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Stock-Based Compensation and Awards | 12 Months Ended
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Dec. 31, 2013
Stock-Based Compensation and Awards |
Stock-Based Compensation and Awards | 17. Stock-Based Compensation and Awards The following table presents the stock-based compensation expense included in our results of operations (in thousands):
|  | Years Ended December 31, |
|  | 2013 |  | 2012 |  | 2011 |
Stock options |  | $ | 2,241 |  | $ | 2,552 |  | $ | 3,916 |
Restricted stock, restricted stock units, cash settled restricted stock units, cash settled performance awards and phantom units |  | 20,518 |  | 16,583 |  | 14,970 |
Employee stock purchase plan |  | 142 |  | 114 |  | 278 |
Total stock-based compensation expense |  | $ | 22,901 |  | $ | 19,249 |  | $ | 19,164 |
Stock Incentive Plan In April 2013, we adopted the 2013 Plan to provide for the granting of stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, other stock-based awards and dividend equivalent rights to employees, directors and consultants of Exterran. Under the 2013 Plan, the maximum number of shares of common stock available for issuance pursuant to awards is 6,500,000. Each option and stock appreciation right granted counts as one share against the aggregate share limit, and any share subject to a stock settled award other than a stock option, stock appreciation right or other award for which the recipient pays intrinsic value counts as 1.75 shares against the aggregate share limit. Awards granted under the 2013 Plan that are subsequently cancelled, terminated or forfeited are available for future grant. Cash settled awards are not counted against the aggregate share limit. Upon effectiveness of the 2013 Plan, no additional grants may be made under the 2007 Plan and the Exterran Holdings, Inc. 2011 Employment Inducement Long-Term Equity Plan (the “Employment Inducement Plan”). Previous grants made under the 2007 Plan and the Employment Inducement Plan will continue to be governed by their respective plans. Stock Options Stock options are granted at fair market value at the grant date, are exercisable according to the vesting schedule established by the compensation committee of our board of directors in its sole discretion and expire no later than seven years after the grant date. Stock options generally vest one-third per year on each anniversary of the grant date. The weighted average grant date fair value for stock options granted during the years ended December 31, 2013, 2012 and 2011 was $10.19, $5.74 and $5.81, respectively, and was estimated using the Black-Scholes option valuation model with the following weighted average assumptions:
|  | Years Ended December 31, |
|  | 2013 |  | 2012 |  | 2011 |
Expected life in years |  | 4.5 |  | 4.5 |  | 4.5 |
Risk-free interest rate |  | 0.66 | % | 0.78 | % | 1.23 | %
Volatility |  | 49.19 | % | 47.96 | % | 45.17 | %
Dividend yield |  | 0.0 | % | 0.0 | % | 0.0 | %
The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the grant date for a period commensurate with the estimated expected life of the stock options. Expected volatility is based on the historical volatility of our stock over the period commensurate with the expected life of the stock options and other factors. At the time of the stock option grants during each of the years ended December 31, 2013, 2012 and 2011, we had not historically paid any dividends and did not expect to pay any dividends during the expected life of the stock options. The following table presents stock option activity during the year ended December 31, 2013:
|  | Stock Options (in thousands) |  | Weighted Average Exercise Price Per Share |  | Weighted Average Remaining Life (in years) |  | Aggregate Intrinsic Value (in thousands) |
Options outstanding, December 31, 2012 |  | 2,584 |  | $ | 27.02 |  |  |  |  |
Granted |  | 177 |  | 25.04 |  |  |  |  |
Exercised |  | (459 | ) | 18.12 |  |  |  |  |
Cancelled |  | (150 | ) | 33.94 |  |  |  |  |
Options outstanding, December 31, 2013 |  | 2,152 |  | 28.27 |  | 3.4 |  | $ | 26,522 |
Options exercisable, December 31, 2013 |  | 1,696 |  | 31.27 |  | 2.9 |  | 18,742 |
Intrinsic value is the difference between the market value of our stock and the exercise price of each stock option multiplied by the number of stock options outstanding for those stock options where the market value exceeds their exercise price. The total intrinsic value of stock options exercised during 2013, 2012 and 2011 was $4.4 million, $0.1 million and $0.2 million, respectively. As of December 31, 2013, we expect $2.0 million of unrecognized compensation cost related to unvested stock options to be recognized over the weighted-average period of 1.3 years. Restricted Stock, Restricted Stock Units, Cash Settled Restricted Stock Units and Cash Settled Performance Awards For grants of restricted stock and restricted stock units, we recognize compensation expense over the vesting period equal to the fair value of our common stock at the grant date. We remeasure the fair value of cash settled restricted stock units and cash settled performance awards and record a cumulative adjustment of the expense previously recognized. Our obligation related to the cash settled restricted stock units and cash settled performance awards is reflected as a liability in our consolidated balance sheets. Our grants of restricted stock, restricted stock units, cash settled restricted stock units and cash settled performance awards generally vest one-third per year on each anniversary of the grant date. The following table presents restricted stock, restricted stock unit, cash settled restricted stock unit and cash settled performance award activity during the year ended December 31, 2013:
|  | Shares (in thousands) |  | Weighted Average Grant-Date Fair Value Per Share |
Non-vested awards, December 31, 2012 |  | 1,992 |  | $ | 16.12 |
Granted |  | 702 |  | 25.10 |
Vested |  | (924 | ) | 17.56 |
Change in expected vesting of cash settled performance awards |  | 20 |  | 25.04 |
Cancelled |  | (118 | ) | 19.33 |
Non-vested awards, December 31, 2013(1) |  | 1,672 |  | 18.97 |
(1) Non-vested awards as of December 31, 2013 are comprised of 419 thousand cash settled restricted stock units and cash settled performance awards and 1,253 thousand restricted stock shares and restricted stock units. As of December 31, 2013, we expect $23.4 million of unrecognized compensation cost related to unvested restricted stock, restricted stock units, cash settled restricted stock units and cash settled performance awards to be recognized over the weighted-average period of 1.5 years. Employee Stock Purchase Plan In August 2007, we adopted the Exterran Holdings, Inc. Employee Stock Purchase Plan (“ESPP”), which is intended to provide employees with an opportunity to participate in our long-term performance and success through the purchase of shares of common stock at a price that may be less than fair market value. The ESPP is designed to comply with Section 423 of the Internal Revenue Code of 1986, as amended. Each quarter, an eligible employee may elect to withhold a portion of his or her salary up to the lesser of $25,000 per year or 10% of his or her eligible pay to purchase shares of our common stock at a price equal to 85% to 100% of the fair market value of the stock as of the first trading day of the quarter, the last trading day of the quarter or the lower of the first trading day of the quarter and the last trading day of the quarter, as the compensation committee of our board of directors may determine. The ESPP will terminate on the date that all shares of common stock authorized for sale under the ESPP have been purchased, unless it is extended. In May 2011, we amended the ESPP to increase the maximum number of shares of common stock available for purchase under the ESPP to 1,000,000. At December 31, 2013, 238,281 shares remained available for purchase under the ESPP. Our ESPP is compensatory and, as a result, we record an expense in our consolidated statements of operations related to the ESPP. The purchase discount under the ESPP is 5% of the fair market value of our common stock on the first trading day of the quarter or the last trading day of the quarter, whichever is lower. Directors’ Stock and Deferral Plan On August 20, 2007, we adopted the Exterran Holdings, Inc. Directors’ Stock and Deferral Plan to provide non-employee members of the board of directors with an opportunity to elect to receive our common stock as payment for a portion or all of their retainer and meeting fees. The number of shares paid each quarter is determined by dividing the dollar amount of fees elected to be paid in common stock by the closing sales price per share of the common stock on the last day of the quarter. In addition, directors who elect to receive a portion or all of their fees in the form of common stock may also elect to defer, until a later date, the receipt of a portion or all of their fees to be received in common stock. We have reserved 100,000 shares under the Directors’ Stock and Deferral Plan, and as of December 31, 2013, 56,858 shares remain available to be issued under the plan. Partnership Long-Term Incentive Plan The Partnership’s Long-Term Incentive Plan (the “Partnership Plan”) was adopted, in October 2006 for employees, directors and consultants of the Partnership, us and our respective affiliates. A maximum of 1,035,378 common units, common unit options, restricted units and phantom units are available under the Partnership Plan. The Partnership Plan is administered by the board of directors of Exterran GP LLC, the general partner of the Partnership’s general partner, or a committee thereof (the “Partnership Plan Administrator”). Phantom units are notional units that entitle the grantee to receive a common unit upon the vesting of the phantom unit or, at the discretion of the Partnership Plan Administrator, cash equal to the fair market value of a common unit. Phantom units granted under the Partnership Plan may include tandem distribution equivalent rights, which provide for the right to receive cash distributions on the units, subject to the same vesting restrictions and risk of forfeiture applicable to the underlying grant. Partnership Phantom Units During the year ended December 31, 2013, the Partnership granted 55,334 phantom units to officers and directors of Exterran GP LLC and certain of our employees, which generally vest one-third per year on each anniversary of the grant date. The following table presents phantom unit activity during the year ended December 31, 2013:
|  | Phantom Units (in thousands) |  | Weighted Average Grant-Date Fair Value per Unit |
Phantom units outstanding, December 31, 2012 |  | 64 |  | $ | 23.62 |
Granted |  | 55 |  | 23.76 |
Vested |  | (28 | ) | 23.45 |
Cancelled |  | (6 | ) | 24.31 |
Phantom units outstanding, December 31, 2013 |  | 85 |  | 23.72 |
As of December 31, 2013, we expect $1.3 million of unrecognized compensation cost related to unvested phantom units to be recognized over the weighted-average period of 1.7 years.

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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 Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: 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 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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