2. Stock-Based Compensation

As more fully discussed in Note 6 to the Consolidated Financial Statements included in EOG's 2013 Annual Report, EOG maintains various stock-based compensation plans. Stock-based compensation expense is included on the Consolidated Statements of Income and Comprehensive Income based upon the job function of the employees receiving the grants as follows (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Lease and Well	$	9.1	$	8.4	$	20.7	$	18.2
Gathering and Processing Costs	0.2		0.3		0.5		0.6
Exploration Costs	5.6		6.4		13.5		13.9
General and Administrative	14.6		12.2		30.4		25.0
Total	$	29.5	$	27.3	$	65.1	$	57.7

The Amended and Restated EOG Resources, Inc. 2008 Omnibus Equity Compensation Plan (2008 Plan) provides for grants of stock options, stock-settled stock appreciation rights (SARs), restricted stock, restricted stock units, performance units, performance stock and other stock-based awards. At June 30, 2014, approximately 32.3 million common shares remained available for grant under the 2008 Plan. EOG's policy is to issue shares related to the 2008 Plan from either previously authorized unissued shares or treasury shares to the extent treasury shares are available.

Stock Options and Stock-Settled Stock Appreciation Rights and Employee Stock Purchase Plan. The fair value of stock option and SAR grants is estimated using the Hull-White II binomial option pricing model. The fair value of Employee Stock Purchase Plan (ESPP) grants is estimated using the Black-Scholes-Merton model. Stock-based compensation expense related to stock option, SAR and ESPP grants totaled $11.7 million and $10.4 million during the three months ended June 30, 2014 and 2013, respectively, and $23.7 million and $20.8 million during the six months ended June 30, 2014 and 2013, respectively.

Weighted average fair values and valuation assumptions used to value stock option, SAR and ESPP grants during the six-month periods ended June 30, 2014 and 2013 are as follows:



	Stock Options/SARs						ESPP
	Six Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Weighted Average Fair Value of Grants	$	27.68		$	19.33		$	18.30		$	14.40
Expected Volatility	35.15		%	35.82		%	25.83		%	29.95		%
Risk-Free Interest Rate	0.86		%	0.48		%	0.09		%	0.12		%
Dividend Yield	0.5		%	0.6		%	0.4		%	0.6		%
Expected Life	5.2 years			5.5 years			0.5 years			0.5 years

Expected volatility is based on an equal weighting of historical volatility and implied volatility from traded options in EOG's common stock. The risk-free interest rate is based upon United States Treasury yields in effect at the time of grant. The expected life is based upon historical experience and contractual terms of stock option, SAR and ESPP grants.

The following table sets forth stock option and SAR transactions for the six-month periods ended June 30, 2014 and 2013 (stock options and SARs in thousands):



	Six Months Ended June 30, 2014				Six Months Ended June 30, 2013
	Number of Stock Options/SARs		Weighted Average Grant Price		Number of Stock Options/SARs		Weighted Average Grant Price
Outstanding at January 1	10,452		$	54.43	12,438		$	42.91
Granted	74		92.51		62		62.80
Exercised ⁽¹⁾	(922	)	43.76		(1,938	)	32.81
Forfeited	(185	)	62.02		(112	)	48.02
Outstanding at June 30 ⁽²⁾	9,419		$	55.62	10,450		$	44.85
Vested or Expected to Vest ⁽³⁾	8,985		$	55.22	9,994		$	44.67
Exercisable at June 30 ⁽⁴⁾	3,898		$	44.71	4,510		$	39.99


(1)	The total intrinsic value of stock options/SARs exercised for the six months ended June 30, 2014 and 2013 was $52.5 million and $62.1 million, respectively. The intrinsic value is based upon the difference between the market price of EOG's common stock on the date of exercise and the grant price of the stock options/SARs.


(2)	The total intrinsic value of stock options/SARs outstanding at June 30, 2014 and 2013 was $576.8 million and $219.5 million, respectively. At June 30, 2014 and 2013, the weighted average remaining contractual life was 4.2 years and 4.1 years, respectively.


(3)	The total intrinsic value of stock options/SARs vested or expected to vest at June 30, 2014 and 2013 was $553.8 million and $211.7 million, respectively. At June 30, 2014 and 2013, the weighted average remaining contractual life was 4.2 years and 4.1 years, respectively.


(4)	The total intrinsic value of stock options/SARs exercisable at June 30, 2014 and 2013 was $281.3 million and $116.7 million, respectively. At June 30, 2014 and 2013, the weighted average remaining contractual life was 2.8 years and 2.6 years, respectively.

At June 30, 2014, unrecognized compensation expense related to non-vested stock option, SAR and ESPP grants totaled $83.5 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 2.2 years.

Restricted Stock and Restricted Stock Units. Employees may be granted restricted (non-vested) stock and/or restricted stock units without cost to them. Stock-based compensation expense related to restricted stock and restricted stock units totaled $16.8 million and $16.6 million for the three months ended June 30, 2014 and 2013, respectively, and $39.5 million and $36.3 million for the six months ended June 30, 2014 and 2013, respectively.

The following table sets forth restricted stock and restricted stock unit transactions for the six-month periods ended June 30, 2014 and 2013 (shares and units in thousands):



	Six Months Ended June 30, 2014				Six Months Ended June 30, 2013
	Number of Shares and Units		Weighted Average Grant Date Fair Value		Number of Shares and Units		Weighted Average Grant Date Fair Value
Outstanding at January 1	7,358		$	49.54	7,636		$	45.53
Granted	435		94.73		530		64.25
Released ⁽¹⁾	(1,939	)	36.85		(586	)	61.82
Forfeited	(181	)	58.48		(108	)	47.20
Outstanding at June 30 ⁽²⁾	5,673		$	57.06	7,472		$	45.56


(1)	The total intrinsic value of restricted stock and restricted stock units released for the six months ended June 30, 2014 and 2013 was $207.0 million and $35.4 million, respectively. The intrinsic value is based upon the closing price of EOG's common stock on the date restricted stock and restricted stock units are released.


(2)	The total intrinsic value of restricted stock and restricted stock units outstanding at June 30, 2014 and 2013 was $662.9 million and $491.9 million, respectively.

At June 30, 2014, unrecognized compensation expense related to restricted stock and restricted stock units totaled $148.5 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 2.1 years.

Performance Units and Performance Stock. EOG grants performance units and/or performance stock to its executive officers. The fair value of the performance units and performance stock is estimated using a Monte Carlo simulation. Stock-based compensation expense related to performance unit and performance stock grants totaled $1.0 million and $0.3 million for the three months ended June 30, 2014 and 2013, and $1.9 million and $0.6 million for the six months ended June 30, 2014 and 2013.

The following table sets forth performance unit and performance stock transactions for the six-month periods ended June 30, 2014 and 2013 (shares and units in thousands):



	Six Months Ended June 30, 2014			Six Months Ended June 30, 2013
	Number of Shares and Units	Weighted Average Grant Date Fair Value		Number of Shares and Units	Weighted Average Grant Date Fair Value
Outstanding at January 1	261	$	82.18	143	$	67.05
Granted	—	—		—	—
Released	—	—		—	—
Forfeited	—	—		—	—
Outstanding at June 30 ⁽¹⁾	261	$	82.18	143	$	67.05


(1)	The total intrinsic value of performance units and performance stock outstanding at June 30, 2014 and 2013 was $30.5 million and $9.4 million, respectively.

At June 30, 2014, unrecognized compensation expense related to performance units and performance stock totaled $4.3 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 1.9 years.