Stock-Based Compensation Plans

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation Plans [Abstract]

STOCK-BASED COMPENSATION PLANS

(14) 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 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. 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 stock and receive dividends thereon. Upon grant of these restricted shares, which we refer to as restricted stock Liability Awards, the shares are placed in our deferred compensation plan and, upon vesting, employees are allowed to take withdrawals either in cash or in stock. These Liability Awards are classified as a liability and are remeasured at fair value each reporting period. This mark-to-market is reported in 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. In second quarter 2012, stock-based compensation was allocated to operating expense ($692,000), exploration expense ($994,000) and general and administrative expense ($12.5 million) for a total of $14.6 million. In second quarter 2011, stock-based compensation was allocated to operating expense ($643,000), exploration expense ($937,000) and general and administrative expense ($11.5 million) for a total of $13.4 million. In the first six months ended June 30, 2012, stock-based compensation was allocated to operating expense ($1.0 million), exploration expense ($1.9 million) and general and administrative expense ($20.7 million) for a total of $24.5 million. In the first six months ended June 30, 2011, stock-based compensation was allocated to operating expense ($953,000), exploration expense ($2.3 million) and general and administrative expense ($19.0 million) for a total of $22.9 million. Unlike the other forms of stock-based compensation mentioned above, the mark-to-market 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.

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 directors and employees pursuant to decisions of the Compensation Committee, which is made up of non-employee, independent directors from the Board of Directors. All awards granted under these plans have been issued at prevailing market prices at the time of the grant. Of the 4.1 million grants outstanding at June 30, 2012, 32,000 of the grants relate to stock options with the remainder of 4.0 million grants relating to SARs. Information with respect to stock option and SARs activities is summarized below.

	Shares			Weighted Average Exercise Price
Outstanding at December 31, 2011		4,558,609		$	41.47
Granted		754,471			64.14
Exercised		(1,218,780	)		21.90
Expired/forfeited		(6,196	)		48.31
Outstanding at June 30, 2012		4,088,104		$	51.48

Stock Appreciation Right Awards

During first six months 2012, we granted SARs to officers and non-officer employees. The weighted average grant date fair value of these SARs, based on our Black-Scholes-Merton assumptions, is shown below:

	Six Months Ended June 30, 2012
Weighted average exercise price per share	$	64.14
Expected annual dividends per share		0.25	%
Expected life in years		3.7
Expected volatility		45	%
Risk-free interest rate		0.4	%
Weighted average grant date fair value	$	21.32

Restricted Stock Awards

Equity Awards

In the first six months ended June 30, 2012, we granted 360,000 restricted stock Equity Awards to employees compared to 329,000 granted to employees in the same period of 2011. These awards generally vest over a three-year period. We recorded compensation expense for these awards of $5.2 million in first six months ended June 30, 2012 compared to $1.7 million in the same period of 2011. Equity Awards are not issued to employees until they are vested. Employees do not have the option to receive cash.

Liability Awards

In first six months 2012, we granted 355,400 shares of restricted stock Liability Awards as compensation to employees at an average price of $63.87 with vesting generally over a three-year period and 14,700 were granted to directors at an average price of $64.35 with immediate vesting. In the same period of 2011, we granted 334,000 shares of Liability Awards as compensation to employees at an average price of $51.10 with vesting generally over a three-year period and 15,500 shares were granted to directors at an average price of $52.35 with immediate vesting. We recorded compensation expense for Liability Awards of $10.2 million in first six months ended June 30, 2012 compared to $10.4 million in the same period of 2011. 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-market is reported in the 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, 2012 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, 2011		221,609		$	49.64		487,244		$	48.76
Granted		359,732			63.37		370,059			63.89
Vested		(85,294	)		56.87		(227,844	)		50.51
Forfeited		(14,307	)		57.56		(1,717	)		51.39
Outstanding at June 30, 2012		481,740		$	58.37		627,742		$	57.04

Deferred Compensation Plan

Our deferred compensation plan gives 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 in the 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 reported at their market value in 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 recorded mark-to-market loss of $9.3 million in second quarter 2012 compared to mark-to-market gain of $5.8 million in second quarter 2011. We recorded mark-to-market loss of $1.5 million in the first six months June 30, 2012 compared to mark-to-market loss of $24.9 million in the same period of 2011. The Rabbi Trust held 3.0 million shares (2.3 million of vested shares) of Range stock at June 30, 2012 compared to 2.8 million shares (2.2 million of vested shares) at December 31, 2011.