Eversource 2013 Annual Report Download - page 113

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The total compensation expense and associated future income tax benefit recognized by NU, CL&P, NSTAR Electric, PSNH and
WMECO for share-based compensation awards are as follows:
NU
For the Years Ended December 31,
(Millions of Dollars)
2013
2012 (1)
2011
Compensation Expense
$
27.0
$
25.8
$
12.3
Future Income Tax Benefit
10.7
10.2
4.9
For the Years Ended December 31,
2013
2012
2011
(Millions of Dollars)
CL&P
NSTAR
Electric
PSNH
WMECO
CL&P
NSTAR
Electric
PSNH
WMECO
CL&P
NSTAR
Electric
PSNH
WMECO
Compensation
Expense
$
6.8
$
7.5
$
2.3
$
1.3
$
4.8
$
7.4
$
1.8
$
1.0
$
7.1
$
7.7
$
2.5
$
1.4
Future Income Tax
Benefit
2.7
3.0
0.9
0.5
1.9
2.9
0.7
0.4
2.8
3.0
1.0
0.6
(1) NSTAR amounts were included in NU beginning April 10, 2012.
As of December 31, 2013, there was $19.5 million of total unrecognized compensation expense related to nonvested share-based
awards for NU, $5.8 million for CL&P, $6.3 million for NSTAR Electric, $1.7 million for PSNH and $0.9 million for WMECO. This cost is
expected to be recognized ratably over a weighted-average period of 1.64 years for NU, 1.85 years for CL&P, 1.47 years for NSTAR
Electric, 1.79 years for PSNH and 1.80 years for WMECO.
For the year ended December 31, 2013, additional tax benefits totaling $5.5 million decreased cash flows from financing activities. For
the years ended December 31, 2012 and 2011, additional tax benefits totaling $8.5 million and $1.3 million, respectively, increased
cash flows from financing activities.
Stock Options: Stock options were granted under the NU and NSTAR Incentive Plans. Options currently outstanding expire ten years
from the date of grant and are fully vested. The weighted average remaining contractual lives for the options outstanding as of
December 31, 2013 is 4.3 years. A summary of stock option transactions is as follows:
Weighted Average
Intrinsic Value
Options
Exercise Price
(Millions)
Outstanding and Exercisable - January 1, 2011
112,599
$
18.80
Exercised
(65,225)
$
18.81
$
1.0
Forfeited and Cancelled
-
$
-
Outstanding and Exercisable - December 31, 2011
47,374
$
18.78
Converted NSTAR Options upon Merger
2,664,894
$
23.99
Exercised
(1,166,511)
$
22.53
$
18.7
Forfeited and Cancelled
-
$
-
Outstanding and Exercisable - December 31, 2012
1,545,757
$
24.92
Exercised
(324,382)
$
20.97
$
6.7
Forfeited and Cancelled
-
$
-
Outstanding and Exercisable - December 31, 2013
1,221,375
$
25.97
$
20.1
Cash received for options exercised during the year ended December 31, 2013 totaled $6.8 million. The tax benefit realized from stock
options exercised totaled $2.7 million for the year ended December 31, 2013.
Employee Share Purchase Plan: NU maintains an ESPP for eligible employees, which allows for NU common shares to be purchased
by employees at the end of successive six-month offering periods at 95 percent of the closing market price on the last day of each six-
month period. Employees are permitted to purchase shares having a value not exceeding 25 percent of their compensation as of the
beginning of the offering period up to a limit of $25,000 per annum. The ESPP qualifies as a non-compensatory plan under accounting
guidance for share-based payments, and no compensation expense is recorded for ESPP purchases.
During 2013, employees purchased 39,526 shares at discounted prices of $38.69 and $42.19. Employees purchased 39,422 shares in
2012 at discounted prices of $33.01 and $37.89. As of December 31, 2013 and 2012, 817,754 and 857,280 shares, respectively,
remained available for future issuance under the ESPP.
An income tax rate of 40 percent is used to estimate the tax effect on total share-based payments determined under the fair value-
based method for all awards. The Company generally settles stock option exercises and fully vested RSUs and performance shares
with either the issuance of new common shares or the issuance of common shares purchased in the open market.