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SEC Filings

10-K
KEY ENERGY SERVICES INC filed this Form 10-K on 02/28/2018
Entire Document
 
Key Energy Services, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



Common Stock Awards
Our common stock awards include restricted stock awards and restricted stock units. The weighted average grant date fair market value of all common stock awards granted during the year ended December 31, 2017 and for the period from December 16, 2016 through December 31, 2016, period from January 1, 2016 through December 15, 2016 and year ended December 31, 2015 was $12.37, $31.99, $0.26 and $1.89 respectively. The total fair market value of all common stock awards vested during the year ended December 31, 2017, for the period from December 16, 2016 through December 31, 2016, period from January 1, 2016 through December 15, 2016 and year ended December 31, 2015 was $6.2 million, zero, 14.5 million and 13.2 million, respectively.
The following tables summarize information for the year ended December 31, 2017 about our unvested common stock awards that we have outstanding (shares in thousands):
 
Year Ended December 31, 2017
 
Outstanding
 
Weighted Average
Issuance Price
Shares at beginning of period
667

 
$
31.99

Granted
1,161

 
$
12.37

Vested
(197
)
 
$
31.44

Canceled
(519
)
 
$
31.36

Shares at end of period
1,112

 
$
11.90

Cancellations for the year ended December 31, 2017 include 0.5 million RSUs that were forfeited by employees in exchange for a new grant of time based and performance based RSUs which have different vesting terms than the forfeited RSUs. The grant-date fair value of our time-based restricted stock units and restricted stock awards is determined using our stock price on the grant date. The grant-date fair value of our performance-based restricted stock units is determined using our stock price on the grant date assuming a 1.0x payout target, however, a maximum 2.0x payout could be achieved if certain EBITDA-based performance measures are met. We recognize compensation expense ratably over the graded vesting period of the grant, net of forfeitures. For the year ended December 31, 2017, period from December 16, 2016 through December 31, 2016, period from January 1, 2016 through December 15, 2016 and year ended December 31, 2015 we recognized $5.3 million, $0.4 million, $5.7 million and $10.2 million, respectively, of pre-tax expense from continuing operations associated with common stock awards. For the unvested common stock awards outstanding as of December 31, 2017, we anticipate that we will recognize $13.3 million of pre-tax expense over the next 2.0 years.
Phantom Share Plan
In December 2017, we implemented a “Phantom Share Plan,” in which certain of our employees were granted “Phantom Shares.” Phantom Shares vest ratably over a three-year period and convey the right to the grantee to receive a cash payment on the anniversary date of the grant equal to the fair market value of the Phantom Shares vesting on that date. Grantees are not permitted to defer this payment to a later date. The Phantom Shares are a “liability” type award and we account for these awards at fair value. We recognize compensation expense related to the Phantom Shares based on the change in the fair value of the awards during the period and the percentage of the service requirement that has been performed, net of forfeitures, with an offsetting liability recorded on our consolidated balance sheets.
NOTE 22.    TRANSACTIONS WITH RELATED PARTIES
Board of Director Relationships
The Company has purchased equipment and services from a few affiliates of certain directors. The dollar amounts related to these related party activities are not material to the Company’s condensed consolidated financial statements.

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