Xcel Energy 2003 Annual Report Download - page 46

62 XCEL ENERGY 2003 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. COMMON STOCK AND INCENTIVE STOCK PLANS
Common Stock and Equivalents Xcel Energy has common stock equivalents consisting of convertible senior notes and options, as discussed further.
The dilutive impacts of common stock equivalents affected earnings per share as follows for the years ending Dec. 31:
2003 2002 2001
(Shares and dollars in thousands, Per Share Per Share Per Share
except per share amounts) Income Shares Amount Income Shares Amount Income Shares Amount
Income from continuing operations $510,020 $527,693 $579,200
Less: Dividend requirements on
preferred stock (4,241) (4,241) (4,241)
Basic earnings per share
Income from continuing operations $505,779 398,765 $1.27 $523,452 382,051 $1.37 $574,959 342,952 $1.69
Effect of dilutive securities:
$230 million convertible debt 11,213 18,654 1,246 2,027 – –
$100 million convertible debt –– – 445 – –
$57.5 million convertible debt 311 507 –– ––
Convertible debt option –508 –– ––
Restricted stock –464 –– ––
Options –14 – 123 – 790
Diluted earnings per share
Income from continuing operations
and assumed conversions $517,303 418,912 $1.23 $524,698 384,646 $1.37 $574,959 343,742 $1.68
Incentive Stock Plans Xcel Energy and some of its subsidiaries have incentive compensation plans under which stock options and other performance
incentives are awarded to key employees. The weighted average number of common and potentially dilutive shares outstanding used to calculate Xcel Energy’s
earnings per share include the dilutive effect of stock options and other stock awards based on the treasury stock method. The options normally have a term of
10 years and generally become exercisable from three to five years after grant date or upon specified circumstances. The tables below include awards made by
Xcel Energy and some of its predecessor companies, adjusted for the merger stock exchange ratio, and are presented on an Xcel Energy share basis.
Activity in stock options and performance awards was as follows for the years ended Dec. 31:
2003 2002 2001
Average Average Average
(Awards in thousands) Awards Price Awards Price Awards Price
Outstanding beginning of year 16,981 $26.29 15,214 $25.65 14,259 $25.35
Granted ––––2,581 $25.98
Options transferred from NRG acquisition ––3,328 $29.97 – –
Exercised (190) $12.21 (112) $20.27 (1,472) $23.00
Forfeited (580) $28.48 (1,349) $28.43 (142) $27.08
Expired (597) $23.41 (100) $28.87 (12) $24.07
Outstanding at end of year 15,614 $26.49 16,981 $26.29 15,214 $25.65
Exercisable at end of year 9,358 $25.59 8,993 $24.78 7,154 $24.78
Range of Exercise Prices
$11.50 to $25.50 $25.51 to $27.00 $27.01 to $51.25
Options outstanding:
Number outstanding 3,721,340 7,659,232 4,233,224
Weighted average remaining contractual life (years) 4.2 6.3 6.3
Weighted average exercise price $20.49 $26.29 $32.13
Options exercisable:
Number exercisable 3,594,809 3,794,565 1,968,619
Weighted average exercise price $20.58 $26.34 $33.29
Certain employees also may be awarded other restricted stock under Xcel Energy incentive plans. Xcel Energy holds restricted stock until restrictions
lapse, generally from two to three years from the date of grant. Xcel Energy reinvests dividends on the shares it holds while restrictions are in place.
Restrictions also apply to the additional shares acquired through dividend reinvestment. Restricted shares have a value equal to the market trading
price of Xcel Energy’s stock at the grant date. Xcel Energy did not grant any restricted shares in 2003. Xcel Energy granted 50,083 restricted shares in
2002 when the grant-date market price was $22.83, and 21,774 restricted shares in 2001 when the grant-date market price was $26.06. Compensation
expense related to these awards was immaterial.
On March 28, 2003, the compensation and nominating committee of Xcel Energy’s board of directors did grant restricted stock units and performance
shares under the Xcel Energy omnibus incentive plan approved by the shareholders in 2000. No stock options were granted in 2003. Restrictions