Duke Energy 2011 Annual Report Download - page 205

PART II
DUKE ENERGY CORPORATION •DUKE ENERGY CAROLINAS, LLC •DUKE ENERGY OHIO, INC. •DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
Amounts included in the table below represent severance
expense recorded by the Duke Energy Registrants during 2010. The
Duke Energy Registrants recorded insignificant amounts for severance
expense during 2011.
Year Ended
December 31,
2010(a)
Duke Energy $172
Duke Energy Carolinas 99
Duke Energy Ohio 24
Duke Energy Indiana 33
(a) These amounts are recorded in Operation, Maintenance and Other within Operating
Expenses on the Consolidated Statements of Operations.
The severance costs discussed above for the Subsidiary
Registrants include an allocation of their proportionate share of
severance costs for employees of Duke Energy’s shared services
affiliate that provides support to the Subsidiary Registrants. Amounts
included in the table below represent the severance liability recorded
by Duke Energy Carolinas and Duke Energy Indiana for employees of
those registrants, and excludes costs allocated from and paid by Duke
Energy’s shared services affiliate.
(in millions)
Balance at
December 31,
2010
Provision/
Adjustments
Cash
Reductions
Balance at
December 31,
2011
Duke Energy $87 $ (2) $(53) $32
Duke Energy
Carolinas 21 (2) (18) 1
Duke Energy
Indiana 1 — (1) —
20. STOCK-BASED COMPENSATION
For employee awards, equity classified stock-based
compensation cost is measured at the service inception date or the
grant date, based on the estimated achievement of certain
performance metrics or the fair value of the award, and is recognized
as expense or capitalized as a component of property, plant and
equipment over the requisite service period.
Duke Energy’s 2010 Long-Term Incentive Plan (the 2010 Plan)
reserved 75 million shares of common stock for awards to employees
and outside directors. The 2010 Plan superseded the 2006 Long-
Term Incentive Plan, as amended (the 2006 Plan), and no additional
grants will be made from the 2006 Plan. Under the 2010 Plan, the
exercise price of each option granted cannot be less than the market
priceofDukeEnergy’scommonstockonthedateofgrantandthe
maximum option term is 10 years. The vesting periods range from
immediate to three years. Duke Energy has historically issued new
shares upon exercising or vesting of share-based awards. In 2012,
Duke Energy may use a combination of new share issuances and
open market repurchases for share-based awards which are exercised
or become vested; however Duke Energy has not determined with
certainty the amount of such new share issuances or open market
repurchases.
The 2010 Plan allows for a maximum of 18.75 million shares
of common stock to be issued under various stock-based awards
other than options and stock appreciation rights.
Stock-Based Compensation Expense
Pre-tax stock-based compensation expense recorded in the
Consolidated Statements of Operations is as follows:
For the Years Ended
December 31,
(in millions) 2011(a) 2010(a) 2009(a)
Stock Options $2 $2 $2
Phantom Awards 27 26 17
Performance Awards 23 39 20
Other Stock Awards ——1
Total $52 $67 $40
(a) Excludes stock-based compensation cost capitalized as a component of property, plant
and equipment of $2 million, $4 million and $4 million for the years ended
December 31, 2011, 2010 and 2009, respectively.
The tax benefit associated with the stock-based compensation
expense for the years ended December 31, 2011, 2010 and 2009
was $20 million, $26 million and $16 million, respectively.
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