Allegheny Power 2014 Annual Report Download - page 98
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83
Stock-based Compensation Expense
Pre-tax stock-based compensation costs and the amount of stock-based compensation expense capitalized related to FirstEnergy
and FES plans are included in the following tables:
FirstEnergy Years ended December 31,
Stock-based Compensation Plan 2014 2013 2012
(In millions)
Restricted Stock and Restricted Stock Units $ 31 $ 42 $ 42
Stock Options — — 1
Performance Shares 5 (10) 5
401(k) Savings Plan 25 25 37
EDCP 3 (2) —
DCPD 5 5 4
Total $ 69 $ 60 $ 89
Stock-based compensation costs capitalized $ 23 $ 20 $ 29
FES Years ended December 31,
Stock-based Compensation Plan 2014 2013 2012
(In millions)
Restricted Stock and Restricted Stock Units $ 4 $ 6 $ 6
Performance Shares 1 (1) 1
401(k) Savings Plan 4 4 6
Total $ 9 $ 9 $ 13
Stock-based compensation costs capitalized $ 1 $ 1 $ 1
Tax benefits associated with stock based compensation plan expense were $14 million, $23 million and $11 million (FES - $2 million,
$1 million and $2 million) for the years ended 2014, 2013 and 2012, respectively.
5. TAXES
FirstEnergy records income taxes in accordance with the liability method of accounting. Deferred income taxes reflect the net tax
effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts recognized for tax purposes. Investment tax credits, which were deferred when utilized, are being amortized over the
recovery period of the related property. Deferred income tax liabilities related to temporary tax and accounting basis differences
and tax credit carryforward items are recognized at the statutory income tax rates in effect when the liabilities are expected to be
paid. Deferred tax assets are recognized based on income tax rates expected to be in effect when they are settled.
FES and the Utilities are party to an intercompany income tax allocation agreement with FirstEnergy and its other subsidiaries that
provides for the allocation of consolidated tax liabilities. Net tax benefits attributable to FirstEnergy, excluding any tax benefits
derived from interest expense associated with acquisition indebtedness from the merger with GPU, are reallocated to the subsidiaries
of FirstEnergy that have taxable income. That allocation is accounted for as a capital contribution to the company receiving the tax
benefit.
On December 19, 2014, the President signed into law the Tax Increase Prevention Act of 2014 (the Act). The Act, among other
things, extended retroactively the R&D tax credit until December 31, 2014, and also extended accelerated depreciation of qualified
capital investments placed into service before January 1, 2015. FirstEnergy and FES recorded the effects of the Act in the fourth
quarter of 2014. The retroactive extension of the tax benefits did not have a significant impact to the effective tax rate.