California Resources CorpCRC
California Resources Corp Stock Compensation Disclosure
STOCK-BASED COMPENSATION
On January 18, 2021, our Board of Directors approved the California Resources Corporation 2021 Long Term Incentive Plan (Long Term Incentive Plan). The Long Term Incentive Plan provides for potential grants of stock options, stock appreciation rights, restricted stock awards, restricted stock units, vested stock awards, dividend equivalents, other stock-based awards and substitute awards to employees, officers, non-employee directors and other service providers of the Company and its affiliates.
The Long Term Incentive Plan provides for the reservation of 9,257,740 shares of common stock for future issuances, subject to adjustment as provided in the Long Term Incentive Plan. Shares of stock subject to an award under the Long Term Incentive Plan that expires or is cancelled, forfeited, exchanged, settled in cash or otherwise terminated without the actual delivery of shares (restricted stock awards are not considered “delivered shares” for this purpose) will again be available for new awards under the Long Term Incentive Plan. However, (i) shares tendered or withheld in payment of any exercise or purchase price of an award or taxes relating to awards, (ii) shares that were subject to an option or a stock appreciation right but were not issued or delivered as a result of the net settlement or net exercise of the option or stock appreciation right, and (iii) shares repurchased on the open market with the proceeds from the exercise price of an option, will not, in each case, again be available for new awards under the Long Term Incentive Plan.
Shares of our common stock may be withheld by us in satisfaction of tax withholding obligations arising upon the vesting of restricted stock units (RSUs) and performance stock units (PSUs).
Stock-based compensation expense is recorded on our consolidated statements of operations based on job function of the employees receiving the grants as shown in the table below.
| Year ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| (in millions) | |||||||||||||||||
| General and administrative expenses | $ | 32 | $ | 40 | $ | 26 | |||||||||||
| Operating costs | 6 | 7 | 4 | ||||||||||||||
Carbon management business expenses | 2 | 1 | — | ||||||||||||||
| Total stock-based compensation expense | $ | 40 | $ | 48 | $ | 30 | |||||||||||
| Income tax benefit | $ | 8 | $ | 9 | $ | 6 | |||||||||||
We paid $18 million, $11 million, and $6 million for our long-term cash incentive awards for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively.
Stock Settled Awards
Restricted Stock Units
Executives and non-employee directors were granted RSUs, which are in the form of, or equivalent in value to, actual shares of our common stock. The awards generally vest from to three years following the grant date. Dividend equivalents are accumulated and paid when the shares are issued.
The following table sets forth RSU activity for the year ended December 31, 2024:
| Number of Units | Weighted-Average Grant-Date Fair Value | ||||||||||
| (in thousands) | |||||||||||
| Unvested at December 31, 2023 | 1,288 | $ | 29.49 | ||||||||
| Granted | 219 | $ | 54.28 | ||||||||
| Vested | (860) | $ | 27.35 | ||||||||
Forfeited or Cancelled | (4) | $ | 45.91 | ||||||||
| Unvested at December 31, 2024 | 643 | $ | 40.36 | ||||||||
Compensation expense was measured on the date of grant using the quoted market price of our common stock and is primarily recognized on a straight-line basis over the requisite service periods adjusted for actual forfeitures, if any.
As of December 31, 2024, the unrecognized compensation expense for our unvested RSUs was approximately $10 million and is expected to be recognized over a weighted-average remaining service period of approximately two years.
Performance Stock Units
In 2024 and 2023, executives were granted PSUs which are earned based on our absolute total shareholder return and total shareholder return relative to the SPDR S&P Oil and Gas Exploration and Production Exchange-Traded Fund listed on the New York Stock Exchange. The PSUs have payouts that range from 0% to 200% of the target award and settle in common shares once certified. Dividend equivalents for these awards are accumulated and paid out upon certification of the award.
In 2022, executives were granted PSUs which are earned upon the attainment of specified 60-trading day volume weighted average prices for shares of our common stock generally during a three-year service period commencing on the grant date. Once units are earned, the earned units are not reduced for subsequent decreases in stock price. For the duration of the three-year period, a minimum of 0% and a maximum of 100% of the PSUs granted could be earned. The grant date fair value and associated equity compensation expense was measured using a Monte Carlo simulation model which runs a probabilistic assessment of the number of units that will be earned based on a projection of our stock price during the three-year service period. Although certain events may accelerate vesting, earned PSUs generally vest on the third anniversary of the grant date, and are settled in shares of our common stock at the three-year anniversary of the grant date.
