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Stock-Based Compensation Plans | 6 Months Ended
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Jun. 30, 2013
Stock-Based Compensation Plans | (13) STOCK-BASED COMPENSATION PLANS Stock-Based Awards Stock options represent the right to purchase shares of stock in the future at the fair value of the stock on the date of grant. Most stock options granted under our stock option plans vest over a three-year period and expire five years from the date they are granted. Beginning in 2005, we began granting SARs to reduce the dilutive impact of our equity plans. Similar to stock options, SARs represent the right to receive a payment equal to the excess of the fair market value of shares of common stock on the date the right is exercised over the value of the stock on the date of grant. All SARs granted under the 2005 Plan will be settled in shares of stock, vest over a three-year period and have a maximum term of five years from the date they are granted. Beginning in first quarter 2011, the Compensation Committee of the Board of Directors also began granting restricted stock units under our equity-based stock compensation plans. These restricted stock units, which we refer to as restricted stock Equity Awards, vest over a three-year period. All awards granted have been issued at prevailing market prices at the time of grant and the vesting of these shares is based upon an employee’s continued employment with us. The Compensation Committee also grants restricted stock to certain employees and non-employee directors of the Board of Directors as part of their compensation. Upon grant of these restricted shares, which we refer to as restricted stock Liability Awards, the shares generally are placed in our deferred compensation plan and, upon vesting, employees are allowed to take withdrawals either in cash or in stock. Compensation expense is recognized over the balance of the vesting period, which is typically three years for employee grants and immediate vesting for non-employee directors. All restricted stock awards are issued at prevailing market prices at the time of the grant and vesting is based upon an employee’s continued employment with us. Prior to vesting, all restricted stock awards have the right to vote such shares and receive dividends thereon. These Liability Awards are classified as a liability and are remeasured at fair value each reporting period. This mark-to-market adjustment is reported as deferred compensation plan expense in the accompanying consolidated statements of operations. Total Stock-Based Compensation Expense Stock-based compensation represents amortization of restricted stock grants and SARs expense. Unlike the other forms of stock-based compensation, the mark-to-market adjustment of the liability related to the vested restricted stock held in our deferred compensation plans is directly tied to the change in our stock price and not directly related to the functional expenses and therefore, is not allocated to the functional categories. The following table details the allocation of stock-based compensation that is allocated to functional expense categories (in thousands):
| Three Months Ended June 30, |  |  | Six Months Ended June 30, |
--- | --- | --- | --- | --- | ---
| 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
Operating expense | $ |  | 696 |  |  | $ |  | 692 |  |  | $ |  | 1,357 |  |  | $ |  | 1,049 |
Brokered natural gas and marketing expense |  | 530 |  |  |  | 408 |  |  |  | 779 |  |  |  | 861 |
Exploration expense |  | 960 |  |  |  | 994 |  |  |  | 2,030 |  |  |  | 1,922 |
General and administrative expense |  | 13,263 |  |  |  | 1 2,540 |  |  |  | 23,569 |  |  |  | 20,698 |
Total | $ |  | 15,449 |  |  | $ |  | 14,634 |  |  | $ |  | 27,735 |  |  | $ |  | 24,530 |
Stock and Option Plans We have two active equity-based stock plans, the 2005 Plan and the Director Plan. Under these plans, incentive and non-qualified stock options, SARs, restricted stock units and various other awards may be issued to non-employee directors and employees pursuant to decisions of the Compensa tion Committee, which is comprised of only non-employee, independent direc tors. All awards granted under these plans have been issued at prevailing market prices at the time of the grant. Of the 2.7 million grants outstanding at June 30, 2013, all are grants relating to SARs. Information w ith respect to SARs activity is summarized below:
| Shares |  |  | Weighted Average Exercise Price |
--- | --- | --- | --- | --- | ---
Outstanding at December 31, 2012 | 3,433,362 |  |  | $ |  | 52.52 |
Granted | 470,617 |  |  |  | 75.31 |
Exercised | (1,115,480 | ) |  |  | 54.01 |
Expired/forfeited | (42,411 | ) |  |  | 5 3.81 |
Outstanding at June 30, 2013 | 2,746,088 |  |  | $ |  | 5 5.83 |
Stock Appreciation Right Awards During first six months 2013, we granted SARs to officers and non-officer employees. The weighted average grant date fair value per share of these SARs, based on our Black-Scholes-Merton assumptions, is shown below:
