Share-Based Compensation

9 Months Ended

Sep. 30, 2014

4. Share-Based Compensation

The following table presents the effects of share-based compensation included in Devon’s accompanying comprehensive statements of earnings. Devon’s gross general and administrative expense for the first nine months of 2014 includes $11 million of unit-based compensation related to grants made under EnLink’s long-term incentive plans.

The vesting for certain share-based awards was accelerated in the first quarter of 2014 in conjunction with the divestiture of Devon’s Canadian conventional assets. The associated expense for these accelerated awards is included in restructuring costs in the accompanying comprehensive statements of earnings. See Note 6 for further details.



	Nine Months Ended September 30,
	2014		2013

	(In millions)
Gross general and administrative expense	$	155	$	118
Share-based compensation expense capitalized pursuant to the
full-cost method of accounting for oil and gas properties	$	40	$	44
Related income tax benefit	$	20	$	17

Under its 2009 Long-Term Incentive Plan, as amended, Devon granted share-based awards to certain employees in the first nine months of 2014. The following sections include information related to these awards.

Restricted Stock Awards and Units

The following table presents a summary of Devon's unvested restricted stock awards and units.


	Restricted Stock Award & Units	Weighted Average Grant-Date Fair Value
	(In thousands)
Unvested at December 31, 2013	3,292	$	59.76
Granted	3,412	$	63.53
Vested	(558)	$	60.65
Forfeited	(607)	$	60.96
Unvested at September 30, 2014	5,539	$	61.73

As of September 30, 2014, Devon's unrecognized compensation cost related to unvested restricted stock awards and units was $225 million. Such cost is expected to be recognized over a weighted-average period of 2.4 years.

Performance Based Restricted Stock Awards

The following table presents a summary of Devon's performance based restricted stock awards.


	Performance Restricted Stock Awards	Weighted Average Grant-Date Fair Value
	(In thousands)
Unvested at December 31, 2013	316	$	56.25
Granted	234	$	61.33
Vested	(75)	$	53.45
Unvested at September 30, 2014	475	$	59.20

As of September 30, 2014, Devon's unrecognized compensation cost related to these awards was $7 million. Such cost is expected to be recognized over a weighted-average period of 1.4 years.

Performance Share Units

The following table presents a summary of the grant-date fair values of performance share units granted in 2014 and the related assumptions.


	2014

Grant-date fair value	$	70.18	-	$	81.05
Risk-free interest rate					0.54%
Volatility factor					28.8%
Contractual term (in years)					2.89

The following table presents a summary of Devon’s performance share units.


	Performance Share Units	Weighted Average Grant-Date Fair Value
	(In thousands)
Unvested at December 31, 2013	925	$	66.64
Granted	708	$	77.77
Forfeited	(147)	$	77.25
Unvested at September 30, 2014 (1)	1,486	$	70.89

____________________________

(1)

A maximum of 3.0 million common shares could be awarded based upon Devon’s final total shareholder return ranking.

As of September 30, 2014, Devon's unrecognized compensation cost related to unvested units was $40 million. Such cost is expected to be recognized over a weighted-average period of 1.6 years.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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