Stock-based compensation is measured at the grant date, based on the calculated fair value of the
award and is remeasured each reporting period for liability-classified awards. Stock-based
compensation is recognized over the requisite employee service period (generally the vesting period of
the grant). Stock-based compensation is expensed or capitalized based on the nature of the
employee’s activities, and for the years ended December 31, 2011, 2010 and 2009 was (in thousands):
Year Ended December 31,
2011
2010
2009
Stock-based compensation included in:
General and administrative expense . . . . . . . . . . . . . . . . . . . . . $ 42,268 $ 46,953 $ 56,098
Lease operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,925
3,922
4,392
Oil and natural gas properties . . . . . . . . . . . . . . . . . . . . . . . . . .
13,695
14,662
15,930
Total stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . $ 62,888 $ 65,537 $ 76,420
Stock-based compensation charged to earnings for the years ended December 31, 2011, 2010
and 2009 was (in thousands):
Year Ended December 31,
2011
2010
2009
Charged to earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49,193 $ 50,875 $ 60,490
Tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(18,438)
(19,068)
(22,714)
$ 30,755 $ 31,807 $ 37,776
At December 31, 2011, there was $169.5 million of total unrecognized compensation cost related
to unvested stock-based compensation arrangements that is expected to be recognized over a
weighted-average period of approximately 3.9 years.
SARs
SAR grants generally vest ratably over three years or 100% at the end of three years and expire
within five years after the date of grant. These awards are similar to stock options, but are settled in
cash rather than in shares of common stock and are classified as liability awards. Compensation cost
for these awards is determined using a fair-value method and remeasured at each reporting date until
the date of settlement. Stock-based compensation expense recognized is based on the number of
SARs ultimately expected to vest and has been reduced for estimated forfeitures.
The following table summarizes the status of our SARs at December 31, 2011 and the changes
during the year then ended:
Outstanding
(thousands)
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
($ thousands)
Weighted
Average
Remaining
Contractual
Life (years)
Outstanding at January 1, 2011 . . . . . .
3,156 $ 37.29
Granted . . . . . . . . . . . . . . . . . . . . . . . . .
955
36.91
Exercised . . . . . . . . . . . . . . . . . . . . . . . .
(250) 26.43
Forfeited or expired . . . . . . . . . . . . . . . .
(291) 36.91
Outstanding at December 31, 2011 . . .
3,570
37.98 $
13,815
2.3
Exercisable at December 31, 2011 . . .
1,612
46.25 $
2,410
1.0
F-32