National Oilwell Varco 2015 Annual Report Download - page 97

Table of Contents
Stock Options
Under the terms of National Oilwell Varco’s Long-Term Incentive Plan, as amended, 39.5 million shares of common stock are authorized for the grant of
options to officers, key employees, non-employee directors and other persons. Options granted under our stock option plan generally vest over a three-year
period starting one year from the date of grant and expire ten years from the date of grant. The purchase price of options granted may not be less than the
closing market price of National Oilwell Varco common stock on the date of grant. At December 31, 2015, approximately 6.2 million shares were available
for future grants.
We also have inactive stock option plans that were acquired in connection with the acquisitions of Varco International, Inc. in 2005 and Grant Prideco in
2008. We converted the outstanding stock options under these plans to options to acquire our common stock and no further options are being issued under
these plans. Stock option information summarized below includes amounts for the National Oilwell Varco Long-Term Incentive Plan and stock plans of
acquired companies. Options outstanding at December 31, 2015 under the stock option plans have exercise prices between $12.15 and $77.99 per share, and
expire at various dates from January 13, 2016 to February 26, 2025.
On June 2, 2014, as a result of the spin-off and pursuant to the terms of the Employee Matters Agreement and the Plan, outstanding NOV stock-based awards
held by continuing NOV employees were adjusted to generally preserve the intrinsic value of the original award. Outstanding NOV stock-based awards held
by employees of NOW were converted into similar NOW stock-based awards, each appropriately adjusted to generally preserve the intrinsic value of the
original award. Adjustments to the awards are reflected in the following tables and did not have a material impact to compensation expense.
The following summarizes options activity:
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Shares under option at beginning of year 10,881,133 $ 61.22 11,535,566 $ 58.36 10,274,477 $ 54.11
Granted 5,746,153 54.74 3,389,547 69.00 3,072,086 63.96
Spun-off — — (1,567,348) 70.56 — —
Cancelled (886,356) 62.73 (498,967) 70.32 (329,002) 66.78
Exercised (310,623) 22.56 (1,977,665) 53.56 (1,481,995) 38.75
Shares under option at end of year 15,430,307 $ 59.50 10,881,133 $ 61.22 11,535,566 $ 58.36
Exercisable at end of year 7,498,414 $ 60.30 5,903,712 $ 55.06 6,324,117 $ 49.29
The following summarizes information about stock options outstanding at December 31, 2015:
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
$12.15 - $55.00 7.34 7,599,928 $ 48.99 2,148,275 $ 34.39
$55.01 - $70.00 7.25 5,045,298 66.22 2,569,643 64.98
$70.01 - $77.99 5.68 2,785,081 76.00 2,780,496 76.00
Total 7.01 15,430,307 $ 59.50 7,498,414 $ 60.30
The weighted-average fair value of options granted during 2015, 2014 and 2013, was approximately $15.41, $25.60 and $24.11 per share, respectively, as
determined using the Black-Scholes option-pricing model. The total intrinsic value of options exercised during 2015 and 2014, was $9 million and $111
million, respectively.
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