Xcel Energy 2007 Annual Report Download - page 103

Xcel Energy believes these authorizations are adequate and will seek additional authorization when necessary, however,
there can be no assurance that additional authorization will be granted on the timeframe or in the amounts requested.
The FERC has granted a blanket authorization for certain intra-system financings involving holding companies. In
addition, Xcel Energy’s utility subsidiaries have received FERC authorization through June 30, 2008 to engage in intra-
system financings, including through the money pool, in amounts ranging from $250 million for each of
NSP-Minnesota and PSCo, to $100 million for SPS and $75 million for NSP-Wisconsin.
Stockholder Protection Rights Agreement — In June 2001, Xcel Energy adopted a Stockholder Protection Rights
Agreement. Each share of Xcel Energy’s common stock includes one shareholder protection right. Under the agreement’s
principal provision, if any person or group acquires 15 percent or more of Xcel Energy’s outstanding common stock, all
other shareholders of Xcel Energy would be entitled to buy, for the exercise price of $95 per right, common stock of
Xcel Energy having a market value equal to twice the exercise price, thereby substantially diluting the acquiring person’s
or group’s investment. The rights may cause substantial dilution to a person or group that acquires 15 percent or more
of Xcel Energy’s common stock. The rights should not interfere with a transaction that is in the best interests of Xcel
Energy and its shareholders because the rights can be redeemed prior to a triggering event for $0.01 per right.
9. Share-Based Compensation
Effective Jan. 1, 2006, Xcel Energy adopted the provisions of SFAS No. 123(R), which requires the measurement and
recognition of compensation expense in an amount equal to the fair value of share-based payment awards granted to
employees and directors including stock option awards, restricted stock, restricted stock units and performance share
awards. Xcel Energy previously applied the provisions of Accounting Principles Board Opinion No. 25 — ‘‘Accounting
for Stock Issued to Employees’’ and related Interpretations in order to provide the required pro forma disclosures under
SFAS No. 123, ‘‘Accounting for Share-based Compensation,’’ (‘‘SFAS No. 123’’). Xcel Energy adopted SFAS
No. 123(R) using the modified prospective transition method. Accordingly, in 2006, Xcel Energy recorded share based
compensation expense for awards granted prior to but not yet vested as of Jan, 1, 2006 as if the fair value method
required for pro forma disclosure under SFAS No. 123 were in effect for expense recognition purposes.
The pro forma information for share based compensation in 2005 was as follows:
2005
(Thousands of
Dollars, except
per share
amounts)
Net income — as reported ................................................ $512,972
Less: Total share-based employee compensation expense determined under fair-value-based method for
stock options, net of related tax effects ....................................... (1,180)
Pro forma net income ................................................ $511,792
Earnings per share:
Basic — as reported .................................................. $ 1.26
Basic — pro forma ................................................... 1.26
Diluted — as reported ................................................. 1.23
Diluted — pro forma ................................................. 1.23
Stock Options — Xcel Energy has incentive compensation plans under which stock options and other performance
incentives are awarded to key employees. In the past, Xcel Energy issued stock options, but has not granted stock
options since December 2001. 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.
Activity in stock options was as follows for the years ended Dec. 31:
2007 2006 2005
(Awards in thousands) Awards Average Price Awards Average Price Awards Average Price
Outstanding beginning of year ...... 12,374 $27.36 13,576 $26.92 14,606 $26.67
Exercised ................... (266) 19.18 (563) 18.33 (152) 17.30
Forfeited ................... (50) 27.43 (89) 26.98 (213) 26.84
Expired .................... (2,511) 29.37 (550) 25.66 (665) 23.71
Outstanding at end of year ........ 9,547 27.19 12,374 27.36 13,576 26.92
Exercisable at end of year ......... 9,547 27.19 12,374 27.36 13,529 26.91
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