Diamondback Energy Inc

10. STOCKHOLDERS’ EQUITY AND EARNINGS (LOSS) PER SHARE

Common Stock Repurchase Program

The Company’s board of directors has approved a common stock repurchase program to acquire up to $6.0 billion of the Company’s outstanding common stock, excluding excise tax. Purchases under the repurchase program may be made from time to time in open market or privately negotiated transactions, and are subject to market conditions, applicable regulatory and legal requirements, contractual obligations and other factors. The repurchase program does not require the Company to acquire any specific number of shares. This repurchase program may be suspended from time to time, modified, extended or discontinued by the board of directors at any time. During the years ended December 31, 2024, 2023 and 2022, the Company repurchased approximately $959 million, $838 million and $1.1 billion of common stock under the respective repurchase programs, respectively, in each case excluding excise tax. As of December 31, 2024, approximately $2.7 billion remained available for future repurchases under the Company’s common stock repurchase program, excluding excise tax.

Viper 2024 Equity Offering

On September 13, 2024, Viper completed an underwritten public offering of approximately 11.5 million shares of its Class A common stock, which included 1.5 million shares issued pursuant to an option to purchase additional shares of Class A common stock granted to the under writers, at a price to the public of $42.50 per share for total net proceeds to Viper of approximately$476 million, after underwriters’ discounts andtransaction costs (the “Viper 2024 Equity Offering”). The net proceeds were used to fund a portion of the cash consideration forthe Viper TWR Acquisition.

See Note 17—Subsequent Events for discussion of additional subsequent Viper equity offering.

Change in Ownership of Consolidated Subsidiaries

Non-controlling interests in the accompanying consolidated financial statements represent minority interest ownership in Viper and Rattler through the Effective Date of the Rattler Merger and are presented as a component of equity. When the Company’s relative ownership interests in Viper and Rattler, through the Effective Date of the Rattler Merger, change, adjustments to non-controlling interest and additional paid-in-capital, tax effected, will occur.

The following table summarizes changes in the ownership interest in consolidated subsidiaries during the respective periods presented:

Dividends

The following table presents dividends and distribution equivalent rights paid on the Company’s common stock during the respective periods:

Viper’s Common Stock Repurchase Program

Viper’s board of directors has currently approved a common stock repurchase program to acquire up to $750 million of Viper’s outstanding Class A common stock, excluding excise tax, over an indefinite period of time. During the year ended December 31, 2024 Viper hadno repurchases under its repurchase program. During the years ended December 31, 2023 and 2022, Viper repurchased approximately $95 million, and $151 million under its repurchase program. As of December 31, 2024, $434 million remains available Viper’s common stock repurchase program, excluding excise tax.

Dividends to Non-Controlling Interest

During the years ended December 31, 2024, 2023 and 2022, Viper paid $227 million, $129 million, and $182 million of distributions and dividends to its public shareholders, excluding Diamondback, in accordance with the dividend policy approved by its board of directors. Prior to the Rattler Merger, Rattler made $35 million of distributions to its common unitholders during the year ended December 31, 2022 in accordance with the distribution policy approved by its board of directors. These dividends are reflected under the caption “Dividends/distributions to non-controlling interest” on the Company’s consolidated statement of stockholders’ equity and consolidated statements of cash flows.

Earnings (Loss) Per Share

The Company’s basic earnings (loss) per share amounts have been computed using the two-class method. The two-class method is an earnings allocation proportional to the respective ownership among holders of common stock and participating securities. Basic earnings (loss) per share amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Diluted earnings per share include the effect of potentially dilutive shares outstanding for the period. Additionally, the per share earnings of Viper and Rattler prior to the Effective Date of the Rattler Merger are included in the consolidated earnings per share computation based on the consolidated group’s holdings of the subsidiaries.

A reconciliation of the components of basic and diluted earnings (loss) per common share is presented below:

(1) Unvested restricted stock awards and performance stock awards that contain nonforfeitable distribution equivalent rights are considered participating securities and therefore are included in the earnings per share calculation pursuant to the two-class method.