The following table sets forth PSU activity for the year ended December 31, 2024:
| Number of Units | Weighted-Average Grant-Date Fair Value | ||||||||||
| (in thousands) | |||||||||||
| Unvested at December 31, 2023 | 1,373 | $ | 28.13 | ||||||||
| Granted | 281 | $ | 59.00 | ||||||||
Vested | (869) | $ | 19.66 | ||||||||
Forfeited or Cancelled | (21) | $ | 38.00 | ||||||||
| Unvested at December 31, 2024 | 764 | $ | 48.83 | ||||||||
The range of assumptions used in the valuation of PSUs granted during 2024, 2023 and 2022 were as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
Expected volatility(a) | 38.58% - 40.30% | 42.36% - 55.00% | 60.00 | % | |||||||||||||
Risk-free interest rate(b) | 4.52% - 4.86% | 3.81% - 4.95% | 1.59% - 2.55% | ||||||||||||||
Dividend yield(c) | — | % | — | % | — | % | |||||||||||
| Forecast period (in years) | 2.5 - 3 | 1.5 - 3 | 2 - 3 | ||||||||||||||
(a)Expected volatility was calculated using the historic volatility of a peer group due to our limited trading history since our emergence from bankruptcy. We included the historic volatility of our stock, excluding our first trading months, in the peer group. Expected volatility was calculated using the historic volatility of our stock beginning in 2023 for certain awards as we established enough stock history.
(b)Based on the U.S. Treasury yield for a - or three-year term at the grant date, as applicable.
(c)A dividend adjusted stock price (assumed reinvestment of dividends during the performance period) was used.
Compensation expense is recognized on a straight-line basis over the requisite service periods adjusted for actual forfeitures, if any. Events that accelerate the vesting of an award have no effect on the requisite service period until such an event becomes probable.
As of December 31, 2024, the unrecognized compensation expense for our unvested PSUs was approximately $16 million and is expected to be recognized over a weighted-average remaining service period of approximately two years.
Cash Incentive Awards
In each of the years of 2024, 2023 and 2022, we granted performance cash-settled awards to approximately 500 non-executive employees where half of the award is variable with payouts ranging from 75% to 150% of the grant value. The variable portion of the award is determined based upon the attainment of specified 60-trading day volume weighted average prices for shares of our common stock preceding each vesting date. These awards vest ratably over a three-year service period, with one third of the grants vesting on each of the first three anniversaries of the grant date. The fair value of the awards is adjusted on a quarterly basis for the cumulative change in the value determined using a Monte Carlo simulation model which runs a probabilistic assessment of our stock price for each of the three-year service periods.
The assumptions used in the valuation of our cash awards as of December 31, 2024 were as follows:
| 2024 Awards | 2023 Awards | 2022 Awards | |||||||||||||||
Expected volatility(a) | 35 | % | 37 | % | 38 | % | |||||||||||
Risk-free interest rate(b) | 4.25 | % | 4.17 | % | 4.24 | % | |||||||||||
Dividend yield(c) | — | % | — | % | — | % | |||||||||||
| Forecast period (in years) | 2.15 | 1.15 | 0.5 | ||||||||||||||
(a)Expected volatility was calculated using the historical volatility of our stock.
(b)Based on the U.S. Treasury yield for the remaining terms.
(c)A dividend adjusted stock price (assumed reinvestment of dividends during the performance period) was used.
As of December 31, 2024, the unrecognized compensation expense for all of our unvested cash-settled awards was $11 million and is expected to be recognized over a weighted-average remaining service period of approximately two years. The value of awards forfeited during the year ended December 31, 2024 was approximately $3 million.
Aera Incentive Awards
Upon closing of the Aera Merger we assumed cash-settled incentive awards that had been granted to certain Aera employees. The awards were granted by Aera in 2022, 2023, and 2024 and vest ratably over periods between to three years. Awards that vested prior to July 1, 2024 were earned based on the performance metrics of Aera and we assumed a liability of $8 million for the vested awards. Following July 1, 2024, the unvested awards will be earned based on our absolute total shareholder return and total shareholder return relative to the SPDR S&P Oil and Gas Exploration and Production Exchange-Traded Fund listed on the New York Stock Exchange. The awards pay out between 0% to 200%.
| 2024 Awards | 2023 Awards | ||||||||||
Expected volatility(a) | 34.81 | % | 38.53 | % | |||||||
Risk-free interest rate(b) | 4.25 | % | 4.16 | % | |||||||
Dividend yield(c) | — | % | — | % | |||||||
| Forecast period (in years) | 2.00 | 1 | |||||||||
(a)Expected volatility was calculated using the historical volatility of our stock.
(b)Based on the U.S. Treasury yield for the remaining terms.
(c)A dividend adjusted stock price (assumed reinvestment of dividends during the performance period) was used.
As of December 31, 2024, the unrecognized compensation expense for these cash-settled awards was approximately $5 million and is expected to be recognized over a weighted-average remaining service period of 1.6 years.
Employee Stock Purchase Plan
In May 2022, our shareholders approved a new California Resources Corporation Employee Stock Purchase Plan (ESPP), which took effect in July 2022. The ESPP provides our employees with the ability to purchase shares of our common stock at a price equal to 85% of the closing price of a share of our common stock as of the first or last day of each fiscal quarter, whichever amount is less. The maximum number of shares of our common stock which may be issued pursuant to the ESPP is subject to certain annual limits and has a cumulative limit of 1,250,000 shares.
As of December 31, 2024, a total of 95,750 common shares were issued under our ESPP.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 3, 2025 | Showing above |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 29, 2016 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.