Permian Resources CorpPR
Permian Resources Corp Stock Compensation Disclosure
Note 7—Stock-Based Compensation
The Company has a Long Term Incentive Plan (the “LTIP”) that has a total of 71,718,560 shares of Class A Common Stock authorized for issuance. The LTIP provides for grants of restricted stock, stock options (including incentive stock options and nonqualified stock options), restricted stock units (including performance stock units), stock appreciation rights and other stock or cash-based awards.
Stock-based compensation expense is recognized within both General and administrative expenses and Exploration and other expenses in the consolidated statements of operations. The Company accounts for forfeitures of awards granted under the LTIP as they occur.
The following table summarizes stock-based compensation expense recognized for the periods presented:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Equity Awards | |||||||||||||||||
| Restricted stock | $ | 30,171 | $ | 26,216 | $ | 34,762 | |||||||||||
| Stock option awards | — | — | 1 | ||||||||||||||
| Performance stock units | 40,200 | 34,183 | 43,655 | ||||||||||||||
| Total stock-based compensation expense | $ | 70,371 | $ | 60,399 | $ | 78,418 | |||||||||||
Equity Awards
The Company has restricted stock, stock options and performance stock units (“PSUs”) outstanding that were granted under the LTIP as discussed below. Each award has service-based and, in the case of the PSUs, market-based vesting requirements, and is expected to be settled in shares of Class A Common Stock upon vesting. As a result, these awards are classified as equity-based awards in accordance with ASC Topic 718, Compensation-Stock Compensation (“ASC 718”).
In connection with the merger (the “Colgate Merger”) with Colgate Energy Partners III, LLC (“Colgate”) and Colgate Energy Partners III MidCo, LLC (the “Colgate Unit holder”), the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) approved a resolution to extend severance benefits under the Company’s Second Amended and Restated Severance Plan (the “Second A&R Severance Plan”) to employees that experience a Qualifying Termination (as defined in the Second A&R Severance Plan) following the Colgate Merger. As a result, affected employees of the Company received an accelerated vesting of their unvested restricted stock awards and PSUs upon termination, which changed the terms of the vesting conditions and were treated as modifications in accordance with ASC 718. A total of forty-eight employees and two non-employee directors had Qualifying Terminations related to the Colgate Merger, all of which received accelerated vesting of their unvested stock awards or had changes in their service periods resulting in modifications of such impacted stock awards. These modifications resulted in an increase to total stock-based compensation expense of $14.6 million and $40.0 million for the years ended December 31, 2024 and 2023, respectively, as a result of the change in the fair value of the modified awards. The restricted stock shares and performance stock units that were accelerated are included within the vested line items in the below tables. As of September 1, 2024, no additional Qualifying Terminations pursuant to the Second A&R Severance Plan can occur as a result of the Colgate Merger.
Restricted Stock
The following table provides information about restricted stock activity during the year ended December 31, 2025:
| Restricted Stock | Weighted Average Fair Value | ||||||||||
| Unvested balance as of December 31, 2024 | 3,614,303 | $ | 12.64 | ||||||||
| Granted | 4,719,206 | 14.26 | |||||||||
| Vested | (1,647,463) | 11.16 | |||||||||
| Forfeited | (578,331) | 13.86 | |||||||||
| Unvested balance as of December 31, 2025 | 6,107,715 | 14.17 | |||||||||
The Company grants service-based restricted stock to certain officers and employees, which either vests ratably over a three-year service period or cliff vests upon an eighteen month to five-year service period, and to directors, which vest over a one-year service period. Compensation cost for these service-based restricted stock grants is based on the closing market price of the Company’s Class A Common Stock on the grant date, and such costs are recognized ratably over the applicable vesting period. The weighted average fair value for restricted stock granted was $14.26, $14.90 and $10.99 per share for the years ended December 31, 2025, 2024 and 2023, respectively. The total fair value of restricted stock that vested for the years ended December 31, 2025, 2024 and 2023 was $18.4 million, $19.7 million and $35.8 million, respectively. Unrecognized compensation cost related to restricted shares that were unvested as of December 31, 2025 was $60.9 million, which the Company expects to recognize over a weighted average period of 2.2 years.
Stock Options
Stock options that have been granted under the LTIP expire ten years from the grant date and vest ratably over their three-year service period. The exercise price for an option granted under the LTIP is the closing market price of the Company’s Class A Common Stock on the grant date. Compensation cost for stock options is based on the grant-date fair value of the award, which is then recognized ratably over the vesting period of three years. No stock options were granted during the years ended December 31, 2025, 2024 and 2023.
