6. Employee Benefit Plans

Stock-Based Compensation

During 2012, EOG maintained various stock-based compensation plans as discussed below. EOG recognizes compensation expense on grants of stock options, stock-settled stock appreciation rights (SARs), restricted stock and restricted stock units, performance stock and performance units, and grants made under its Employee Stock Purchase Plan (ESPP). Stock-based compensation expense is calculated based upon the grant date estimated fair value of the awards, net of forfeitures, based upon EOG's historical employee turnover rate. Compensation expense is amortized over the shorter of the vesting period or the period from date of grant until the date the employee becomes eligible to retire without company approval.

Stock-based compensation expense is included on the Consolidated Statements of Income and Comprehensive Income based upon job functions of the employees receiving the grants. Compensation expense related to EOG's stock-based compensation plans for the years ended December 31, 2012, 2011 and 2010 was as follows (in millions):

		2012		2011		2010

Lease and Well	$	35	$	33	$	27
Gathering and Processing Costs		1		1		1
Exploration Costs		27		26		24
General and Administrative		65		68		55
Total	$	128	$	128	$	107

The EOG Resources, Inc. 2008 Omnibus Equity Compensation Plan (2008 Plan) provides for grants of stock options, SARs, restricted stock and restricted stock units, performance stock and performance units, and other stock-based awards up to an aggregate maximum of 12.9 million shares plus shares of Common Stock underlying forfeited or cancelled grants under prior stock plans. At December 31, 2012, approximately 3.4 million shares of Common Stock remained available for grant under the 2008 Plan. EOG's policy is to issue shares related to the 2008 Plan from previously authorized unissued shares or treasury shares to the extent treasury shares are available.

During 2012, 2011 and 2010, EOG issued shares in connection with stock option/SAR exercises, restricted stock grants, restricted stock unit releases and ESPP purchases. EOG recognized, as an adjustment to APIC, federal income tax (expense)/benefits of $67 million, $25,000 and $(1) million for 2012, 2011 and 2010, respectively, related to the exercise of stock options/SARs and the release of restricted stock and restricted stock units.

Stock Options and Stock-Settled Stock Appreciation Rights and Employee Stock Purchase Plan. Participants in EOG's stock plans (including the 2008 Plan) have been or may be granted options to purchase shares of Common Stock. In addition, participants in EOG's stock plans (including the 2008 Plan) have been or may be granted SARs, representing the right to receive shares of Common Stock based on the appreciation in the stock price from the date of grant on the number of SARs granted. Stock options and SARs are granted at a price not less than the market price of the Common Stock on the date of grant. Stock options and SARs granted vest on a graded vesting schedule up to four years from the date of grant based on the nature of the grants and as defined in individual grant agreements. Terms for stock options and SARs granted have not exceeded a maximum term of 10 years. EOG's ESPP allows eligible employees to semi-annually purchase, through payroll deductions, shares of Common Stock at 85 percent of the fair market value at specified dates. Contributions to the ESPP are limited to 10 percent of the employee's pay (subject to certain ESPP limits) during each of the two six-month offering periods each year.

The fair value of stock option grants and SAR grants is estimated using the Hull-White II binomial option pricing model. The fair value of all ESPP grants is estimated using the Black-Scholes-Merton model. Stock-based compensation expense related to stock option, SAR and ESPP grants totaled $49 million, $48 million and $41 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Weighted average fair values and valuation assumptions used to value stock option, SAR and ESPP grants for the years ended December 31, 2012, 2011 and 2010 were as follows:

	Stock Options/SARs			ESPP
	2012	2011	2010	2012	2011	2010

Weighted Average Fair Value of Grants	$37.95	$29.92	$32.12	$25.11	$22.75	$25.45
Expected Volatility	39.68%	40.96%	39.70%	40.92%	29.82%	38.30%
Risk-Free Interest Rate	0.45%	0.58%	0.87%	0.11%	0.14%	0.18%
Dividend Yield	0.60%	0.70%	0.70%	0.60%	0.70%	0.70%
Expected Life	5.6 yrs	5.6 yrs	5.5 yrs	0.5 yrs	0.5 yrs	0.5 yrs

Expected volatility is based on an equal weighting of historical volatility and implied volatility from traded options in EOG's Common Stock. The risk-free interest rate is based upon United States Treasury yields in effect at the time of grant. The expected life is based upon historical experience and contractual terms of stock option, SAR and ESPP grants.

