Share Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

Note 12 – Share-Based Compensation

QEP issues stock options and restricted shares under its Long-Term Stock Incentive Plan (LTSIP) and performance based share units under its Long-Term Cash Incentive Plan (LTCIP) to certain officers, employees and non-employee directors. QEP recognizes expense over time as the stock options or restricted shares vest. Share-based compensation expense amounted to $5.7 million in the third quarter of 2011 compared to $4.2 million for the third quarter of 2010. Shared based compensation for the nine months ended September 30, 2011 was $16.5 million compared to $11.3 million during the same period of 2010. Deferred share-based compensation is included in additional paid-in capital in the Condensed Consolidated Balance Sheets. There were 14.1 million shares available for future grants at September 30, 2011.

Stock Options

QEP uses the Black-Scholes-Merton mathematical model to estimate the fair value of stock options for accounting purposes. Fair-value calculations rely upon subjective assumptions used in the mathematical model and may not be representative of future results.

The Black-Scholes-Merton model is intended for measuring the value of options traded on an exchange. The calculated fair value of options granted and major assumptions used in the model at the date of grant are listed below:

	Stock Option Variables Nine Months Ended September 30, 2011
Fair value of options at grant date	$	18.80
Risk-free interest rate		2.1	%
Expected price volatility		54.7	%
Expected dividend yield		0.21	%
Expected life in years		5.0

Stock option transactions under the terms of the LTSIP are summarized below:

	Options Outstanding			Price Range		Weighted-Average Price
Balance at January 1, 2011		1,914,922			$7.78 - $27.84	$	19.02
Granted		202,235			39.07		39.07
Exercised		(111,797	)		7.78 - 27.55		15.69
Forfeited		(1,666	)		23.98		23.98
Balance at September 30, 2011		2,003,694			7.78 - 39.07		21.23

Options Outstanding							Options Exercisable				Unvested Options
Range of Exercise Prices	Number Outstanding at September 30, 2011		Weighted- Average Remaining Term in Years		Weighted- Average Exercise  Price		Number Exercisable at September 30, 2011		Weighted- Average Exercise  Price		Number Unvested at September 30, 2011		Weighted- Average  Exercise Price
$7.78 - $11.89		582,050		0.9	$	8.57		582,050	$	8.57		-	$	-
19.37 - 27.84		1,219,409		4.0		24.31		751,729		24.45		467,680		24.09
39.07		202,235		6.4		39.07		-		-		202,235		39.07
		2,003,694		3.3		21.23		1,333,779		17.52		669,915		28.61

Restricted Shares

Restricted share grants typically vest in equal installments over a three or four-year period from the grant date. Several grants vest in a single installment after a specified period. The weighted-average vesting period of unvested restricted shares at September 30, 2011, was 15 months. Transactions involving restricted shares under the terms of the LTSIP are summarized below:

	Restricted Shares Outstanding			Price Range		Weighted-Average Price
Balance at January 1, 2011		966,961			$17.03 - $47.28	$	29.05
Granted		426,953			32.29 - 44.12		39.18
Distributed		(300,478	)		17.03 - 47.28		29.37
Forfeited		(14,150	)		17.03 - 40.03		35.44
Balance at September 30, 2011		1,079,286			19.86 - 44.12		32.48

Performance Share Units

During the nine months ended September 30, 2011, the Company granted its first performance based share units. Vesting is dependent upon the Company's total shareholder return compared to a group of its peers. The awards are denominated in share units but delivered in cash at the end of the performance period. The weighted-average vesting period of unvested performance shares at September 30, 2011, was 29 months. Transactions involving performance shares units under the terms of the LTCIP are summarized below:

	Performance Shares Outstanding			Price Range		Weighted-Average Price
Balance at January 1, 2011		-		$	-	$	-
Granted		116,074			39.07		39.07
Distributed		-			-		-
Forfeited		(800	)		39.07		39.07
Balance at September 30, 2011		115,274			39.07		39.07