The stock-based compensation awards have been granted under several stock incentive and long-term incentive plans. The plans authorize the Compensation Committee of the Board of Directors to issue various types of incentive compensation. The Company had previously issued stock options and restricted shares from the 2014 Long-Term Incentive Plan (“2014 Plan”) and SARs under the 2016 Stock Appreciation Rights Plan. On June 25, 2020, the Company’s stockholders approved the 2020 Long-Term Incentive Plan (“2020 Plan”) under which 5,500,000 shares are authorized for future grants. At December 31, 2020, 3,744,737 shares were available for future grants under this plan.

For each stock option granted, the number of authorized shares under the 2020 Plan will be reduced on a one-for-one basis. For each restricted share granted, the number of shares authorized under the 2014 Plan and 2020 Plan will be reduced by twice the number of restricted shares. The Company has no set policy for sourcing shares for option grants. Historically the shares issued under option grants have been new shares.

As referenced in the table below, the Company records compensation expense related to stock-based compensation associated with the issuance of stock options, restricted stock, and SARs as general and administrative expense. During the years ended December 31, 2020, 2019 and 2018, the Company settled in cash $0.3 million, $0.5 million, and $0.1 million, respectively, for SARs. During the years ended December 31, 2020, 2019 and 2018, the Company received in cash $0.1 million, $0.3 million, and $0.5 million, respectively from stock option exercises. The Company computes a deferred tax benefit for restricted shares, SARs and stock options expected to generate future tax deductions by applying the U.S. federal statutory income tax rate. For restricted shares, the Company's actual tax deduction is based on the value of the shares at the time of vesting.  The Company receives a tax deduction for certain stock option exercises during the period the stock option awards are exercised, generally for the excess of the market value on the exercise date over the exercise price of the stock option awards.

Stock options and performance stock options

Stock options have an exercise price that may not be less than the fair market value of the underlying shares on the date of grant. In general, stock options granted to participants will become exercisable over a period determined by the Compensation Committee of the Board of Directors, which in the past has been a five-year life, with the options vesting over a service period of up to five years. In addition, stock options will become exercisable upon a change in control, unless provided otherwise by the Compensation Committee.

In June 2020, the Company granted options that are considered performance stock options to purchase an aggregate of 644,758 shares at an exercise price of $1.23 per share and a life of ten years to its employees. For each performance option award, options with respect to one-third of the underlying shares vest on the later of the first anniversary of the grant date and the date on which the Company’s stock price, determined using a 30-day average, exceeds $1.42 per share; options with respect to one-third of the underlying shares vest on the later of the second anniversary of the grant date and the date on which the Company’s stock price, determined using a 30-day average, exceeds $1.63 per share; and options with respect to the remaining one-third of the underlying shares vest on the later of the third anniversary of the grant date and the date on which the Company’s stock price, determined using a 30-day average, exceeds $1.88 per share. These awards are option awards that contain a market condition, which has been met. Compensation cost for such awards is recognized ratably over the derived service period and compensation cost related to awards with a market condition will not be reversed if the Company does not believe it is probable that such performance criteria will be met or if the service provider (employee or otherwise) fails to meet such performance criteria.

The Company used the Monte Carlo simulation to calculate the grant date fair value of performance stock option awards. The fair value of these awards will be amortized to expense over the derived service period of the option. During the year ended December 31, 2020, the assumptions shown below were used to calculate the weighted average grant date fair value of performance stock option awards issued under the 2020 Plan.

For options that do not contain a market or performance condition, the Company uses the Black-Scholes model to calculate the grant date fair value of stock option awards. This fair value is then amortized to expense over the vesting period of the option. During 2020, 2019 and 2018, the weighted average assumptions shown below were used to calculate the weighted average grant date fair value of option grants. Because the Company has not paid cash dividends historically, no expected dividend yield was input to the Black-Scholes model.

vest upon a change in control, unless provided otherwise by the Compensation Committee of the Board of Directors. Share grants to directors vest immediately and are not restricted. The following is a summary of activity in unvested restricted stock in 2020.

The total vest-date fair value of restricted stock awards, which vested during 2020, 2019 and 2018 was $0.2 million, $0.6 million, and $0.4 million, respectively. The weighted average grant date fair value per share of restricted stock awards, which vested during the applicable year, was $1.35, $2.00 and $1.71 for the years ended December 31, 2020, 2019 and 2018, respectively.

In June 2020, the Company issued 710,851 and 260,164 shares of service based restricted stock to employees and directors, respectively, with a grant date fair value of $1.23 per share. The vesting of these shares is dependent upon the employees’ and directors’ continued service with the Company.

As of December 31, 2020, unrecognized compensation cost related to restricted stock totaled $0.8 million and is expected to be recognized over a weighted average period of 1.4 years.

SARs

SARs are granted under the VAALCO Energy, Inc. 2016 Stock Appreciation Rights Plan. A SAR is the right to receive a cash amount equal to the spread with respect to a share of common stock upon the exercise of the SAR. The spread is the difference between the SAR price per share specified in a SAR award on the date of grant, (which may not be less than the fair market value of the common stock on the date of grant), and the fair market value per share on the date of exercise of the SAR. SARs granted to participants will become exercisable over a period determined by the Compensation Committee of the Board of Directors. In addition, SARs will become exercisable upon a change in control, unless provided otherwise by the Compensation Committee of the Board of Directors.

Total compensation expense related to the SARs awards during the year ended December 31, 2020 was $(0.7) million.

SAR activity for the year ended December 31, 2020 is provided below:

Other benefit plans

The Company has adopted forms of change in control agreements for its named executive officers and certain other officers of the Company as well as a severance plan for its Houston-based non-executive employees in order to provide severance benefits in connection with a change in control. Upon a termination of a participant’s employment by the Company without cause or a resignation by the participant for good reason three months prior to a change in control or six months following a change in control, executives and officers with change in control agreements and participants in the severance plan will be entitled to receive 100% and 50%, respectively, of the participant’s base salary and continued participation in the Company’s group health plans for the participant and his or her eligible spouse and other dependents for six months. In addition, certain named executive officers will receive 75% of their target bonus.