Chesapeake Energy 2013 Annual Report Download - page 118

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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Chesapeake's 2003 Stock Incentive Plan terminated in April 2013. Restricted stock was awarded to employees
and consultants of Chesapeake under the plan prior to its termination. Subject to any adjustments as provided by the
plan, the aggregate number of shares available for awards under the plan was limited to 10,000,000 shares. Restricted
stock became vested at dates determined by a committee of the Board of Directors. The plan was approved by our
shareholders. There were nominal amounts of restricted stock, net of forfeitures, issued under the plan during 2013
and 2012 and 0.4 million restricted stock, net of forfeitures, issued under the plan during 2011.
Under Chesapeake's 2003 Stock Award Plan for Non-Employee Directors, a maximum of 10,000 shares of
Chesapeake's common stock are awarded to each newly appointed non-employee director on his or her first day of
service. Subject to any adjustments as provided by the plan, the aggregate number of shares which may be issued
may not exceed 250,000 shares. This plan has been approved by our shareholders. In 2013, 2012 and 2011, 20,000,
30,000 and 10,000 shares, respectively, of common stock were awarded to new directors under the plan. As of
December 31, 2013, there were 130,000 shares remaining available for issuance under the plan.
Equity-Classified Awards
Restricted Stock. We grant restricted stock to employees and non-employee directors. Restricted stock vests
over a minimum of three years and the holder receives dividends or dividend equivalents on unvested shares. A
summary of the changes in unvested shares of restricted stock during 2013, 2012 and 2011 is presented below.
Number of
Unvested
Restricted Shares
Weighted Average
Grant Date
Fair Value
(in thousands)
Unvested shares as of January 1, 2013...................................... 18,899 $ 23.72
Granted ................................................................................... 9,189 $ 19.68
Vested ..................................................................................... (12,897) $ 21.32
Forfeited ................................................................................. (1,791) $ 22.86
Unvested shares as of December 31, 2013 ................................ 13,400 $ 23.38
Unvested shares as of January 1, 2012...................................... 19,544 $ 26.97
Granted ................................................................................... 9,480 $ 21.13
Vested ..................................................................................... (8,620) $ 28.08
Forfeited ................................................................................. (1,505) $ 24.57
Unvested shares as of December 31, 2012 ................................ 18,899 $ 23.72
Unvested shares as of January 1, 2011...................................... 21,375 $ 28.68
Granted ................................................................................... 9,541 $ 28.38
Vested ..................................................................................... (10,401) $ 31.76
Forfeited ................................................................................. (971) $ 27.28
Unvested shares as of December 31, 2011 ................................ 19,544 $ 26.97
The aggregate intrinsic value of restricted stock that vested during 2013 was approximately $342 million based
on the stock price at the time of vesting.
As of December 31, 2013, there was $195 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 3.6 years.
The vesting of certain restricted stock grants may 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 2013,
2012 and 2011, we recognized reductions in tax benefits related to restricted stock of $14 million, $32 million and $23
million, respectively, which were recorded as adjustments to additional paid-in capital and deferred income taxes.