Baker Hughes 2009 Annual Report Download - page 120

Download and view the complete annual report

Please find page 120 of the 2009 Baker Hughes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

46 Baker Hughes Incorporated
The total intrinsic value of stock options (defined as the
amount by which the market price of the underlying stock on
the date of exercise exceeds the exercise price of the option)
exercised in 2009, 2008 and 2007 was $0.4 million, $13 mil-
lion and $73 million, respectively. The income tax benefit real-
ized from stock options exercised was $0.1 million, $7 million
and $19 million in 2009, 2008 and 2007, respectively.
The total fair value of options vested in 2009, 2008 and
2007 was $17 million, $17 million and $20 million, respec-
tively. As of December 31, 2009, there was $15 million of
total unrecognized compensation cost related to nonvested
stock options which is expected to be recognized over a
weighted average period of two years.
The following table summarizes information about stock options outstanding as of December 31, 2009 (in thousands, except
per option prices and remaining life):
Outstanding Exercisable
Weighted Average Weighted Weighted Average Weighted
Remaining Contractual Average Exercise Remaining Contractual Average Exercise
Range of Exercise Prices Number of Options Life (In years) Price Per Option Number of Options Life (In years) Price Per Option
$ 14.79 – $ 16.78 3 3.7 $ 15.84 3 3.7 $ 15.84
22.88 – 33.32 1,286 7.6 29.35 377 4.0 29.73
34.45 – 46.48 2,146 7.5 39.77 860 4.4 40.22
56.21 – 82.28 2,218 7.1 71.94 1,639 6.7 71.20
86.50 – 86.50 23 8.6 86.50 8 8.6 86.50
Total 5,676 7.4 $ 50.16 2,887 5.7 $ 56.54
The aggregate intrinsic value of stock options outstanding at December 31, 2009 was $17 million, $5 million of which relates
to options vested and exercisable. The intrinsic value for stock options outstanding is calculated as the amount by which the quoted
price of $40.48 of our common stock as of the end of 2009 exceeds the exercise price of the options.
Restricted Stock Awards and Units
In addition to stock options, officers, directors and key employees may be granted restricted stock awards (“RSA”), which is an
award of common stock with no exercise price, or restricted stock units (“RSU”), where each unit represents the right to receive at
the end of a stipulated period one unrestricted share of stock with no exercise price. RSAs and RSUs are subject to cliff or graded
vesting, generally ranging over a three to five year period. We determine the fair value of restricted stock awards and restricted
stock units based on the market price of our common stock on the date of grant. Compensation cost for RSAs and RSUs is primarily
recognized on a straight-line basis over the vesting or service period and is net of forfeitures.
A summary of our RSA and RSU activity and related information is presented below (in thousands, except per share/unit prices):
RSA Number Weighted Average Grant RSU Number Weighted Average Grant
of Shares Date Fair Value Per Share of Units Date Fair Value Per Unit
Nonvested balance at December 31, 2008 902 $ 69.63 325 $ 74.74
Granted 1,091 31.18 427 31.54
Vested (412) 68.28 (116) 73.41
Forfeited (65) 44.61 (42) 45.56
Nonvested balance at December 31, 2009 1,516 $ 43.40 594 $ 46.01