Vectren 2013 Annual Report Download - page 104

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Following is a reconciliation of the total cost associated with share-based awards recognized in the Company’s financial
statements to its after tax effect on net income:
Year Ended December 31,
(In millions) 2013 2012 2011
Total cost of share-based compensation $ 14.8 $ 6.3 $ 5.8
Less capitalized cost 2.8 1.2 0.8
Total in other operating expense 12.0 5.1 5.0
Less income tax benefit in earnings 4.8 2.1 2.0
After tax effect of share-based compensation $ 7.2 $ 3.0 $ 3.0
Performance Based Awards & Other Awards
The vesting of awards issued to Company officers and other key non-officer employees is contingent upon meeting a total return
and return on equity performance objectives. Grants to Company officers and key non-officer employees generally vest at the
end of a four-year period, with performance measured at the end of the third year. Based on that performance, awards could
double or could be entirely forfeited. However, a limited number of awards have also been time-vested awards that vest ratably
over a three or five year period. In addition non-employee directors receive a portion of their fees in share based
awards. These awards to non-employee directors are not performance based and generally vest over one year. Because
Company officers and non-employee directors have the choice of settling awards in cash or deferring their receipt into a
deferred compensation plan (where the value is eventually withdrawn in cash), these awards are accounted for as liability
awards at their settlement date fair value. Certain share awards to key non-officer employees must be settled in shares and are
therefore accounted for in equity at their grant date fair value.
A summary of the status of awards separated between those accounted for as liabilities and equity as of December 31, 2013,
and changes during the year ended December 31, 2013, follows:
Equity Awards
Wtd. Avg.
Grant Date Liability Awards
Units Fair value Units Fair value
Awards at January 1, 2013 70,493 $ 27.45 628,810
Granted 28,579 30.19 305,617
Vested (15,175) 26.04 (158,187)
Forfeited (3,940) 26.20 (44,989)
Awards at December 31, 2013 79,957 $ 29.12 731,251 $ 35.50
As of December 31, 2013, there was $11.8 million of total unrecognized compensation cost associated with outstanding grants.
That cost is expected to be recognized over a weighted-average period of 2.3 years. The total fair value of shares vested for
liability awards during the years ended December 31, 2013, 2012, and 2011, was $5.7 million, $4.4 million, and $3.0 million,
respectively. The total fair value of equity awards vesting during the year ended December 31, 2013, 2012, and 2011 was $0.4
million, $0.1 million, $0.2 million, respectively.
Stock Option Plans
In the past, option awards were granted to executives and other key employees with an exercise price equal to the market price
of the Company’s stock at the date of grant; those option awards generally required three years of continuous service and have
10-year contractual terms. These awards generally vested on a pro-rata basis over three years. The last option grant occurred
in 2005, and the Company does not intend to issue options in the future. All compensation cost has been recognized. A
summary of the status of the Company’s stock option awards as of December 31, 2013, and changes during the year ended
December 31, 2013, follows: