Company has accounted for these as liability-classified awards, and accordingly changes in the fair market value of the instruments will be recorded to general and administrative expense and capitalized expense over the vesting period of the awards. The performance unit awards granted in 2018 include a performance condition based on cash flow per debt-adjusted share and two market conditions, one based on absolute TSR and the other on relative TSR as compared to a group of the Company’s peers. The performance unit awards granted in 2019 include a performance condition based on return on average capital employed and two market conditions, one based on absolute TSR and the other on relative TSR. The performance unit awards granted in 2020 include a performance condition based on return on average capital employed and a market condition based on relative TSR. The fair values of all market conditions discussed above are calculated by Monte Carlo models on a quarterly basis. (in millions) 2020 2019 2018 Liability-classified performance units – general and administrative expense $ 7  $ 2  $ 2  Liability-classified performance units – general and administrative expense capitalized $ 2  $ 1  $ —  The Company also recorded deferred tax assets of $2 million related to liability-classified performance units for the year ended December 31, 2020, compared to a reduction of deferred tax asset of less than $1 million and a deferred tax asset of $1 million for the years ended 2019 and 2018, respectively. As of December 31, 2020, there was $14 million of total unrecognized compensation cost related to liability-classified performance units. This cost is expected to be recognized over a weighted-average period of two years. The amount of unrecognized compensation cost for liability-classified awards will fluctuate over time as they are marked to market. The final value of the performance unit awards is contingent upon the Company’s actual performance against the Performance Measures. The following table summarizes liability-classified performance unit activity to be paid out in cash or stock for the years ended December 31, 2020, 2019 and 2018 and provides information for unvested units as of December 31, 2020, 2019 and 2018: 2020 2019 2018 Number of Units Weighted Average Fair Value Number of Units Weighted Average Fair Value Number of Units Weighted Average Fair Value (in thousands) (in thousands) (in thousands) Unvested units at January 1 5,142  $ 2.42  2,803  $ 3.41  —  $ —  Granted 6,172  $ 1.41  2,757  $ 4.34  3,200  $ 3.70  Vested —  $ —  (43) $ 2.42  —  $ —  Forfeited (2,615) $ 3.05  (375) $ 3.12  (397) $ 4.55  Unvested units at December 31 8,699  $ 2.57  5,142  $ 2.42  2,803  $ 3.41  (1) (2) (3) (1) Includes 518,450 units related to the reduction in workforce for the year ended December 31, 2020. (2) Includes 375,086 units related to the reduction in workforce for the year ended December 31, 2019. (3) Includes 295,160 units related to the reduction in workforce for the year ended December 31, 2018. Cash-Based Compensation Performance Cash Awards In 2020, the Company granted performance cash awards that vest over a four-year period and are payable in cash on an annual basis. The value of each unit of the award equal one dollar. The Company recognizes the cost of these awards as general and administrative expense, operating expense and capitalized expense over the vesting period of the awards. The performance cash awards granted in 2020 include a performance condition determined annually by the Company. In 2020, the performance measure is a targeted discretionary cash flow amount. If the Company, in its sole discretion, determines that the threshold was not met, the amount for that vesting period will not vest and will be cancelled. 121 Table of Contents Index to Financial Statements