CenterPoint Energy 2012 Annual Report Download - page 100

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78
The savings plan has significant holdings of CenterPoint Energy common stock. As of December 31, 2012, 19,494,130 shares
of CenterPoint Energy’s common stock were held by the savings plan, which represented approximately 22% of its investments.
Given the concentration of the investments in CenterPoint Energy’s common stock, the savings plan and its participants have
market risk related to this investment.
CenterPoint Energy’s savings plan benefit expenses were $34 million, $35 million and $36 million in 2010, 2011 and 2012,
respectively.
(d) Postemployment Benefits
CenterPoint Energy provides postemployment benefits for former or inactive employees, their beneficiaries and covered
dependents, after employment but before retirement (primarily healthcare and life insurance benefits for participants in the long-
term disability plan). The Company recorded postemployment benefits of $1 million income, $7 million expense and $8 million
expense in 2010, 2011 and 2012, respectively.
Included in “Benefit Obligations” in the accompanying Consolidated Balance Sheets at December 31, 2011 and 2012 was
$30 million and $32 million, respectively, relating to postemployment obligations.
(e) Other Non-Qualified Plans
CenterPoint Energy has non-qualified deferred compensation plans that provide benefits payable to directors, officers and
certain key employees or their designated beneficiaries at specified future dates, upon termination, retirement or death. Benefit
payments are made from the general assets of CenterPoint Energy. During 2010, 2011 and 2012, CenterPoint Energy recorded
benefit expense relating to these plans of $5 million, $5 million and $5 million, respectively. Included in “Benefit Obligations”
in the accompanying Consolidated Balance Sheets at December 31, 2011 and 2012 was $76 million and $71 million, respectively,
relating to deferred compensation plans.
Included in Benefit Obligations in CenterPoint Energy’s Consolidated Balance Sheets at December 31, 2011 and 2012 was
$25 million and $29 million, respectively, relating to split-dollar life insurance arrangements.
(f) Change in Control Agreements and Other Employee Matters
CenterPoint Energy has agreements with certain of its officers that generally provide, to the extent applicable, in the case of
a change in control of CenterPoint Energy and termination of employment, for severance benefits of up to three times annual base
salary plus bonus, and other benefits. These agreements are for a one-year term with automatic renewal unless action is taken by
CenterPoint Energy’s board of directors prior to the renewal.
As of December 31, 2012, approximately 30% of CenterPoint Energy’s employees were subject to collective bargaining
agreements. The collective bargaining agreement with the International Brotherhood of Electrical Workers Union Local 66, which
covers approximately 14% of CenterPoint Energy's employees, is scheduled to expire in May 2013. CenterPoint believes it has a
good relationship with this bargaining unit and expects to negotiate a new agreement in 2013.
(7) Derivative Instruments
CenterPoint Energy is exposed to various market risks. These risks arise from transactions entered into in the normal course
of business. CenterPoint Energy utilizes derivative instruments such as physical forward contracts, swaps and options to mitigate
the impact of changes in commodity prices, weather and interest rates on its operating results and cash flows.
(a) Non-Trading Activities
Derivative Instruments. CenterPoint Energy enters into certain derivative instruments to manage physical commodity price
risks and does not engage in proprietary or speculative commodity trading. These financial instruments do not qualify or are not
designated as cash flow or fair value hedges.
During the year ended December 31, 2010, CenterPoint Energy recorded increased natural gas revenues from unrealized net
gains of $18 million and increased natural gas expense from unrealized net losses of $14 million, a net unrealized gain of
$4 million. During the year ended December 31, 2011, CenterPoint Energy recorded increased natural gas revenues from
unrealized net gains of $38 million and increased natural gas expense from unrealized net losses of $30 million, a net unrealized
gain of $8 million. During the year ended December 31, 2012, CenterPoint Energy recorded decreased natural gas revenues from