13. Stock-based Compensation Plans

Schlumberger has three types of stock-based compensation programs: (i) stock options, (ii) a restricted stock, restricted stock unit and performance share unit program (collectively referred to as “restricted stock”) and (iii) a discounted stock purchase plan (“DSPP”).

Stock Options

Key employees are granted stock options under Schlumberger stock option plans. For all stock options granted, the exercise price equals the average of the high and low sales prices of Schlumberger stock on the date of grant; the maximum term is ten years, and the options generally vest in increments over five years.

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions and resulting weighted-average fair value per share:

	2015			2014			2013
Dividend yield.........................................		2.3	%		1.6	%		1.7	%
Expected volatility......................................		36	%		37	%		38	%
Risk free interest rate.....................................		1.7	%		2.2	%		1.2	%
Expected option life in years................................		7.0			7.0			7.0
Weighted-average fair value per share.........................	$	25.96		$	34.20		$	23.93

The following table summarizes information concerning options outstanding and options exercisable as of December 31, 2015:

	(Shares stated in thousands)

	Options Outstanding						Options Exercisable
			Weighted-
			average
			remaining		Weighted-				Weighted-
	Options		contractual life		average		Options		average
Exercise prices range	Outstanding		(in years)		exercise price		Exercisable		exercise price
$37.85 - $67.87.............................		4,882		2.5	$	51.61		4,857	$	51.53
$68.51 - $70.93.............................		7,499		5.6	$	69.81		4,873	$	69.26
$72.11 - $78.31.............................		8,927		7.0	$	73.56		3,206	$	72.51
$83.88 - $84.93.............................		7,585		4.4	$	84.17		6,514	$	84.21
$88.61 - $114.83............................		12,194		8.0	$	95.48		2,920	$	96.55
		41,087		6.1	$	78.73		22,370	$	73.79

The weighted average remaining contractual life of stock options exercisable as of December 31, 2015 was 4.4 years.

The following table summarizes stock option activity during the years ended December 31, 2015, 2014 and 2013:

	(Shares stated in thousands)

	2015					2014					2013
				Weighted-					Weighted-					Weighted-
				average					average					average
				exercise					exercise					exercise
	Shares			price		Shares			price		Shares			price
Outstanding at beginning of year.............		38,583		$	76.10		41,939		$	70.33		42,059		$	67.77
Granted..............................		7,118		$	86.86		6,105		$	99.04		6,570		$	72.16
Exercised.............................		(2,561	)	$	60.10		(8,269	)	$	64.19		(5,168	)	$	51.73
Forfeited.............................		(2,053	)	$	80.34		(1,192	)	$	73.56		(1,522	)	$	70.57
Outstanding at year-end...................		41,087		$	78.73		38,583		$	76.10		41,939		$	70.33

The aggregate intrinsic value of both stock options outstanding and stock options exercisable as of December 31, 2015 was $93 million, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was $62 million, $314 million and $176 million, respectively.

Restricted Stock

Schlumberger grants performance share units to certain executives. The number of shares earned is determined at the end of each performance period, which is generally three years, based on Schlumberger’s achievement of a predefined return on capital employed (“ROCE”), as defined in the underlying performance share unit agreement. In the event the ROCE exceeds the predefined target, shares for up to the maximum of 250% of the target award may be granted. In the event the ROCE falls below the predefined target, a reduced number of shares may be granted. If the ROCE falls below the threshold award performance level, no shares will be granted. As of December 31, 2015, performance share units of 0.9 million were outstanding based on the achievement of 100% of target.

All other restricted stock awards generally vest at the end of three years.

Restricted stock awards do not pay dividends or allow voting rights during the performance period. Accordingly, the fair value of the restricted stock award is the quoted market price of Schlumberger’s stock on the date of grant less the present value of the expected dividends not received during the vesting period.

The following table summarizes information about all restricted stock transactions:

	(Shares stated in thousands)

	2015					2014					2013
				Weighted					Weighted					Weighted
				Average					Average					Average
	Restricted			Grant Date		Restricted			Grant Date		Restricted			Grant Date
	Stock			Fair Value		Stock			Fair Value		Stock			Fair Value
Unvested at beginning of year...............		4,138		$	80.80		4,171		$	76.01		3,566		$	73.62
Granted..............................		1,254		$	82.37		1,341		$	96.08		1,949		$	75.65
Vested...............................		(1,495	)	$	71.30		(1,186	)	$	81.59		(958	)	$	66.98
Forfeited.............................		(326	)	$	83.86		(188	)	$	78.68		(386	)	$	74.53
Unvested at year-end.....................		3,571		$	85.04		4,138		$	80.80		4,171		$	76.01

Discounted Stock Purchase Plan

Under the terms of the DSPP, employees can choose to have a portion of their earnings withheld, subject to certain restrictions, to purchase Schlumberger common stock. The purchase price of the stock is 92.5% of the lower of the stock price at the beginning or end of the plan period at six-month intervals.

The fair value of the employees’ purchase rights under the DSPP was estimated using the Black-Scholes model with the following assumptions and resulting weighted average fair value per share:

	2015			2014			2013
Dividend yield..........................................		2.3	%		1.6	%		1.7	%
Expected volatility.......................................		27	%		19	%		24	%
Risk free interest rate.....................................		0.2	%		0.1	%		0.1	%
Weighted-average fair value per share..........................	$	12.45		$	12.67		$	9.91

Total Stock-based Compensation Expense

The following summarizes stock-based compensation expense recognized in income:

(Stated in millions)

	2015		2014		2013
Stock options..........................................	$	176	$	177	$	165
Restricted stock.........................................		107		114		110
DSPP...............................................		43		38		40
	$	326	$	329	$	315

At December 31, 2015, there was $480 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements, of which $215 million is expected to be recognized in 2016, $137 million in 2017, $80 million in 2018, $40 million in 2019 and $8 million in 2020.

As of December 31, 2015, approximately 27 million shares of Schlumberger common stock were available for future grants under Schlumberger’s stock-based compensation programs.