The following table sets forth the stock option and SAR transactions for the years ended December 31, 2012, 2011 and 2010 (stock options and SARs in thousands):

	2012		2011		2010
	Number	Weighted	Number	Weighted	Number	Weighted
	of Stock	Average	of Stock	Average	Of Stock	Average
	Options/	Grant	Options/	Grant	Options/	Grant
	SARs	Price	SARs	Price	SARs	Price

Outstanding at January 1	8,374	$ 70.01	8,445	$64.49	8,335	$57.08
Granted	1,240	111.97	1,509	85.29	1,450	93.07
Exercised ⁽¹⁾	(3,246)	54.80	(1,399)	50.86	(1,144)	43.38
Forfeited	(149)	91.18	(181)	87.74	(196)	84.22
Outstanding at December 31	6,219	85.81	8,374	70.01	8,445	64.49

Stock Options/SARs Exercisable at December 31	3,143	74.98	5,148	59.19	5,439	51.71

(1)

The total intrinsic value of stock options/SARs exercised during the years 2012, 2011 and 2010 was $185 million, $78 million and $66 million, respectively. The intrinsic value is based upon the difference between the market price of the Common Stock on the date of exercise and the grant price of the stock options/SARs.

At December 31, 2012, there were 5,982,406 stock options/SARs vested or expected to vest with a weighted average grant price of $85.36 per share, an intrinsic value of $212 million and a weighted average remaining contractual life of 4.1 years.

The following table summarizes certain information for the stock options and SARs outstanding at December 31, 2012 (stock options and SARs in thousands):

Stock Options/SARs Outstanding					Stock Options/SARs Exercisable
		Weighted				Weighted
		Average	Weighted			Average	Weighted
Range of	Stock	Remaining	Average	Aggregate	Stock	Remaining	Average	Aggregate
Grant	Options/	Life	Grant	Intrinsic	Options/	Life	Grant	Intrinsic
Prices	SARs	(Years)	Price	Value⁽¹⁾	SARs	(Years)	Price	Value⁽¹⁾

$ 18.00 to $ 69.99	846	1	$ 45.84		838	1	$45.62
70.00 to 81.99	1,168	3	78.44		932	3	77.64
82.00 to 88.99	1,767	5	85.14		790	4	87.14
89.00 to 109.99	1,157	4	93.37		508	4	92.76
110.00 to 136.99	1,281	6	113.03		75	4	121.24
	6,219	4	85.81	$217,879	3,143	3	74.98	$144,335

(1)	Based upon the difference between the closing market price of the Common Stock on the last trading day of the year and the grant price of in-the-money stock options and SARs.

At December 31, 2012, unrecognized compensation expense related to non-vested stock option and SAR grants totaled $91 million. This unrecognized expense will be amortized on a straight-line basis over a weighted average period of 2.8 years.

At December 31, 2012, approximately 625,000 shares of Common Stock remained available for issuance under the ESPP. The following table summarizes ESPP activities for the years ended December 31, 2012, 2011 and 2010 (in thousands, except number of participants):

		2012		2011		2010

Approximate Number of Participants		1,705		1,525		1,236
Shares Purchased		164		135		114
Aggregate Purchase Price	$	12,522	$	10,947	$	9,172

Restricted Stock and Restricted Stock Units. Employees may be granted restricted (non-vested) stock and/or restricted stock units without cost to them. The restricted stock and restricted stock units generally vest five years after the date of grant, except for certain bonus grants, and as defined in individual grant agreements. Upon vesting of restricted stock, shares of Common Stock are released to the employee. Upon vesting, restricted stock units are converted into shares of Common Stock and released to the employee. Stock-based compensation expense related to restricted stock and restricted stock units totaled $72 million, $80 million and $66 million for the years ended December 31, 2012, 2011 and 2010, respectively.

