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Share-Based Compensation
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9 Months Ended | ||||||||||||||||||||
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Sep. 30, 2012
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| Share-based Compensation [Abstract] | |||||||||||||||||||||
| Share-Based Compensation |
Share-Based Compensation
We have granted options to purchase common stock to employees, consultants and outside directors under the Amended and Restated 1997 Stock Option Plan ("1997 Plan") and the Amended and Restated 2003 Stock Incentive Plan ("2003 Plan"). We recognize our share-based payments to employees in the consolidated financial statements based on their fair values at the date of grant. The calculated fair value is recognized as expense (net of any capitalization) over the requisite service period, net of estimated forfeitures, using either the straight-line or accelerated recognition methods.
In July 2012, we met the criteria to determine the Long-Term Commercial Bonus Pool that was established by the Compensation Committee of the Board of Directors in the 2011-2013 Bonus Plan in relation to LNG trains 1 and 2 of the Liquefaction Project. In August 2012, the Compensation Committee approved a Long-Term Commercial Bonus Pool, which consisted of approximately $60 million in cash awards and 10 million restricted shares of common stock to be issued under the 2011 Incentive Plan (the "2011 Plan"). The restricted stock awards vest in five installments. The first restricted stock award installment vested in August 2012 when Sabine Pass Liquefaction issued its full notice to proceed ("NTP") to Bechtel under the lump sum turnkey agreement with respect to LNG trains 1 and 2 of the Liquefaction Project. The restricted stock awards vest in five installments as follows:
In general, employees must be employed at the time of each vesting to receive the awards or will otherwise forfeit such awards. Vesting and payment of the awards would accelerate in full upon (i) termination of employment by the Company without "Cause" or, solely in the case of executive officers, termination of employment by the employee for "Good Reason" (each as defined in the 2003 Plan), (ii) the employee's death or disability, or (iii) the occurrence of a change of control.
For the three months ended September 30, 2012 and 2011, the total share-based compensation expense recognized in our net loss was $49.8 million and $2.3 million, respectively. For the nine months ended September 30, 2012 and 2011, the total share-based compensation expense recognized in our net loss was $54.0 million and $16.6 million, respectively. For the three and nine months ended September 30, 2012, the total share-based compensation cost capitalized was $2.2 million. The effect of a change in estimated forfeitures is recognized through a cumulative adjustment included in share-based compensation cost in the period of change in estimate. We consider many factors when estimating expected forfeitures, including types of awards, employee class and historical experience.
The total unrecognized compensation cost at September 30, 2012 and December 31, 2011 relating to non-vested share-based compensation arrangements granted under the 1997 Plan, 2003 Plan and the 2011 Plan was $94.7 million and $7.7 million, respectively. That cost is expected to be recognized over 4.0 years, with a weighted average period of 3.8 years.
We received $0.8 million and zero proceeds from the exercise of stock options in the three and nine months ended September 30, 2012 and 2011, respectively.
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