Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

Stock-Based Compensation [Abstract]

Stock-Based Compensation

(12) STOCK-BASED COMPENSATION

The Company recognized the following amounts in employee stock-based compensation costs for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2015		2014		2015		2014
	(in millions)
Stock-based compensation cost  –  expensed	$	6	$	4	$	18	$	13
Stock-based compensation cost – capitalized	$	6	$	4	$	17	$	13

As of September 30, 2015, there was $80 million of total unrecognized compensation cost related to the Company’s unvested stock option grants, restricted stock grants, and performance units. This cost is expected to be recognized over a weighted-average period of 2 years.

The following table summarizes stock option activity for the nine months ended September 30, 2015 and provides information for options outstanding and options exercisable as of September 30, 2015:

		Weighted
		Average
	Number	Exercise
	of Options	Price
	(in thousands)	(per share)
Outstanding at December 31, 2014	3,622	$	35.41
Granted	224		26.35
Exercised	–		–
Forfeited or expired	(67)		38.97
Outstanding at September 30, 2015	3,779	$	34.82
Exercisable at September 30, 2015	2,249	$	36.17

The following table summarizes restricted stock activity for the nine months ended September 30, 2015 and provides information for unvested shares as of September 30, 2015:

		Weighted
		Average
	Number	Grant Date
	of Shares	Fair Value
	(in thousands)	(per share)
Unvested shares at December 31, 2014	2,376	$	34.00
Granted	103		26.05
Vested	(98)		34.96
Forfeited	(70)		33.54
Unvested shares at September 30, 2015	2,311	$	33.61

The following table summarizes performance unit activity to be paid out in Company stock for the nine months ended September 30, 2015 and provides information for unvested units as of September 30, 2015. The performance units include a market condition based on Relative Total Shareholder Return (“TSR”) and a performance condition based on the Company's Present Value Index (“PVI”), collectively the “Performance Measures.” The fair value of the TSR market condition of the performance units is based on a Monte Carlo model and is amortized to compensation expense on a straight-line basis over the vesting period of the award. The fair value of the PVI performance condition of the performance units is based on the economic analysis for each investment opportunity based upon the expected present value added for each dollar to be invested and amortized to compensation expense on a straight line basis over the vesting period of the award. The grant date fair value is calculated using the Performance Measures and the closing price of the Company’s common stock at the grant date.

		Weighted
		Average
	Number	Grant Date
	of Units (1)	Fair Value
	(in thousands)	(per unit)
Unvested units at December 31, 2014	223	$	40.44
Granted	443		35.22
Vested	–		–
Forfeited	–		–
Unvested units at September 30, 2015	666	$	36.97

⁽¹⁾ These amounts reflect the number of performance units granted in thousands. The actual payout of shares may range from a minimum of zero shares to a maximum of two shares contingent upon the actual performance against the Performance Measures.

Liability-Classified Performance Units

Certain employees were provided performance units vesting equally over three years.  The payout of these units is based on certain metrics, such as total shareholder return and reserve replacement efficiency, compared to a predetermined group of peer companies and Company goals.  At the end of each performance period, the value of the vested performance units, if any, is paid in cash.  As of September 30, 2015 and December 31, 2014, the Company’s liability under the performance unit agreements was $24million and $51 million, respectively.