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Baker Hughes Incorporated57
Baker Hughes Incorporated
Notes to Consolidated Financial Statements
of our common stock on the date of grant. The following table presents the combined changes of RSAs and RSUs
and related information (in thousands, except per share/unit prices):
Number of
Awards and Units
Weighted Average
Grant Date Fair
Value Per Award/Unit
Unvested balance at December 31, 2012 2,411 $ 50.71
Granted 1,596 45.58
Vested (1,129) 51.60
Forfeited (226) 48.34
Unvested balance at December 31, 2013 2,652 $ 47.44
The weighted average grant date fair value per share for RSAs and RSUs granted in 2013, 2012 and 2011 was
$45.58, $47.10 and $63.01, respectively. The total fair value of RSAs and RSUs vested in 2013, 2012 and 2011
was $58 million, $55 million and $52 million, respectively. As of December 31, 2013, there was $70 million of total
unrecognized compensation cost related to unvested RSAs and RSUs, which is expected to be recognized over a
weighted average period of two years.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan (“ESPP”) provides for eligible employees to purchase shares on an after-
tax basis in an amount between 1% and 10% of their annual pay: (i) on June 30 of each year at a 15% discount of
the fair market value of our common stock on January 1 or June 30, whichever is lower, and (ii) on December 31 of
each year at a 15% discount of the fair market value of our common stock on July 1 or December 31, whichever is
lower. An employee may not purchase more than $5,000 in either of the six-month measurement periods described
above or $10,000 annually.
We currently have 30.5 million shares authorized for issuance, and at December 31, 2013, there were 7.8
million shares reserved for future issuance. Compensation cost for the years ended December 31, was calculated
using the Black-Scholes option pricing model with the following assumptions:
2013 2012 2011
Expected life (years) 0.5 0.5 0.5
Risk-free interest rate 0.1% 0.1% 0.1%
Volatility 30.3% 44.1% 36.6%
Dividend yield 1.4% 1.3% 1.0%
Fair value per share of the 15% cash discount $ 6.45 $ 6.71 $ 9.62
Fair value per share of the look-back provision 3.58 5.46 6.50
Total weighted average fair value per share at grant date $ 10.03 $ 12.17 $ 16.12
We calculated estimated volatility using historical daily prices based on the expected life of the stock purchase
plan. The risk-free interest rate is based on the observed U.S. Treasury yield curve in effect at the time the ESPP
shares were granted. The dividend yield is based on our history of dividend payouts.