Occidental Petroleum 2008 Annual Report Download - page 74

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The fair value of the cash-settled portion of the PSAs and TSRIs are further measured using a Monte Carlo simulation model each
quarter, through vesting, using updated assumptions. Changes in value of the cash-settled portion of the PSAs and TSRIs are recorded in
compensation expense each quarter. Compensation expense is recognized ratably over the vesting period for all awards, along with the
quarterly change in the fair value of the cash-settled portion of the PSAs and TSRIs.
A summary of Occidental’s unvested PSAs and TSRIs as of December 31, 2008 and changes during the year ended December 31,
2008, is presented below:
PSAs TSRIs
Awards
(000’s)
Grant-Date Fair
Value
of Occidental Stock
Awards
(000’s)
Grant-Date Fair
Value
of Occidental Stock
Unvested at January 1 (a) 973 $47.01 523 $61.93
Granted (a, b) — $ — 420 $77.00
Vested (c) (371) $21.12 — $ —
Forfeitures (19) $41.55 (9) $66.24
Unvested at December 31 (a) 583 $63.62 934 $68.66
(a) Unvested awards and award grants are presented at the target payouts.
(b) Actual payout may be up to 200 percent of this amount for PSAs. The TSRIs have a maximum payout of 150 percent.
(c) The weighted-average payout at vesting was 155 percent of the target.
CSSUs
Certain employees are awarded the right to receive CSSUs (which include and have been issued as Long-Term Incentive awards).
CSSUs are equivalent in value to actual shares of Occidental common stock but are paid in cash at the time of vesting. The fair value of the
CSSUs is initially measured using the grant date quoted market price of Occidental common stock and expensed on a straight-line basis
over the vesting period. CSSUs vest either in total over two years or ratably over three years after the grant date and can be forfeited or
accelerated under certain conditions. For CSSUs which vest in total over two years, dividend equivalents are accumulated during the vesting
period and are paid when they vest. For CSSUs which vest ratably, dividend equivalents are paid during the vesting period. Changes in the
fair value from the grant date until the date when the CSSUs vest are recognized as periodic compensation expense. The weighted-average,
grant-date fair values of the CSSUs granted in 2008, 2007 and 2006 were $76.23, $61.90 and $48.59, respectively.
A summary of changes in Occidental’s unvested CSSUs during the year ended December 31, 2008 is presented below:
CSSUs
(000’s)
Weighted-Average
Grant-Date Fair Value
Unvested at January 1 1,256 $55.39
Granted 953 $76.23
Vested (761) $52.52
Forfeitures (113) $54.74
Unvested at December 31 1,335 $71.97
60
NOTE 13 RETIREMENT PLANS AND POSTRETIREMENT BENEFITS