11. EQUITY-BASED COMPENSATION

Under the equity incentive plan (the “Equity Plan”), approved by the board of directors, the Company is authorized to issue up to 11.80 million shares of incentive and non-statutory stock options, restricted stock awards and restricted stock units, performance awards and stock appreciation rights to eligible employees. The Company currently has outstanding restricted stock units and performance-based restricted stock units under the Equity Plan. At December 31, 2024, approximately 4.65 million shares of common stock remain available for future grants under the Equity Plan. The Company classifies its restricted stock units and performance-based restricted stock units as equity-based awards and estimates the fair values of restricted stock awards and units as the closing price of the Company’s common stock on the grant date of the award, which is expensed over the applicable vesting period.

In addition to the Equity Plan, Viper maintains its own long-term incentive plan, which is not significant to the Company.

The following table presents the financial statement impacts of equity compensation plans and related costs on the Company’s financial statements:

Restricted Stock Units

The following table presents the Company’s restricted stock unit activity during the year ended December 31, 2024 under the Equity Plan:

The aggregate grant date fair value of restricted stock units that vested during the years ended December 31, 2024, 2023 and 2022 was $57 million, $48 million and $41 million, respectively. As of December 31, 2024, the Company’s unrecognized compensation cost related to unvested restricted stock units was $78 million, which is expected to be recognized over a weighted-average period of 2.0 years.

Performance-Based Restricted Stock Units

To provide long-term incentives for executive officers to deliver competitive returns to the Company’s stockholders, the Company has granted performance-based restricted stock units to eligible employees. The ultimate number of shares awarded from these conditional restricted stock units is based upon measurement of total stockholder return of the Company’s common stock (“TSR”) as compared to a designated peer group during athree-year performance period.

In March 2024, eligible employees received performance restricted stock unit awards totaling 110,989 units from which a minimum of 0% and a maximum of 200% of the units could be awarded based upon the measurement of total stockholder return of the Company’s common stock as compared to a designated peer group during thethree-year performance period of January 1, 2024 to December 31, 2026 and cliff vest at December 31, 2026 subject to continued employment. The initial payout of the March 2024 awards will be further adjusted by a TSR modifier that may reduce the payout or increase the payout up to a maximum of 250%. Additionally, in September 2024 the Company granted 6,750 units under substantially the same terms as the March 2024 performance restricted stock unit awards.

In March 2023, eligible employees received performance restricted stock unit awards totaling 126,347 units from which a minimum of 0% and a maximum of 200% of the units could be awarded based upon the measurement of total stockholder return of the Company’s common stock as compared to a designated peer group during thethree-year performance period of January 1, 2023 to December 31, 2025 and cliff vest at December 31, 2025 subject to continued employment. The initial payout of the March 2023 awards will be further adjusted by a TSR modifier that may reduce the payout or increase the payout up to a maximum of 250%. Additionally, in July 2023 the Company granted 1,858 units under substantially the same terms as the March 2023 performance restricted stock unit awards.

In March 2022, eligible employees received performance restricted stock unit awards totaling 126,905 units from which a minimum of 0% and a maximum of 200% units could be awarded based upon the TSR during thethree-year performance period of January 1, 2022 to December 31, 2024. These awards cliff vested at 250% on December 31, 2024 based upon the results of the TSR during the performance period, which was further adjusted by a TSR modifier.

The fair value of each performance restricted stock unit issuance is estimated at the date of grant using a Monte Carlo simulation, which results in an expected percentage of units to be earned during the performance period.

The following table presents a summary of the grant-date fair values of performance restricted stock units granted and the related assumptions for the awards granted during the periods presented:

The following table presents the Company’s performance restricted stock unit activity under the Equity Plan for the year ended December 31, 2024:

(1)A maximum of 647,818 units could be awarded based upon the Company’s final TSR ranking.

As of December 31, 2024, the Company’s unrecognized compensation cost related to unvested performance based restricted stock awards and units was $41 million, which is expected to be recognized over a weighted-average period of 1.8 years.