020		2019		2018
Weighted-average grant date fair value of stock options granted (per share)	NA		NA		NA
Aggregate grant date fair value of stock options vested during the year	$	89	$	543	$	1,954
Aggregate intrinsic value of stock options exercised	$	—	$	—	$	—

As of December 31, 2020, options to purchase 15,000 shares were outstanding and not vested. All of these non-vested options are expected to ultimately vest. Additional information as of December 31, 2020 with respect to these non-vested options follows (dollars in thousands):

Restricted Stock—For all restricted stock awards made to date, shares of common stock were issued when the awards were granted. Non-vested shares are subject to forfeiture for failure to fulfill service conditions. Non-forfeitable dividends are paid on non-vested shares of restricted stock. We use the straight-line method to recognize periodic compensation cost over the vesting period.

				Weighted Average
				Grant Date Fair
	Shares			Value Per Share
Non-vested restricted stock outstanding at beginning of year		72,051		$	21.59
Vested		(72,051	)	$	21.59
Forfeited		—		$	—
Non-vested restricted stock outstanding at end of year		—		$	—

Restricted Stock Units — For all restricted stock unit awards made to date, shares of common stock are not issued until the units vest. Restricted stock units are subject to forfeiture for failure to fulfill service conditions and, in certain cases, performance conditions. Forfeitable dividend equivalents are accrued on certain restricted stock units that will be paid upon vesting. We use the straight-line method to recognize periodic compensation cost over the vesting period.

							Weighted Average
	Time			Performance			Grant Date Fair
	Based			Based			Value Per Share
Non-vested restricted stock units outstanding at beginning of year		2,631,726			397,315		$	15.81
Granted		1,691,246			—		$	4.25
Vested ⁽¹⁾		(1,285,658	)		(38,000	)	$	16.32
Forfeited		(295,766	)		—		$	13.39
Non-vested restricted stock units outstanding at end of year		2,741,548			359,315		$	9.52

As of December 31, 2020, approximately 3.0 million non-vested restricted stock units outstanding are expected to vest. Additional information as of December 31, 2020 with respect to these non-vested restricted stock units follows (dollars in thousands):

Performance Unit Awards — We have granted share-settled performance unit awards to certain employees (the “Performance Units”) on an annual basis since 2010. The Performance Units provide for the recipients to receive a grant of shares of common stock upon the achievement of certain performance goals during a specified period established by the Compensation Committee. The performance period for the Performance Units is the three-year period commencing on April 1 of the year of grant, except that for the Performance Units granted in 2017 the three-year performance period commenced on May 1.

The performance goals for the Performance Units are tied to our total shareholder return for the performance period as compared to total shareholder return for a peer group determined by the Compensation Committee. These goals are considered to be market conditions under the relevant accounting standards and the market conditions were factored into the determination of the fair value of the respective Performance Units. For the Performance Units granted in April 2018, the recipients will receive a target number of shares if our total shareholder return during the performance period, when compared to the peer group, is at the 50th percentile. For the Performance Units granted in April 2019 and April 2020, the recipients will receive the target number of shares if our total shareholder return during the performance period, when compared to the peer group, is at the 55th percentile. If our total shareholder return during the performance period, when compared to the peer group, is at the 75th percentile or higher, then the recipients will receive two times the target number of shares. If our total shareholder return during the performance period, when compared to the peer group, is at the 25th percentile, then the recipients will only receive one-half of the target number of shares. If our total shareholder return during the performance period, when compared to the peer group, is between the 25th and target percentile, or the target and 75th percentile, then the shares to be received by the recipients will be determined using linear interpolation for levels of achievement between these points.

For the Performance Units granted in April 2018, the payout is based on relative performance and does not have an absolute performance requirement. For the Performance Units granted in April 2019 and April 2020, the payout shall not exceed the target number of shares if our total shareholder return is negative or zero. Additionally, the Performance Units granted in April 2020 will not pay out if our total shareholder return is not equal to or greater than the total stockholder return of the S&P 500 Index for the Performance Period.

The total target number of shares with respect to the Performance Units for the years 2015-2020 is set forth below:

	2020		2019		2018		2017		2016		2015
	Performance		Performance		Performance		Performance		Performance		Performance
	Unit Awards		Unit Awards		Unit Awards		Unit Awards		Unit Awards		Unit Awards
Target number of shares		500,500		489,800		310,700		186,198		185,000		190,600

In April 2018, 381,200 shares were issued to settle the 2015 Performance Units. In April 2019, 185,000 shares were issued to settle the 2016 Performance Units. In May 2020, 332,773 shares were issued to settle the 2017 Performance Units. The Performance Units granted in 2018, 2019, and 2020 have not reached the end of their respective performance periods.

Because the Performance Units are share-settled awards, they are accounted for as equity awards and measured at fair value on the date of grant using a Monte Carlo simulation model. The fair value of the Performance Units is set forth below (in thousands):

	2020		2019		2018		2017		2016		2015
	Performance		Performance		Performance		Performance		Performance		Performance
	Unit Awards		Unit Awards		Unit Awards		Unit Awards		Unit Awards		Unit Awards
Aggregate fair value at date of grant	$	826	$	9,958	$	8,004	$	5,780	$	3,854	$	4,052

These fair value amounts are charged to expense on a straight-line basis over the performance period. Compensation expense associated with the Performance Units is set forth below (in thousands):

	2020		2019		2018		2017		2016		2015
	Performance		Performance		Performance		Performance		Performance		Performance
	Unit Awards		Unit Awards		Unit Awards		Unit Awards		Unit Awards		Unit Awards
Year ended December 31, 2020	$	206	$	3,319	$	2,668	$	642	NA		NA
Year ended December 31, 2019	NA		$	2,489	$	2,668	$	1,927	$	321	NA
Year ended December 31, 2018	NA		NA		$	2,001	$	1,927	$	1,285	$	338

Dividends on Equity Awards – Non-forfeitable cash dividends are paid on restricted stock awards and dividend equivalents are paid or accrued on certain restricted stock units. These dividends are recognized as follows:

Phantom Units — In May 2020, the Compensation Committee approved a grant of long-term performance-based phantom units to our Chief Executive Officer and President, William A. Hendricks, Jr (the “Phantom Units”). The Phantom Units were granted outside of the 2014 Plan. Pursuant to this phantom unit grant, Mr. Hendricks may earn from 0% to 200% of a target award of 298,500 phantom units based on our achievement of the same performance conditions over the same Performance Period that applies to the Performance Units granted in April 2020, as described above. Earned Phantom Units, if any, will be settled in 2023, following completion of the three-year Performance Period, in a cash payment equal to the number of earned phantom units multiplied by our average trading price per share over the twenty consecutive trading days ending March 31, 2023. Because the Phantom Units are cash-settled awards, they are accounted for as a liability classified award. The grant date fair value of the Phantom Units was $1.2 million. Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the Phantom Units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $0.6 million compensation expense associated with the Phantom Units in 2020.