Hess 2014 Annual Report Download - page 82

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67
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
67
The Corporation’s share-based compensation activity consisted of the following:
Performance Share Units Stock Options Restricted Stock
Performance
Share Units
Weighted-
Average Fair
Value on Date
of Grant Options
Weighted-
Average
Exercise Price
per Share
Shares of
Restricted
Common
Stock
Weighted-
Average Price
on Date of
Grant
(In thousands) (In thousands) (In thousands)
Outstanding at January 1, 2014 ................................. 635 $ 89.45 10,141 $ 63.08 2,865 $ 69.36
Granted ................................................................. 298 90.32 163 80.35 1081 81.20
Exercised ..............................................................
—
—
(3,327) 54.99
—
—
Vested ..................................................................
—
—
—
—
(510) 82.42
Forfeited ............................................................... (133) 88.60 (211) 85.07 (535) 68.74
Outstanding at December 31, 2014 ........................... 800 $ 89.91 6,766 $ 66.79 2,901 $ 71.58
The table below summarizes information regarding the outstanding and exercisable stock options as of December 31, 2014:
Outstanding Options Exercisable Options
Options
Weighted-
Average
Remaining
Contractual
Life
Weighted-
Average
Exercise Price
per Share Options
Weighted-
Average
Exercise Price
per Share
Range of Exercise Prices
(In thousands) (Years) (In thousands)
$20.00 – $40.00 ..................................................... 65 1 $ 29.96 65 $ 29.96
$40.01 – $50.00 ..................................................... 684 2 49.42 681 49.44
$50.01 – $60.00 ..................................................... 1,927 4 55.08 1,921 55.08
$60.01 – $80.00 ..................................................... 1,302 4 60.68 1,302 60.68
$80.01 – $120.00 ................................................... 2,788 5 82.85 2,625 83.00
6,766 4 $ 66.79 6,594 $ 66.47
The following weighted average assumptions were utilized to estimate the fair value of PSU awards:
2014 2013
Risk free interest rate ...................................................................................................................................... 0.65% 0.36 %
Stock price volatility ....................................................................................................................................... .359 .359
Contractual term in years ................................................................................................................................ 3.0 3.0
Grant date price of Hess common stock .......................................................................................................... $ 80.35 $ 69.49
The risk free interest rate is based on the vesting period of the award and is obtained from published sources. The stock price
volatility is determined from the historical stock prices of the peer group using the vesting period. The contractual term is equivalent
to the vesting period.
Restricted common shares are valued based on the prevailing market price of the Corporation’s common stock on the date of grant.
In May 2008, shareholders approved the 2008 LTIP, which was amended in May 2010 and May 2012 to increase the number of
new shares of common stock available for awards. At December 31, 2014, the Corporation had 8.5 million shares that remain
available for issuance under the 2008 LTIP, as amended, out of the total of 29.0 million shares of common stock authorized for
issuance under the 2008 LTIP, as amended.
12. Foreign Currency
Foreign currency gains (losses) before income taxes recorded in Other, net in the Statement of Consolidated Income amounted to
a loss of $43 million in 2014, a loss of $54 million in 2013 and a gain of $36 million in 2012, all of which related to the Corporation’s
continuing operations. The after-tax foreign currency translation adjustments included in Accumulated other comprehensive income
(loss) totaled $(757) million at December 31, 2014 and $(1) million at December 31, 2013. The change in 2014 related to the
Corporation’s Norwegian operations and reflects translation impacts of the strengthening U.S. dollar versus the Norwegian Krone.
13. Retirement Plans
The Corporation has funded noncontributory defined benefit pension plans for a significant portion of its employees. In addition,
the Corporation has an unfunded supplemental pension plan covering certain employees, which provides incremental payments that
would have been payable from the Corporation’s principal pension plans, were it not for limitations imposed by income tax