This excerpt taken from the EOG DEF 14A filed Apr 4, 2008.
Subject to the terms and conditions of the 2008 Plan, a SAR entitles its holder to the right to receive an amount equal to the excess of (a) the fair market value of one share of Common Stock on the date of exercise of the SAR over (b) the grant price of the SAR. All SARs granted under the 2008 Plan must have a grant price equal to or greater than the fair market value of our Common Stock at the time the SAR is granted.
The Compensation Committee may determine the term of any SAR, so long as that term does not exceed seven years. With respect to the exercise of a SAR, the Compensation Committee, in its sole discretion, may also impose whatever further terms and conditions it deems advisable. The Compensation Committee may also determine the extent to which any holder of a SAR will have the right to exercise the SAR following such holders termination of employment or other severance of service with EOG.
Upon the exercise of a SAR, a holder will be entitled to receive payment in an amount determined by multiplying (i) the excess of the fair market value of a share of our Common Stock on the date of exercise over the grant price of the SAR by (ii) the number of shares of Common Stock with respect to which the SAR is exercised. At the discretion of the Compensation Committee, this payment may be in cash, in shares of our Common Stock of equivalent value, in some combination thereof, or in any other form that may be approved by the Compensation Committee.