Ring Energy, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK UNITS

EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK UNITS

6 Months Ended

Jun. 30, 2023

EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k)

EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK UNITS

NOTE 11 — EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK UNITS

Compensation expense charged against income for share-based awards during the three and six months ended June 30, 2023 and 2022 was as follows. These amounts are included in General and administrative expense in the Condensed Statements of Operations.


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		Jun. 30, 2023		Jun. 30, 2022
Share-based compensation	$	2,260,312	$	1,899,245	$	4,204,008	$	3,421,155

In 2011, the Board approved and adopted a long-term incentive plan (the “2011 Plan”), which was subsequently approved and amended by the shareholders. There were 341,755 shares eligible for grant, either as stock options or as restricted stock, as of June 30, 2023.

In 2021, the Board approved and adopted the Ring Energy, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”), which was subsequently approved and amended by the shareholders at the 2021 Annual Meeting. At the 2023 Annual Meeting,

the shareholders approved a Plan Amendment to increase the number of shares available under the 2021 Plan by 6.0 million. Accordingly, there were 8,219,397 shares eligible for grant, either as stock options or as restricted stock, as of June 30, 2023 under the 2021 Plan.

Stock Options

A summary of the status of the stock options as of June 30, 2023 and 2022 and changes during the six months then ended are as follows:


	Options	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding, December 31, 2021	365,500	$	3.61
Granted	—	—
Forfeited or rescinded	—	—
Exercised	—	—
Outstanding, March 31, 2022	365,500	$	3.61	2.21 years	$	536,900

Granted	—	$	—
Forfeited or rescinded	—	$	—
Exercised	(100,000)	$	2.00
Outstanding, June 30, 2022	265,500	$	4.21	2.14 years	$	128,700
Exercisable, June 30, 2022	265,500	$	4.21	2.14 years

Outstanding, December 31, 2022	265,500	$	4.21
Granted	—	—
Forfeited or rescinded	—	—
Exercised	—	—
Outstanding, March 31, 2023	265,500	$	4.21	1.39 years	$	—

Granted	—	$	—
Forfeited or rescinded	—	$	—
Exercised	—	$	—
Outstanding, June 30, 2023	265,500	$	4.21	1.14 years	$	—
Exercisable, June 30, 2023	265,500	$	4.21	1.14 years

The intrinsic values were calculated using the closing price on June 30, 2023 of $1.71 and the closing price on June 30, 2022 of $2.66. As of June 30, 2023, the Company had $0 of unrecognized compensation cost related to stock options.

Restricted Stock Units

A summary of the restricted stock unit activity as of June 30, 2023 and 2022, respectively, and changes during the six months then ended are as follows:


	Restricted Stock Units	Weighted- Average Grant Date Fair Value
Outstanding, December 31, 2021	2,572,596	$	1.75
Granted	1,247,061	2.79
Forfeited or rescinded	—	—
Vested	—	—
Outstanding, March 31, 2022	3,819,657	$	2.09
Granted	19,642	$	4.27
Forfeited or rescinded	(17,204)	$	2.79
Vested	(610,195)	$	2.80
Outstanding, June 30, 2022	3,211,900	$	1.97

Outstanding, December 31, 2022	2,623,790	$	2.29
Granted	2,270,842	2.22
Forfeited or rescinded	(11,712)	2.22
Vested	(659,479)	2.80
Outstanding, March 31, 2023	4,223,441	$	2.17
Granted	—	$	—
Forfeited or rescinded	(49,465)	$	2.22
Vested	(288,709)	$	2.85
Outstanding, June 30, 2023	3,885,267	$	2.12

As of June 30, 2023, the Company had $5,060,731 of unrecognized compensation cost related to restricted stock unit grants that will be recognized over a weighted average period of 2.05 years. Grant activity for the six months ended June 30, 2023 was primarily restricted stock units for the annual long-term incentive plan awards for employees.

Performance Stock Units

A summary of the status of the performance stock unit ("PSU") grants as of June 30, 2023 and 2022, respectively, along with changes during the six months then ended are as follows:


	Performance Stock Units	Weighted- Average Grant Date Fair Value
Outstanding, December 31, 2021	860,216	$	3.87
Granted	860,216	3.65
Forfeited or rescinded	—	—
Vested	—	—
Outstanding, March 31, 2022	1,720,432	$	3.76
Granted	—	$	—
Forfeited or rescinded	—	$	—
Vested	—	$	—
Outstanding, June 30, 2022	1,720,432	$	3.76

Outstanding, December 31, 2022	1,720,432	$	3.76
Granted	1,162,162	2.71
Forfeited or rescinded	—	—
Vested	—	—
Outstanding, March 31, 2023	2,882,594	$	3.34
Granted	—	$	—
Forfeited or rescinded	—	$	—
Vested	—	$	—
Outstanding, June 30, 2023	2,882,594	$	3.34

As of June 30, 2023, the Company had $6,364,168 of unrecognized compensation cost related to the PSU awards that will be recognized over a weighted average period of 1.76 years.