Stock-Based Compensation

9 Months Ended

Sep. 30, 2011

NOTE 3 — STOCK-BASED COMPENSATION

Under the Merger Agreement, holders of our outstanding stock options, whether or not then exercisable or vested, had the option to elect to receive, at the effective time of the Merger, either cash or fully exercisable and vested stock options to purchase Archer common shares. In addition, all restrictions on time-lapse and performance-based restricted stock awards were deemed to have lapsed and each restricted share was deemed to be an unrestricted share of our common stock. Our Incentive Stock Plans were terminated in connection with the Merger. Our net loss for the two months ended February 28, 2011 includes approximately $6.1 million of compensation costs related to share-based payments with approximately $5.4 million of this amount relating to the acceleration of stock based compensation expense associated with the Merger.

We recognize all share-based payments to employees and directors in the financial statements based on their grant-date fair values. We utilize the Black-Scholes model to determine fair value, which incorporates assumptions to value stock-based awards. The dividend yield on our common stock is assumed to be zero as we have historically not paid dividends and have no current plans to do so in the future. The expected volatility is based on historical volatility of our common stock. The risk-free interest rate is the related United States Treasury yield curve for periods within the expected term of the option at the time of grant. We estimate forfeiture rates based on our historical experience.

The following summarizes the Black-Scholes model assumptions used for the options granted in the nine months ended September 30, 2010 (no options were granted during the three and nine months ended September 30, 2011 and the three months ended September 30, 2010):


	Nine Months
	Ended
	September 30,
	2010
Expected dividend yield		—
Expected price volatility		89.81	%
Risk free interest rate		1.41	%
Expected life of options	5 years
Weighted average fair value of options granted at market value	$	2.63

A summary of our stock option activity and related information is as follows:


				Weighted
	Shares			Average
	Under			Exercise
	Option			Price
Balance at December 31, 2010		1,751,018		$	4.74
Granted		—			—
Converted at Merger		(1,750,018	)		4.74
Exercised		(1,000	)		1.23

Outstanding at September 30, 2011		—			—

Restricted stock awards, or RSAs, activity during the nine months ended September 30, 2011 is as follows:


				Weighted
				Average Grant-
				Date Fair Value
	Number of Shares			Per Share
Nonvested at December 31, 2010		1,702,067		$	6.09
Granted		—			—
Vested		(1,702,067	)		6.09
Forfeited		—			—

Nonvested at September 30, 2011		—		$	—

- 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

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Reference 3: http://www.xbrl.org/2003/role/presentationRef

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Reference 4: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

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+ Details

Allis Chalmers Energy Inc. 10-Q