The following table sets forth the restricted stock and restricted stock unit transactions for the years ended December 31, 2012, 2011 and 2010 (shares and units in thousands):

	2012		2011		2010
		Weighted		Weighted		Weighted
	Number of	Average	Number of	Average	Number of	Average
	Shares and	Grant Date	Shares and	Grant Date	Shares and	Grant Date
	Units	Fair Value	Units	Fair Value	Units	Fair Value

Outstanding at January 1	4,240	$82.93	4,009	$79.13	3,636	$73.69
Granted	767	112.17	932	90.87	850	93.39
Released ⁽¹⁾	(1,059)	72.70	(457)	66.10	(364)	58.00
Forfeited	(130)	85.36	(244)	82.45	(113)	79.37
Outstanding at December 31 ⁽²⁾	3,818	91.06	4,240	82.93	4,009	79.13

(1)

The total intrinsic value of restricted stock and restricted stock units released during the years ended December 31, 2012, 2011 and 2010 was $120 million, $44 million and $35 million, respectively. The intrinsic value is based upon the closing price of EOG's common stock on the date restricted stock and restricted stock units are released.

(2)	The aggregate intrinsic value of restricted stock and restricted stock units outstanding at December 31, 2012 and 2011 was approximately $461 million and $418 million, respectively.

At December 31, 2012, unrecognized compensation expense related to restricted stock and restricted stock units totaled $136 million. Such unrecognized expense will be recognized on a straight-line basis over a weighted average period of 2.5 years.

Performance Units and Performance Stock. In September 2012, as a new element of the long-term incentive component of EOG's executive officer compensation program, EOG granted an aggregate of 54,526 performance units and 16,752 shares of performance stock to its executive officers (in each case under the terms of the 2008 Plan), which units and shares remained outstanding at December 31, 2012. As more fully discussed in the grant agreements, the performance metric applicable to these performance-based grants is EOG's total shareholder return over a three-year performance period relative to the total shareholder return of a designated group of peer companies. Upon the application of the performance multiple at the completion of the performance period, a minimum of zero and a maximum of 142,556 performance units/shares could be outstanding. Subject to the termination provisions set forth in the grant agreements and the applicable performance multiple, the grants of performance units/shares will "cliff" vest five years from the date of grant.

The fair value of the performance units and performance stock is estimated using a Monte Carlo simulation. Stock-based compensation expense related to performance unit and performance stock grants totaled $7 million for the year ended December 31, 2012. Weighted average fair values and valuation assumptions used to value performance unit and performance stock grants as of December 31, 2012 were: Weighted Average Fair Value of Grants, $134.09; Expected Volatility, 36.39%; Risk-Free Interest Rate, 0.39%; and Dividend Yield, 0.60%.

Expected volatility is based on the term-matched historical volatility over the simulated term, which is calculated as the time between the grant date and the end of the performance period. The risk-free interest rate is based on a 3.26 year zero-coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve on the grant date.

At December 31, 2012, unrecognized compensation expense related to performance units and performance stock totaled $3 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 3.0 years.

Pension Plans. EOG has a defined contribution pension plan in place for most of its employees in the United States. EOG's contributions to the pension plan are based on various percentages of compensation and, in some instances, are based upon the amount of the employees' contributions. EOG's total costs recognized for the plan were $36 million, $27 million and $23 million for 2012, 2011 and 2010, respectively.

In addition, EOG's Canadian subsidiary maintains both a non-contributory defined benefit pension plan and a non-contributory defined contribution pension plan, as well as a matched defined contribution savings plan. EOG's Trinidadian subsidiary maintains a contributory defined benefit pension plan and a matched savings plan. EOG's United Kingdom subsidiary maintains a pension plan which includes a non-contributory defined contribution pension plan and a matched defined contribution savings plan. With the exception of Canada's non-contributory defined benefit pension plan, which is closed to new employees, these pension plans are available to most employees of the Canadian, Trinidadian and United Kingdom subsidiaries. EOG's combined contributions to these plans were $3 million for each of the years 2012, 2011 and 2010.

For the Canadian and Trinidadian defined benefit pension plans, the benefit obligation, fair value of plan assets and prepaid/(accrued) benefit cost totaled $14 million, $10 million and $(2) million, respectively, at December 31, 2012, and $11 million, $8 million and $(2) million, respectively, at December 31, 2011.

Postretirement Health Care. EOG has postretirement medical and dental benefits in place for eligible United States and Trinidad employees and their eligible dependents, the costs of which are not material.