Eversource 2009 Annual Report Download - page 150

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thousand for PSNH and $20 thousand for WMECO) in 2008, and $1 million ($71 thousand for CL&P, $139 thousand for PSNH and $9
thousand for WMECO) in 2007.
C. Employee Stock Ownership Plan
NU maintains an ESOP for purposes of allocating shares to NU, CL&P, PSNH, and WMECO's employees participating in NU's 401(k)
Savings Plan. Under this arrangement, NU issued unsecured notes during 1991 and 1992 totaling $250 million, the proceeds of which
were loaned to the ESOP trust (ESOP Notes) for the purchase of 10.8 million newly issued NU common shares (ESOP shares). The
ESOP trust is obligated to make principal and interest payments to NU on the ESOP Notes at the same rate that ESOP shares are
allocated to employees. For the year ended December 31, 2009, NU made annual contributions to the ESOP trust equal to the ESOP's
debt service, less dividends received by the ESOP. NU's contributions to the ESOP trust for the years ended December 31, 2009, 2008
and 2007 totaled $6.1 million, $6 million and $4.2 million, respectively. For the years ended December 31, 2009, 2008 and 2007, NU
recognized $8.2 million, $8 million and $6.9 million, respectively, of expense related to the ESOP.
Dividends on the ESOP unallocated shares are not considered dividends for financial reporting purposes. During the first and second
quarters of 2007, NU paid a $0.1875 per share quarterly dividend. During the third quarter of 2007 through the second quarter of 2008,
NU paid a $0.20 per share quarterly dividend. During the third and fourth quarters of 2008, NU paid a $0.2125 per share quarterly
dividend. NU paid a $0.2375 per share quarterly dividend in 2009.
In 2009 and 2008, the ESOP trust allocated 542,724 and 469,601 of NU common shares, respectively, to satisfy 401(k) Savings Plan
obligations to employees. As of December 31, 2009 and 2008, total allocated ESOP shares were 10,673,131 and 10,130,407,
respectively, and total unallocated ESOP shares were 127,054 and 669,778, respectively. The fair market value of the unallocated
ESOP shares as of December 31, 2009 and 2008 was $3.3 million and $16.1 million, respectively.
D. Share-Based Payments
NU maintains an Employee Share Purchase Plan (ESPP) and other long-term equity-based incentive plans under the Northeast Utilities
Incentive Plan (Incentive Plan) in which NU, CL&P, PSNH, and WMECO employees and officers are entitled to participate. NU, CL&P,
PSNH, and WMECO record compensation cost related to these plans, as applicable, for shares issued or sold to NU, CL&P, PSNH,
and WMECO employees and officers, as well as the allocation of costs associated with shares issued or sold to NUSCO employees
and officers that support CL&P, PSNH, and WMECO.
In accordance with accounting guidance for share-based payments, share-based compensation awards are recorded using the fair
value-based method based on the fair value at the date of grant. This guidance applies to share-based compensation awards granted
on or after January 1, 2006 or to awards for which the requisite service period has not been completed.
NU accounts for its various share-based plans as follows:
 For grants of restricted shares and restricted share units (RSUs), NU records compensation expense, net of estimated forfeitures,
on a straight-line basis over the vesting period based upon the fair value of NU's common shares at the date of grant. Dividend
equivalents on RSUs are charged to retained earnings, net of estimated forfeitures.
 For grants of performance shares, NU records compensation expense, net of estimated forfeitures, on a straight-line basis over the
vesting period. Performance shares vest based upon the achievement of Company targets. For the majority of performance
shares, fair value is based upon the value of NU's common shares at the date of grant and compensation expense is recorded
based upon the probable outcome of the achievement of Company targets. The remaining performance shares are based upon
the achievement of the Company's share price as compared to an index of similar equity securities. The fair value at the date of
grant for these remaining performance shares was determined using a lattice model and compensation expense is recorded over
the vesting period.
 NU has not granted any stock options since 2002, and no compensation expense has been recorded. All options were fully vested
prior to January 1, 2006.
 For shares sold under the ESPP, no compensation expense is recorded, as the ESPP qualifies as a non-compensatory plan under
relevant accounting guidance.
For the years ended December 31, 2009, 2008 and 2007, tax expense in excess of compensation expense totaling $0.9 million, $1.6
million and $3.2 million, respectively, increased cash flows from financing activities.
Incentive Plan: Under the Incentive Plan, in which CL&P, PSNH and WMECO participate, NU is authorized to grant up to 4.5 million
new shares for various types of awards, including restricted shares, RSUs, performance shares and stock options to eligible employees
and board members. As of December 31, 2009 and 2008, NU had 2,363,521 and 2,705,615 common shares, respectively, available for
issuance under the Incentive Plan.
Restricted Shares: NU has granted restricted shares under the 2002 through 2004 incentive programs that are subject to three-year
and four-year graded vesting schedules. The remaining restricted shares under these programs of 6,250, with a per share and total
weighted average grant-date fair value of $18.65 and $0.1 million, respectively, were fully vested in February 2008. The per share and
total weighted average grant-date fair value for restricted shares vested was $14.14 and $0.8 million, respectively, for the year ended