XML 95 R21.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Common Stock | 12 Months Ended
--- | ---
Dec. 31, 2011
Common Stock [Abstract] |
Common Stock | 13. Common Stock National Oilwell Varco has authorized 1 billion shares of $.01 par value common stock. The Company also has authorized 10 million shares of $.01 par value preferred stock, none of which is issued or outstanding. Cash dividends aggregated $191 million and $172 million for the years ended December 31, 2011 and 2010, respectively. The declaration and payment of future dividends is at the discretion of the Company’s Board of Directors and will be dependent upon the Company’s results of operations, financial condition, capital requirements and other factors deemed relevant by the Company’s Board of Directors. Stock Options Under the terms of National Oilwell Varco’s Long-Term Incentive Plan, as amended, 25.5 million shares of common stock are authorized for the grant of options to officers, key employees, non-employee directors and other persons. Options granted under our stock option plan generally vest over a three-year period starting one year from the date of grant and expire ten years from the date of grant. The purchase price of options granted may not be less than the closing market price of National Oilwell Varco common stock on the date of grant. At December 31, 2011, approximately 6 million shares were available for future grants. We also have inactive stock option plans that were acquired in connection with the acquisitions of Varco International, Inc. in 2005 and Grant Prideco in 2008. We converted the outstanding stock options under these plans to options to acquire our common stock and no further options are being issued under these plans. Stock option information summarized below includes amounts for the National Oilwell Varco Long-Term Incentive Plan and stock plans of acquired companies. Options outstanding at December 31, 2011 under the stock option plans have exercise prices between $8.38 and $79.80 per share, and expire at various dates from January 30, 2012 to May 20, 2021. The following summarizes options activity:
|  | Years Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | Number of Shares |  |  | Average Exercise Price |  |  | Number of Shares |  |  | Average Exercise Price |  |  | Number of Shares |  |  | Average Exercise Price |
Shares under option at beginning of year |  |  | 11,039,544 |  |  | $ | 38.01 |  |  |  | 10,255,982 |  |  | $ | 34.19 |  |  |  | 7,547,822 |  |  | $ | 37.24 |
Granted |  |  | 2,277,946 |  |  |  | 79.68 |  |  |  | 3,485,283 |  |  |  | 44.03 |  |  |  | 3,234,400 |  |  |  | 26.03 |
Cancelled |  |  | (241,174 | ) |  |  | 40.20 |  |  |  | (232,488 | ) |  |  | 40.53 |  |  |  | (156,356 | ) |  |  | 29.79 |
Exercised |  |  | (2,594,566 | ) |  |  | 36.84 |  |  |  | (2,469,233 | ) |  |  | 30.35 |  |  |  | (369,884 | ) |  |  | 40.86 |
Shares under option at end of year |  |  | 10,481,750 |  |  | $ | 47.20 |  |  |  | 11,039,544 |  |  | $ | 38.01 |  |  |  | 10,255,982 |  |  | $ | 34.19 |
Exercisable at end of year |  |  | 5,073,965 |  |  | $ | 38.47 |  |  |  | 5,067,186 |  |  | $ | 36.31 |  |  |  | 5,308,465 |  |  | $ | 33.14 |
The following summarizes information about stock options outstanding at December 31, 2011:
Range of Exercise Price |  | Weighted-Avg Remaining Contractual Life |  |  | Options Outstanding |  |  | Options Exercisable |
|  | Shares |  |  | Weighted-Avg Exercise Price |  |  | Shares |  |  | Weighted-Avg Exercise Price |
$ 8.38 - $40.00 |  |  | 5.45 |  |  |  | 4,121,224 |  |  | $ | 27.17 |  |  |  | 3,124,581 |  |  | $ | 27.53 |
$ 40.01 - $65.00 |  |  | 7.48 |  |  |  | 4,104,562 |  |  |  | 49.50 |  |  |  | 1,919,040 |  |  |  | 55.72 |
$ 65.01 - $79.80 |  |  | 9.11 |  |  |  | 2,255,964 |  |  |  | 79.60 |  |  |  | 30,344 |  |  |  | 73.53 |
Total |  |  | 7.03 |  |  |  | 10,481,750 |  |  | $ | 47.20 |  |  |  | 5,073,965 |  |  | $ | 38.47 |
The weighted-average fair value of options granted during 2011, 2010 and 2009 was approximately $29.52, $16.73 and $11.89 per share, respectively, as determined using the Black-Scholes option-pricing model. The total intrinsic value of options exercised during 2011 and 2010 was $102 million and $60 million, respectively. The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise activity. The use of the Black Scholes model requires the use of extensive actual employee exercise activity data and the use of a number of complex assumptions including expected volatility, risk-free interest rate, expected dividends and expected term.
