Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

Stock-Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock Options

There were no new stock option grants during the three months ended March 31, 2020 and 2019. As of March 31, 2020, the aggregate intrinsic value for our outstanding stock options was approximately $0.3 million, and the aggregate intrinsic value for our exercisable stock options was $0.3 million. The remaining exercise period for the outstanding and exercisable stock options as of March 31, 2020, was 4.5 years and 4.6 years, respectively.

A summary of the stock option activity for the three months ended March 31, 2020 is presented below.



	Number of Shares		Weighted Average Exercise Price
Outstanding at January 1, 2020	4,300,088		$	5.03
Granted	—		$	—
Exercised	—		$	—
Forfeited	(69,673	)	$	14.00
Expired	—		$	—
Outstanding at March 31, 2020	4,230,415		$	4.88
Exercisable at March 31, 2020	4,092,276		$	4.58

Restricted Stock Units

During the three months ended March 31, 2020, we granted a total of 949,214 restricted stock units ("RSUs") to employees, officers and directors pursuant to the ProPetro Holding Corp. 2017 Incentive Award Plan (the "Incentive Plan"), which generally vest ratably over a three-year vesting period, in the case of awards to employees and officers, and generally vest in full after one year, in the case of awards to directors. RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases to be an employee or director of the Company prior to vesting of the award. Each RSU represents the right to receive one share of common stock. The grant date fair value of the RSUs is based on the closing share price of our common stock on the date of grant. As of March 31, 2020, the total unrecognized compensation expense for all RSUs was approximately $10.5 million, and is expected to be recognized over a weighted average period of approximately 2.4 years.

The following table summarizes RSUs activity during the three months ended March 31, 2020:



	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2020	613,217		$	18.75
Granted	949,214		$	7.74
Vested	(64,615	)	$	21.57
Forfeited	(270,316	)	$	16.18
Canceled	—		$	—
Outstanding at March 31, 2020	1,227,500		$	10.65

Performance Share Units

During the three months ended March 31, 2020, we granted 966,242 performance share units ("PSUs") to certain key employees and officers under the Incentive Plan. The actual number of shares of common stock that may be issued under the PSUs ranges from 0% up to a maximum of 200% of the target number of PSUs granted to the participant, based on our total shareholder return ("TSR") relative to a designated peer group, generally at the end of a three year period. In addition to the TSR conditions, vesting of the PSUs is generally subject to the recipient’s continued employment through the end of the applicable performance period. Compensation expense is recorded ratably over the corresponding requisite service period. The grant date fair value of PSUs is determined using a Monte Carlo probability model. Grant recipients do not have any shareholder rights until performance relative to the peer group has been determined following the completion of the performance period and shares have been issued.

The following table summarizes information about PSUs activity during the three months ended March 31, 2020:



Period Granted	Target Shares Outstanding at January 1, 2020	Target Shares Granted	Target Shares Vested		Target Shares Forfeited		Target Shares Outstanding at March 31, 2020	Weighted Average Grant Date Fair Value per Share
2017	151,492	—	(151,492	)	—		—	$	10.73
2018	156,576	—	—		(72,254	)	84,322	$	27.51
2019	214,553	—	—		(88,235	)	126,318	$	34.82
2020	—	966,242			(125,391	)	840,851	$	9.42
Total	522,621	966,242	(151,492	)	(285,880	)	1,051,491	$	13.92

The total stock compensation expense for the three months ended March 31, 2020 and 2019 for all stock awards was $0.5 million and $1.8 million, respectively. The total unrecognized compensation expense as of March 31, 2020 was approximately $20.7 million, and is expected to be recognized over a weighted average period of approximately 2.4 years.