Chesapeake Energy 2010 Annual Report Download - page 147

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
to natural gas and oil properties are recognized in general and administrative expenses, production expenses,
marketing, gathering and compression expenses or service operations expense. Note 1 details the accounting
for our stock-based compensation expense in 2010, 2009 and 2008.
A summary of the status of the unvested shares of restricted stock and changes during 2010, 2009 and
2008 is presented below:
Number of
Unvested
Restricted Shares
Weighted Average
Grant-Date
Fair Value
(in thousands)
Unvested shares as of January 1, 2010 ....................... 19,225 $ 31.89
Granted ................................................. 9,061 $ 24.19
Vested .................................................. (5,900) $ 31.99
Forfeited ................................................. (1,011) $ 30.05
Unvested shares as of December 31, 2010 .................... 21,375 $ 28.68
Unvested shares as of January 1, 2009 ....................... 21,622 $ 38.85
Granted ................................................. 8,019 $ 18.65
Vested .................................................. (9,214) $ 36.38
Forfeited ................................................. (1,202) $ 34.46
Unvested shares as of December 31, 2009 .................... 19,225 $ 31.89
Unvested shares as of January 1, 2008 ....................... 19,689 $ 32.42
Granted ................................................. 6,800 $ 51.14
Vested .................................................. (3,942) $ 28.27
Forfeited ................................................. (925) $ 37.33
Unvested shares as of December 31, 2008 .................... 21,622 $ 38.85
The aggregate intrinsic value of restricted stock vested during 2010 was approximately $136 million based
on the stock price at the time of vesting.
As of December 31, 2010, there was $364 million of total unrecognized compensation cost related to
unvested restricted stock. The cost is expected to be recognized over a weighted average period of
approximately 2 years.
The vesting of certain restricted stock grants could result in state and federal income tax benefits related to
the difference between the market price of the common stock at the date of vesting and the date of grant.
During the years ended December 31, 2010 and 2009, we recognized a reduction in tax benefits related to
restricted stock of $15 million and $49 million, respectively. During the year ended December 31, 2008, we
recognized an excess tax benefit related to restricted stock of $28 million. These amounts were recorded as an
adjustment to additional paid-in capital and deferred income taxes with respect to such benefits.
Stock Options
We granted stock options prior to 2006 under several stock compensation plans. Outstanding options
expire ten years from the date of grant and vested over a four-year period. All of our stock options outstanding
are fully vested and exercisable.
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