|  | Years Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Valuation Assumptions: |  |  |  |  |  |  |  |  |  |  |  |
Expected volatility |  |  | 53.2 | % |  |  | 55.0 | % |  |  | 63.5 | %
Risk-free interest rate |  |  | 2.1 | % |  |  | 2.3 | % |  |  | 1.8 | %
Expected dividends |  | $ | 0.44 |  |  | $ | 0.40 |  |  | $ | — |
Expected term (in years) |  |  | 3.1 |  |  |  | 3.2 |  |  |  | 3.4 |
The Company used the actual volatility for traded options for the past 10 years prior to option date as the expected volatility assumption required in the Black Scholes model. The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock options. The dividend yield assumption is based on the history and expectation of dividend payouts. The estimated expected term is based on actual employee exercise activity for the past ten years. As stock-based compensation expense recognized in the Consolidated Statement of Income in 2011 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience. The following summary presents information regarding outstanding options at December 31, 2011 and changes during 2011 with regard to options under all stock option plans:
|  | Shares |  |  | Weighted- Average Exercise Price |  |  | Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value |
Outstanding at December 31, 2010 |  |  | 11,039,544 |  |  | $ | 38.01 |  |  |  |  |  |  |  |  |
Granted |  |  | 2,277,946 |  |  | $ | 79.68 |  |  |  |  |  |  |  |  |
Exercised |  |  | (2,594,566 | ) |  | $ | 36.84 |  |  |  |  |  |  |  |  |
Cancelled |  |  | (241,174 | ) |  | $ | 40.20 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2011 |  |  | 10,481,750 |  |  | $ | 47.20 |  |  |  | 7.03 |  |  | $ | 217,950,989 |
Vested or expected to vest |  |  | 10,298,319 |  |  | $ | 47.20 |  |  |  | 7.03 |  |  | $ | 214,136,846 |
Exercisable at December 31, 2011 |  |  | 5,073,965 |  |  | $ | 38.47 |  |  |  | 5.61 |  |  | $ | 149,787,693 |
At December 31, 2011, total unrecognized compensation cost related to nonvested stock options was $68 million. This cost is expected to be recognized over a weighted-average period of two years. The total fair value of stock options vested in 2011, 2010 and 2009 was approximately $54 million, $78 million and $40 million, respectively. Cash received from option exercises for 2011, 2010 and 2009 was $96 million, $73 million and $8 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $43 million, $16 million and $2 million for 2011, 2010 and 2009, respectively. Cash used to settle equity instruments granted under all share-based payment arrangements for 2011, 2010 and 2009 was not material for any period. Restricted Shares The Company issues restricted stock awards and restricted stock units with no exercise price to officers and key employees in addition to stock options. Out of the total number of restricted stock awards and restricted stock units granted, 234,620 were granted on February 22, 2011 and vest on the third anniversary of the date of grant. In addition, on May 19, 2011, 8,505 restricted stock awards were granted to the non-employee members of the Board of Directors. These restricted stock awards vest in equal thirds over three years on the anniversary of the grant date. Performance-based restricted stock awards of 131,300 were granted on February 22, 2011. The performance-based restricted stock awards granted will be 100% vested 36 months from the date of grant, subject to the performance condition of the Company’s operating income growth, measured on a percentage basis, from January 1, 2011 through December 31, 2013 exceeding the median operating income level growth of a designated peer group over the same period. The estimated forfeiture rate of restricted stock awards and restricted stock units is factored into the share-based compensation expense the Company recognizes. The following summary presents information regarding outstanding restricted:
Restricted Shares |  | Units |  |  | Weighted-Average Grant Date Fair Value |
Nonvested at December 31, 2008 |  |  | 1,460,496 |  |  | $ | 47.34 |
Granted |  |  | 762,692 |  |  | $ | 26.02 |
Vested |  |  | (7,322 | ) |  | $ | 36.05 |
Forfeited |  |  | (34,622 | ) |  | $ | 41.52 |
Nonvested at December 31, 2009 |  |  | 2,181,244 |  |  | $ | 40.51 |
Granted |  |  | 558,531 |  |  | $ | 43.99 |
Vested |  |  | (921,454 | ) |  | $ | 43.28 |
Forfeited |  |  | (52,484 | ) |  | $ | 35.11 |
Nonvested at December 31, 2010 |  |  | 1,765,837 |  |  | $ | 42.15 |
Granted |  |  | 374,425 |  |  | $ | 79.53 |
Vested |  |  | (496,642 | ) |  | $ | 64.22 |
Forfeited |  |  | (37,573 | ) |  | $ | 44.02 |
Nonvested at December 31, 2011 |  |  | 1,606,047 |  |  | $ | 44.21 |
The weighted-average grant day fair value of restricted stock awards and restricted stock units granted during the years ended 2011, 2010 and 2009 was $79.53, $43.99 and $26.02 per share, respectively. There were 496,642; 921,454 and 7,322 restricted stock awards that vested during 2011, 2010 and 2009, respectively. At December 31, 2011, there was $30 million of unrecognized compensation cost related to nonvested restricted stock awards and restricted stock units, which is expected to be recognized over a weighted-average period of two years.

X
- Details
Name: | us-gaap_ShareBasedCompensationAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=6228006&loc=d3e74512-122707 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 3, 4, 5, 6, 7, 8 -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 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Preferred Stock -URI http://asc.fasb.org/extlink&oid=6521494 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 15 -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 9: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 4 -Section 08 -Paragraph d Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Chapter 1 -Section B -Paragraph 7, 11A -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 20: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644 Reference 21: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 -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 22: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644 Reference 23: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644 + Details
Name: | us-gaap_StockholdersEquityNoteDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration