STOCK-BASED COMPENSATION:

CONSOL Energy adopted the CONSOL Energy Inc. Equity Incentive Plan on April 7, 1999. The plan provides for grants of stock-based awards to key employees and to non-employee directors. Amendments to the plan have been approved by the Board of Directors since the commencement of the plan. In 2012, the Board of Directors approved an increase in the total number of shares by 8,000,000 bringing the total number of shares of common stock that can be covered by grants to 31,800,000. At December 31, 2013, 6,072,413 shares are available for all awards. The Plan provides that the aggregate number of shares available for issuance under the Plan will be reduced by one share for each share issued in settlement of stock options. The Plan, as amended on May 1, 2012, provides the aggregate number of shares available for issuance under the Plan will be reduced by 1.62 for each share issued in settlement of Performance Share Units (PSUs), Restricted Stock Units (RSUs), or CONSOL Stock Units (CSUs). No award of stock options may be exercised under the plan after the tenth anniversary of the effective date of the award.

CONSOL Energy recognizes stock-based compensation costs for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the option vesting term, or to an employee's eligible retirement date, if earlier and applicable. The total stock-based compensation expense recognized was $56,987, $41,127 and $42,131 for the years ended December 31, 2013, 2012 and 2011, respectively. The related deferred tax benefit totaled $21,769, $15,464 and $15,841, for the years ended December 31, 2013, 2012 and 2011, respectively.

CONSOL Energy examined its historical pattern of option exercises in an effort to determine if there were any discernable activity patterns based on certain employee populations. From this analysis, CONSOL Energy identified two distinct employee populations. CONSOL Energy uses the Black-Scholes option pricing model to value the options for each of the employee populations. The table below presents the weighted average expected term in years of the two employee populations. The expected term computation is based upon historical exercise patterns and post-vesting termination behavior of the populations. The risk-free interest rate was determined for each vesting tranche of an award based upon the calculated yield on U.S. Treasury obligations for the expected term of the award. The expected forfeiture rate is based upon historical forfeiture activity. A combination of historical and implied volatility is used to determine expected volatility and future stock price trends. There were no options granted in 2013. Total fair value of options granted during the years ended December 31, 2012 and 2011 were $8,515 and $9,913, respectively. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values:



	December 31,
	2012			2011
Weighted average fair value of grants	$	14.58		$	20.47
Risk-free interest rate	0.73		%	1.61		%
Expected dividend yield	1.18		%	0.82		%
Expected forfeiture rate	2.00		%	2.00		%
Expected volatility	54.80		%	55.10		%
Expected term in years	4.40			4.26

A summary of the status of stock options granted is presented below:



					Weighted
					Average
			Weighted		Remaining	Aggregate
			Average		Contractual	Intrinsic
			Exercise		Term (in	Value (in
	Shares		Price		years)	thousands)
Balance at December 31, 2012	5,111,214		$	36.54
Granted	—		$	—
Exercised	(310,376	)	$	11.99
Forfeited	(23,612	)	$	38.64
Balance at December 31, 2013	4,777,226		$	38.12	4.20	$	28,398
Vested and expected to vest	4,765,963		$	38.13	4.19	$	28,398
Exercisable at December 31, 2013	4,344,749		$	38.45	3.76	$	28,839

These stock options will expire ten years after the date on which they were granted. The employee stock options, covered by the Equity Incentive Plan adopted April 7, 1999, vest 25% per year, beginning one year after the grant date for awards granted prior to 2007. Employee stock options awarded after December 31, 2006, vest 33% per year, beginning one year after the grant date. There are 4,529,216 stock options outstanding under the Equity Incentive Plan. Additionally, there are 192,934 fully vested employee stock options outstanding which vested under terms ranging from six months to one year. Non-employee director stock options vest 33% per year, beginning one year after the grant date. There are 53,895 stock options outstanding under these grants. The vesting of all options, including performance options, will accelerate in the event of death, disability or retirement and may accelerate upon a change in control of CONSOL Energy.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between CONSOL Energy's closing stock price on the last trading day of the year ended December 31, 2013, and the option's exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2013. This amount varies based on the fair market value of CONSOL Energy's stock. Total intrinsic value of options exercised for the year ended December 31, 2013, 2012 and 2011 was $6,820, $18,562 and $18,049, respectively.

Cash received from option exercises for the years ended December 31, 2013, 2012 and 2011 was $3,720, $8,383 and $9,033, respectively. The tax impact from option exercises totaled $2,929, $8,678, and $8,281, for the years ended December 31, 2013, 2012 and 2011, respectively. This excess tax benefit is included in cash flows from financing activities in the Consolidated Statements of Cash Flows.

Under the Equity Incentive Plan, CONSOL Energy granted certain employees and non-employee directors restricted stock unit awards. These awards entitle the holder to receive shares of common stock as the award vests. Compensation expense is recognized over the vesting period of the units. The total fair value of the restricted stock units granted during the years ended December 31, 2013, 2012 and 2011 was $20,687, $26,426 and $24,882, respectively. The total fair value of shares vested during the years ended December 31, 2013, 2012 and 2011 was $37,002, $23,097 and $16,496, respectively. The following represents the unvested restricted stock units and their corresponding fair value (based upon the closing share price) at the date of grant:



	Number of		Weighted Average
	Shares		Grant Date Fair Value
Nonvested at December 31, 2012	1,326,953		$40.39
Granted	654,656		$31.60
Vested	(930,390	)	$39.77
Forfeited	(169,649	)	$32.93
Nonvested at December 31, 2013	881,570		$35.95

Under the Equity Incentive Plan, CONSOL Energy granted certain employees performance share unit awards. These awards entitle the holder to receive shares of common stock subject to the achievement of certain market and performance goals. Compensation expense is recognized over the performance measurement period of the units in accordance with the provisions of the Stock Compensation Topic of the FASB Accounting Standards Codification for awards with market and performance vesting conditions. At December 31, 2013, achievement of the market and performance goals is believed to be probable. The total fair value of performance share units granted during the years ended December 31, 2013, 2012 and 2011 was $1,270, $16,794 and $11,648, respectively. The following represents the unvested performance share unit awards and their corresponding fair value (based upon the closing share price) at the date of grant:



	Number of		Weighted Average
	Shares		Grant Date Fair Value
Nonvested at December 31, 2012	702,194		$50.76
Granted	40,514		$31.35
Vested	(159,228	)	$68.45
Nonvested at December 31, 2013	583,480		$38.19

Under the Equity Incentive Plan, CONSOL Energy granted certain employees performance stock options. These awards entitle the holder to receive shares of common stock subject to the achievement of certain performance goals. Compensation expense is recognized over the vesting period of the units. The annual performance goals for the performance stock options include a gas cost goal and a gas production goal. Achievement of the gas production goal for the year ended December 31, 2012 did not occur. A reversal of compensation expense of $1,671 was recognized in Cost of Goods Sold and Other Operating Charges for the year ended December 31, 2012. The achievement of all goals is believed to be probable at December 31, 2013. The total fair value of performance share options vested during the year ended December 31, 2013, 2012, 2011 was $1,650, $6,599, $3,299. The following represents the unvested performance options and their corresponding fair value (based upon the closing share price) at the date of grant:



	Number of		Weighted Average
	Shares		Grant Date Fair Value
Nonvested at December 31, 2012	401,392		$16.44
Vested	(100,349	)	$16.44
Nonvested at December 31, 2013	301,063		$16.44

Under the Equity Incentive Plan, CONSOL Energy granted certain employees CONSOL Stock Unit Awards. These awards entitle the holder to receive shares of common stock subject to the achievement of certain market and performance goals. Compensation expense is recognized over the performance measurement period of the units in accordance with the provisions of the Stock Compensation Topic of the FASB Accounting Standards Codification for awards with market and performance vesting conditions. At December 31, 2013, the achievement of the market and performance goals is believed to be probable. The total fair value of CONSOL Stock Units granted during the year ended December 31, 2013 was $28,381. The following represents the unvested CONSOL Stock Unit awards and their corresponding fair value (based upon the closing share price) at the date of the grant:



	Number of		Weighted Average
	Shares		Grant Date Fair Value
Nonvested at December 31, 2012	—		—
Granted	842,167		$33.70
Forfeited	(8,614	)	$33.39
Nonvested at December 31, 2013	833,553		$33.70

As of December 31, 2013, $20,508 of total unrecognized compensation cost related to all unvested stock-based awards is expected to be recognized over a weighted-average period of 1.79 years. When stock options are exercised and restricted and performance stock unit awards become vested, the issuances are made from CONSOL Energy's common stock shares.