Flex LNG Ltd.

The Company accounts for share-based payments in accordance with ASC Topic 718 Compensation - Stock Compensation, under which the fair value of issued stock options is expensed over the period in which the options vest under the simplified method. Share-based compensation represents the cost of vested and non-vested shares and share options granted to employees and directors for their services, and are included in administrative expenses in the consolidated statements of operations. The fair value of share options grants is determined with reference to option pricing models, and depends on the terms of the granted options.

Equity-settled share-based compensation awards are measured at the grant-date fair value, with the fair value recognized as compensation expense over the requisite service period. Cash-settled share-based compensation arrangements are classified as liabilities and are measured at fair value at each reporting date, with changes in fair value recognized in administrative expenses in the consolidated statements of operations over the requisite service period.