The following table provides information about stock option awards outstanding during the year ended December 31, 2025:
| Options | Weighted Average Exercise Price | Weighted Average Remaining Term (in years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
| Outstanding as of December 31, 2024 | 388,033 | $ | 16.10 | $ | 628 | ||||||||||||||||||
| Exercised | (35,000) | 6.58 | $ | 257 | |||||||||||||||||||
| Expired | (113,500) | 19.00 | |||||||||||||||||||||
| Outstanding as of December 31, 2025 | 239,533 | 16.11 | 1.8 | $ | 339 | ||||||||||||||||||
| Exercisable as of December 31, 2025 | 239,533 | 16.11 | 1.8 | $ | 339 | ||||||||||||||||||
The total fair value of stock options that vested and the intrinsic value of the stock options exercised during the years ended December 31, 2025, 2024 and 2023 were minimal. As of December 31, 2025, there was no unrecognized compensation cost related to unvested stock options.
Performance Stock Units
The Company grants PSUs to certain officers and members of management that are subject to market-based vesting criteria as well as a service period of three years. Vesting at the end of the service period depends on the Company’s absolute annualized total shareholder return (“TSR”) over the performance period, as well as the Company’s TSR relative to the TSR of a group of peer companies. These market-based conditions must be met in order for the stock awards to vest, and it is therefore possible that no shares could ultimately vest. However, the Company recognizes compensation expense for the PSUs subject to market conditions regardless of whether it becomes probable that these conditions will be met or not, and compensation expense is not reversed if vesting does not actually occur.
The Company’s PSUs currently outstanding can be settled in either Class A Common Stock or cash upon vesting at the Company’s discretion. The Company intends to settle all PSUs in Class A Common Stock and has sufficient shares available under the LTIP to settle the units in Class A Common Stock at the potential future vesting dates. Accordingly, the PSUs have been treated as equity-based awards with their fair values determined as of the grant or modification date, as applicable. The fair values of the awards are estimated using a Monte Carlo valuation model. The Monte Carlo valuation model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment. Expected volatility was calculated based on the historical volatility of the Company’s Class A Common Stock, and the risk-free interest rate is based on U.S. Treasury yield curve rates with maturities consistent with the vesting periods.
Each of our Co-Chief Executive Officers received performance-based restricted stock unit awards in September 2022 (the “2022 PSUs”) which were split into three tranches with performance period end dates at the end of 2025, 2026 and 2027 and with service periods corresponding to those same performance periods. During the third quarter of 2024, the Compensation Committee amended the 2022 PSUs to deem the service requirement portion of the 2022 PSUs met on each of the three tranches as of September 1, 2025, which is consistent with the three-year service requirement for other performance-based restricted stock awards granted by the Company. Following September 1, 2025, each tranche of the 2022 PSUs will continue to be subject to the original performance-based conditions, including no changes to the performance period, and will continue to vest, if at all, based on the satisfaction of the original performance conditions at year-end 2025, 2026 and 2027. In accordance with ASC 718, no incremental stock-based compensation was recognized as a result of these modifications, instead the remaining unrecognized compensation cost was recognized over the modified requisite service period.
The following table summarizes the key assumptions and related information used to determine the fair value of PSUs measured during the periods presented:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Weighted average fair value per share | $19.53 | $24.81 | $18.19 | |||||||||||||||||
| Weighted Average Expected implied stock volatility | 34.6% | 43.9% | 55.4% | |||||||||||||||||
| Weighted Average risk-free interest rate | 4.2% | 4.3% | 4.2% | |||||||||||||||||
The following table provides information about PSUs outstanding during the year ended December 31, 2025:
| Awards | Weighted Average Fair Value | ||||||||||
| Unvested balance as of December 31, 2024 | 5,343,399 | $ | 16.54 | ||||||||
| Granted | 2,216,934 | 19.53 | |||||||||
Vested(1) | (2,301,088) | 16.20 | |||||||||
| Forfeited | (20,636) | 22.34 | |||||||||
| Unvested balance as of December 31, 2025 | 5,238,609 | 17.93 | |||||||||
(1) This balance includes vested PSU awards as of December 31, 2025 based on the original number of PSUs granted. Actual PSUs vested is based upon the Company’s absolute annualized TSR calculation and the Company’s TSR relative to the TSR of a peer group of companies at the time of vesting, which may be greater than or less than the original number granted.
The total fair value of PSUs that vested during the years ended December 31, 2025, 2024 and 2023 were $37.3 million, $14.7 million and $41.1 million, respectively. As of December 31, 2025, there was $35.8 million of unrecognized compensation cost related to PSUs that were unvested, which the Company expects to recognize on a pro-rata basis over a weighted average period of 1.8 years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 24, 2023 | |
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.