Cobalt Annual Report 2015 - page 119

Cobalt International Energy, Inc.
Notes to Consolidated Financial Statements (Continued)
F-27
14. Equity based Compensation (Continued)
The following table summarizes the information about the restricted stock awarded to employees for years ended December 31,
2015, 2014 and 2013:
Year Ended December 31,
2015
2014
2013
Restricted
Shares
Weighted
Average
Grant Date
Fair Value
Per Share
Restricted
Shares
Weighted
Average
Grant Date
Fair Value
Per Share
Restricted
Shares
Weighted
Average
Grant Date
Fair Value
Per Share
Non-vested shares at beginning of year ....................... 2,802,789 $ 16.44 4,334,886 $ 14.31 4,040,825 $ 13.05
Granted......................................................................... 3,503,948 $ 8.53 2,275,317 $ 14.53 620,840 $ 24.58
Vested .......................................................................... (225,430) $ 22.67 (1,433,172) $ 16.32 (239,317) $ 17.37
Forfeited or expired...................................................... (301,068) $ 12.75 (2,374,242) $ 10.63 (87,462) $ 20.91
Non-vested shares at end of year ................................. 5,780,239 $ 11.59 2,802,789 $ 16.44 4,334,886 $ 14.31
Weighted-average vesting period remaining................ 2.14 years
3.08 years
1.22 years
Unrecognized compensation ($ in thousands).............. $ 41,028
$ 34,066
$ 22,467
A total of 105,846 restricted stock units were granted to non-employee directors during the year ended December 31, 2015. As
of December 31, 2015, the Company has granted a cumulative total of 341,645 restricted stock units to non-employee directors. For
the years ended December 31, 2015, 2014 and 2013, the Company also granted 51,526, 26,438 and 15,318 shares of common stock,
respectively, for annual retainers to non-employee directors who elected to be compensated by stock in lieu of cash payments. For the
years ended December 31, 2015, 2014 and 2013, the weighted average fair values of these shares at grant date were $9.49, $17.52 and
$25.40 per share, respectively.
Non-Qualified Stock Options
. The Company grants non-qualified stock options to employees at an exercise price equal to the
market value of the Company’s common stock on the grant date. The non-qualified stock option awards have contractual terms of
10 years. The options granted in February 2014 and 2013 will vest 50% at the end of the third year from date of grant and 50% at the
end of the fourth year from date of grant. The options granted in 2012 were fully vested during the year ended December 31, 2014.
The fair value of each stock option granted is determined using the Black-Scholes-Merton option-pricing model based on
several assumptions. These assumptions are based on management’s best estimate at the time of grant. The Company used the
following weighted average assumptions for grants in 2015:
2015
Expected Term in Years...............................................................
5.5
Expected Volatility.......................................................................
54.97%
Expected Dividends .....................................................................
—%
Risk-Free Interest Rate.................................................................
1.84%
The Company estimates expected volatility based on an analysis of its stock price since the initial public offering and comparing
the stock price volatility for the period from IPO date through December 31, 2015 with the historical stock price volatility of a similar
exploration and production company. The Company estimates the expected term of its option awards based on the vesting period and
average remaining contractual term, referred to as the “simplified method”. The Company uses this method to provide a reasonable
basis for estimating its expected term based on a lack of sufficient historical employee exercise data on stock option awards.
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