CenterPoint Energy 2009 Annual Report Download - page 102

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80
Valuation Data
The total intrinsic value of awards received by participants was as follows for 2007, 2008 and 2009:
Year Ended December 31,
2007 2008 2009
(In millions)
Stock o
p
tions exercise
d
........................... $ 13 $ 2 $ 2
Performance awards ................................ 3 6 7
Stock awards ........................................... 4 5 4
The total grant date fair value of performance and stock awards which vested during the years ended December
31, 2007, 2008 and 2009 was $7 million, $8 million and $11 million, respectively. As of December 31, 2009, there
was $27 million of total unrecognized compensation cost related to non-vested performance and stock awards which
is expected to be recognized over a weighted-average period of 1.8 years.
Pension and Postretirement Benefits
CenterPoint Energy maintains a non-contributory qualified defined benefit pension plan covering substantially all
employees, with benefits determined using a cash balance formula. Under the cash balance formula, participants
accumulate a retirement benefit based upon 5% of eligible earnings, which increased from 4% effective January 1,
2009, and accrued interest. Prior to 1999, the pension plan accrued benefits based on years of service, final average
pay and covered compensation. Certain employees participating in the plan as of December 31, 1998 automatically
receive the greater of the accrued benefit calculated under the prior plan formula through 2008 or the cash balance
formula. Participants have historically been 100% vested in their benefit after completing five years of service.
Effective January 1, 2008, CenterPoint Energy changed the vesting schedule to provide for 100% vesting after three
years to comply with the Pension Protection Act of 2006. In addition to the non-contributory qualified defined
benefit pension plan, CenterPoint Energy maintains unfunded non-qualified benefit restoration plans which allow
participants to receive the benefits to which they would have been entitled under CenterPoint Energy’s non-
contributory pension plan except for federally mandated limits on qualified plan benefits or on the level of
compensation on which qualified plan benefits may be calculated.
CenterPoint Energy provides certain healthcare and life insurance benefits for retired employees on a contributory
and non-contributory basis. Employees become eligible for these benefits if they have met certain age and service
requirements at retirement, as defined in the plans. Under plan amendments, effective in early 1999, healthcare
benefits for future retirees were changed to limit employer contributions for medical coverage.
Such benefit costs are accrued over the active service period of employees. The net unrecognized transition
obligation, resulting from the implementation of accrual accounting, is being amortized over approximately
20 years.
CenterPoint Energy’s net periodic cost includes the following components relating to pension, including the
benefit restoration plan, and postretirement benefits:
Year Ended December 31,
2007 2008 2009
Pension
Benefits
Postretirement
Benefits
Pension
Benefits
Postretirement
Benefits
Pension
Benefits
Postretirement
Benefits
(In millions)
Service cos
t
............................................
.
$ 37 $ 2 $ 31 $ 1 $ 25 $ 1
Interest cos
t
............................................
.
100 26 101 27 113 28
Expected return on plan assets ...............
.
(149) (12) (147) (12) (98) (9)
Amortization of prior service cost
(credit) .................................................
.
(7)
—
(8) 3
3
3
Amortization of net loss ........................
.
34 3 23
—
68
—
Amortization of transition obligation ....
.
—
7
—
7
—
7
Benefit enhancemen
t
.............................
.
—
—
1
—
—
—
N
et periodic cos
t
....................................
.
$ 15 $ 26 $ 1 $ 26 $ 111 $ 30