Kinetik Holdings Inc

12. SHARE-BASED COMPENSATION

The Company granted various Class A and Class C Shares, restricted stock units (“RSUs”) and performance stock units (“PSUs”) to members of the Board of Directors (the “Board”) and employees. The Class A Shares and Class C Shares and RSUs are subject to service requirements for vesting and the PSUs have both service requirements and market condition performance requirements for vesting. These units are recorded at grant-date fair value and compensation expense is recognized on a straight‑line or graded straight-line basis over the vesting period within “General and Administrative Expenses” of the Condensed Consolidated Statements of Operations in accordance with FASB ASC 718, Compensation - Stock Compensation. Forfeitures are recognized as they occur.

Class A Shares and Class C Shares

The table below summarizes Class A Share and Class C Share activities for the six months ended June 30, 2024:

Table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of vested Class A Shares for the three months ended June 30, 2024 and 2023:

No vesting or forfeiture occurred for Class C Shares for the three and six months ended June 30, 2024 and 2023. No vesting or forfeiture occurred for Class A Shares for the three months ended June 30, 2024 and 2023. As of June 30, 2024, there were $50.4 million of unrecognized compensation costs related to unvested Class A Shares and Class C Shares. These costs are expected to be recognized over a weighted average period of 1.34 years.

Restricted Stock Units

Certain RSUs were granted in the first half of 2024 to certain executives and employees under the Kinetik Holdings Inc. Amended and Restated 2019 Omnibus Compensation Plan (the “2019 Plan”) with various service vesting requirements. Such RSUs may be settled only for shares of Class A Common Stock on aone-for-one basis, contingent upon continued employment.

The table below summarizes RSU activities for the six months ended June 30, 2024:

(1)The number of shares and weighted average fair market value per share include RSUs issued to new employees that transitioned from ALTM as part of the merger as replacement awards.

Table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of RSUs for the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024, there were $16.0 million of unrecognized compensation costs related to the RSUs. These costs are expected to be recognized over a weighted average period of 1.83 years.

Performance Stock Units

The Company granted PSUs pursuant to the 2019 Plan to certain of its employees and executives in the first half of 2024. These PSUs vest and become earned upon the achievement of certain performance goals based on the Company’s annualized absolute total stockholder return and the Company’s relative total stockholder return as compared to the performance peer group during a three-year performance period. Depending on the results achieved during thethree-year performance period, the actual number of Class A Common Stock that a holder of the PSUs earns at the end of the performance period may range from 0% to 200% of the target number of PSUs granted. The fair value of the PSUs is determined using the Monte Carlo simulation at the grant date. The Company recognized compensation expense for PSUs on a straight-line basis over the performance period. Any PSU not earned at the end of the performance period will be forfeited.

The table below summarizes PSU activities for the six months ended June 30, 2024:

No vesting or forfeiture occurred for PSUs for the three and six months ended June 30, 2024.

The table below presents a summary of the grant-date fair value assumptions used to value the PSUs on grant date:

As of June 30, 2024, there were $6.5 million of unrecognized compensation costs related to the PSUs. These costs are expected to be recognized over a weighted average period of 2.50 years.

With respect to above Class A Shares, Class C Shares, RSUs and PSUs, the Company recorded compensation expenses of $15.1 million and $13.3 million for the three months ended June 30, 2024 and 2023, respectively, and $37.7 million and $30.8 million for the six months ended June 30, 2024 and 2023.