Allegheny Power 2013 Annual Report Download - page 104

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89
4. STOCK-BASED COMPENSATION PLANS
FirstEnergy has four stock-based compensation plans - ICP, 401(k) Savings Plan, EDCP and DCPD, as described further below.
ICP
The ICP includes four forms of stock-based compensation — restricted stock, restricted stock units, stock options and performance
shares.
Under the ICP, total issuances cannot exceed 29 million shares of common stock or their equivalent. Stock options, restricted stock
and restricted stock units have currently been designated to pay out in common stock, with vesting periods ranging from eight
months to ten years. Performance share awards are currently designated to be paid in cash unless the recipient elects to defer the
award, in which case, the award may be paid in stock depending upon the duration of the deferral. Shares available under the ICP
are also used for bonuses earned under FirstEnergy’s Short-Term Incentive Program that are, at the election of the participant,
deferred through the EDCP and paid in shares under the ICP. As of December 31, 2013, approximately 3.0 million shares were
available for future issuance plus any shares that become available again under the ICP due to cancellations, forfeitures, cash
settlements or other similar circumstances with respect to outstanding awards.
FirstEnergy records the compensation costs for stock-based compensation awards over the vesting period based on the fair value
on the grant date, less estimated forfeitures. FirstEnergy records the actual tax benefit realized from tax deductions when awards
are exercised or distributed. Realized tax benefits during the years ended December 31, 2013, 2012 and 2011 were $13 million,
$22 million and $14 million, respectively. The excess of the deductible amount over the recognized compensation cost is recorded
as a component of stockholders’ equity and reported as an other financing activity on the Consolidated Statements of Cash Flows.
Restricted Stock and Restricted Stock Units
Restricted common stock (restricted stock) and restricted stock units (stock units) activity for the year ended December 31, 2013,
was as follows:
Outstanding as of January 1, 2013 2,180,422
Granted 952,137
Vested (815,851)
Forfeited (100,099)
Outstanding as of December 31, 2013 2,216,609
The 952,137 shares of restricted stock and stock units granted during the year ended December 31, 2013, includes 212,211 stock
units related to previous grants due to over-achievement of performance metrics, and had a grant-date fair value of $39.97 and a
weighted-average vesting period of 3.02 years.
Eligible employees receive awards of FE restricted stock or stock units subject to restrictions that lapse over a defined period of
time or upon achieving performance results. Dividends are received on the restricted stock and are reinvested in additional shares.
Restricted stock grants under the ICP were as follows:
2013 2012 2011
Restricted stock granted 27,561 263,771 297,859
Weighted average market price $ 42.53 $ 44.82 $ 38.44
Weighted average vesting period (years) 3.68 3.09 2.27
Dividends restricted Yes Yes Yes
Vesting activity for restricted stock during 2013 was as follows (forfeitures were not material):