13. Stock-based Compensation Plans

Schlumberger has three types of stock-based compensation programs: (i) stock options, (ii) a restricted stock, restricted stock unit and performance share unit program (collectively referred to as “restricted stock”) and (iii) a discounted stock purchase plan (“DSPP”).

Stock Options

Key employees are granted stock options under Schlumberger stock option plans. For all of the stock options granted, the exercise price equals the average of the high and low sales prices of Schlumberger stock on the date of grant; an option’s maximum term is ten years, and options generally vest in increments over five years.

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions and resulting weighted-average fair value per share:

	2014			2013			2012
Dividend yield		1.6	%		1.7	%		1.5	%
Expected volatility		37	%		38	%		39	%
Risk free interest rate		2.2	%		1.2	%		1.5	%
Expected option life in years		7.0			7.0			6.9
Weighted-average fair value per share	$	34.20		$	23.93		$	25.26

The following table summarizes information concerning options outstanding and options exercisable as of December 31, 2014:

	(Shares stated in thousands)

	Options Outstanding						Options Exercisable
Exercise prices range	Options Outstanding		Weighted- average remaining contractual life (in years)		Weighted- average exercise price		Options Exercisable		Weighted- average exercise price
$32.45 - $67.87		6,553		3.2	$	51.50		6,295	$	51.03
$68.51 - $70.93		8,346		6.9	$	69.82		3,648	$	69.02
$72.11 - $78.31		7,553		7.2	$	72.56		1,915	$	72.47
$83.88 - $84.93		8,045		5.2	$	84.17		5,118	$	84.34
$88.61 - $114.83		8,086		8.1	$	97.78		1,566	$	95.92
		38,583		6.2	$	76.10		18,542	$	69.77

The weighted average remaining contractual life of stock options exercisable as of December 31, 2014 was 4.2 years.

The following table summarizes stock option activity during the years ended December 31, 2014, 2013 and 2012:

	(Shares stated in thousands)

	2014					2013					2012
	Shares			Weighted- average exercise price		Shares			Weighted- average exercise price		Shares			Weighted- average exercise price
Outstanding at beginning of year		41,939		$	70.33		42,059		$	67.77		40,027		$	63.84
Granted		6,105		$	99.04		6,570		$	72.16		8,664		$	72.04
Exercised		(8,269	)	$	64.19		(5,168	)	$	51.73		(4,171	)	$	39.07
Forfeited		(1,192	)	$	73.56		(1,522	)	$	70.57		(2,461	)	$	67.50
Outstanding at year-end		38,583		$	76.10		41,939		$	70.33		42,059		$	67.77

The aggregate intrinsic value of stock options outstanding as of December 31, 2014 was $459 million.

The aggregate intrinsic value of stock options exercisable as of December 31, 2014 was $306 million.

The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $314 million, $176 million and $142 million, respectively.

Restricted Stock

During 2013, Schlumberger began granting performance share units to certain executives. The number of shares earned is determined at the end of each performance period, which is generally three years, based on Schlumberger’s achievement of a predefined return on capital employed (“ROCE”), as defined in the underlying performance share unit agreement. In the event the ROCE exceeds the predefined target, shares for up to the maximum of 250% of the target award may be granted. In the event the ROCE falls below the predefined target, a reduced number of shares may be granted. If the ROCE falls below the threshold award performance level, no shares will be granted. As of December 31, 2014, performance share units of 0.6 million were outstanding based on the achievement of 100% of target.

All other restricted stock awards generally vest at the end of three years.

Restricted stock awards do not pay dividends or allow voting rights during the performance period. Accordingly, the fair value of the restricted stock award is the quoted market price of Schlumberger’s stock on the date of grant less the present value of the expected dividends not received during the vesting period.

The following table summarizes information about all restricted stock transactions:

	(Shares stated in thousands)

	2014					2013					2012
	Restricted Stock			Weighted Average Grant Date Fair Value		Restricted Stock			Weighted Average Grant Date Fair Value		Restricted Stock			Weighted Average Grant Date Fair Value
Unvested at beginning of year		4,171		$	76.01		3,566		$	73.62		2,433		$	72.25
Granted		1,341			96.08		1,949			75.65		1,668			71.09
Vested		(1,186	)		81.59		(958	)		66.98		(351	)		52.26
Forfeited		(188	)		78.68		(386	)		74.53		(184	)		73.38
Unvested at end of year		4,138		$	80.80		4,171		$	76.01		3,566		$	73.62

Discounted Stock Purchase Plan

Under the terms of the DSPP, employees can choose to have a portion of their earnings withheld, subject to certain restrictions, to purchase Schlumberger common stock. The purchase price of the stock is 92.5% of the lower of the stock price at the beginning or end of the plan period at six-month intervals.

The fair value of the employees’ purchase rights under the DSPP was estimated using the Black-Scholes model with the following assumptions and resulting weighted average fair value per share:

	2014			2013			2012
Dividend yield		1.6	%		1.7	%		1.6	%
Expected volatility		19	%		24	%		41	%
Risk free interest rate		0.1	%		0.1	%		0.2	%
Weighted average fair value per share	$	12.67		$	9.91		$	12.71

Total Stock-based Compensation Expense

The following summarizes stock-based compensation expense recognized in income:

	(Stated in millions)

	2014		2013		2012
Stock options	$	177	$	165	$	203
Restricted stock		114		110		82
DSPP		38		40		50
	$	329	$	315	$	335

At December 31, 2014, there was $514 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements, of which $238 million is expected to be recognized in 2015, $152 million in 2016, $73 million in 2017, $43 million in 2018 and $8 million in 2019.

As of December 31, 2014, approximately 33 million shares of Schlumberger common stock were available for future grants under Schlumberger’s stock-based compensation programs.