| Six Months Ended June 30, 2013 |
--- | --- | ---
Weighted average exercise price per share | $ |  | 75.31 |
Expected annual dividends per share |  | 0.21 |  | %
Expected life in years |  | 3.7 |
Expected volatility |  | 3 5 |  | %
Risk-free interest rate |  | 0.6 |  | %
Weighted average grant date fair value per share | $ |  | 20.19 |
Restricted Stock Awards Equity Awards In first six months 2013, we granted 388,7 00 restricted stock Equity Awards to employees at an average gran t price of $71.05 compared to 3 59,7 00 restricted stock Equity Awards granted to employees at an average grant price of $63.37 in the same period of 2012. These awards generally vest over a three-year period. We recorded compensation expense for these Equity Awards of $9.5 million in the first six months 2013 compared to $5.2 million in the same period of 2012. Equity Awards are not issued to employees until they are vested. Employees do not have the option to receive cash. Liability Awards In f irst six months 2013, we granted 406,1 00 shares of restricted stock Liability Awards as compensation to employees at an average price of $75.45 with vesting generally over a three-year period and 18,300 were granted to non-employee dire ctors at an average price of $77.26 with immediate vesting. In the sam e period of 2012, we granted 355,4 00 shares of Liability Awards as compensation to employe es at an average price of $63.87 with vesting generally over a three-year period and 14,700 were granted to non-employee directors at an average price of $64.35 with immediate vesting. We recorded compensation expense for Liability Awards of $11.1 million in first six months 2013 compared to $10.2 million in the same period of 2012. Substantially all of these awards are held in our deferred compensation plan, are classified as a liability and are remeasured at fair value each reporting period. This mark-to-mark et adjustment is reported as deferred compensation expense in our consolidated statements of operations (see additional discussion below). A summary of the status of our non-vested restricted stock outstanding at June 30, 2013 is summarized below:
| Equity Awards |  |  | Liability Awards |
| Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Shares |  |  | Weighted Average Grant Date Fair Value |
Outstanding at December 31, 2012 |  | 349,156 |  |  | $ |  | 59.08 |  |  |  | 423,478 |  |  | $ |  |  | 58.91 |
Granted |  | 38 8,65 3 |  |  |  | 71.05 |  |  |  | 424,431 |  |  |  | 75.53 |
Vested |  | (153,439 | ) |  |  | 61.97 |  |  |  | (180,503 | ) |  |  | 60.57 |
Forfeited |  | (27,914 | ) |  |  | 65.0 2 |  |  |  | (21,620 | ) |  |  | 57.21 |
Outstanding at June 30, 2013 |  | 556,456 |  |  | $ |  | 66.35 |  |  |  | 645,786 |  |  | $ |  |  | 69.43 |
Deferred Compensation Plan Our deferred compensation plan gives non-employees directors, officers and key employees the ability to defer all or a portion of their salaries and bonuses and invest in Range common stock or make other investments at the individual’s discretion. Range provides a partial matching contribution which vests over three years. The assets of the plans are held in a grantor trust, which we refer to as the Rabbi Trust, and are therefore available to satisfy the claims of our creditors in the event of bankruptcy or insolvency. Our stock held in the Rabbi Trust is treated as a liability award as employees are allowed to take withdrawals from the Rabbi Trust either in cash or in Range stock. The liability for the vested portion of the stock held in the Rabbi Trust is reflected as deferred compensation liability in the accompanying consolidated balance sheets and is adjusted to fair value each reporting period by a charge or credit to deferred compensation plan expense on our consolidated statements of operations. The assets of the Rabbi Trust, other than our common stock, are invested in marketable securities and r eported at their market value as other assets in the accompanying consolidated balance sheets. The deferred compensation liability reflects the vested market value of the marketable securities and Range stock held in the Rabbi Trust. Changes in the market value of the marketable securities and changes in the fair value of the deferred compensation plan liability are charged or credited to deferred compensation plan expense each quarter. We recor ded mark-to-market income of $6.9 million in second quarter 2013 compared to mark-to-market loss of $9.3 million in second quarter 2012. We recorded mark-to-market loss of $35.5 million in the six months ended June 30, 2013 compared to $1.5 million in the same period of 2012. The Rabbi Trust held 2.9 million shares (2.3 million of vested shares) of Range stock at June 30, 2013 compared to 2.7 million shares (2.3 million of vested shares) at December 31, 2012.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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