Dominion Power 2007 Annual Report Download - page 96

Notes to Consolidated Financial Statements, Continued
Plan permits restricted stock and stock options. Under provisions
of both plans, employees and non-employee directors may be
granted options to purchase common stock at a price not less than
its fair market value at the date of grant with a maximum term of
eight years. Option terms are set at the discretion of the Compen-
sation, Governance and Nominating (CGN) Committee of the
Board of Directors or the Board of Directors itself, as provided
under each individual plan. At December 31, 2007, approx-
imately 29 million shares were available for future grants under
these plans. Prior to April 2005, we had an incentive compensa-
tion plan that provided stock options and restricted stock awards
to directors, executives and other key employees with vesting
periods from one to five years. Stock options generally had con-
tractual terms from six and one half to ten years in length.
Our results for the years ended December 31, 2007, 2006 and
2005 include $57 million, $31 million and $25 million,
respectively, of compensation costs and $21 million, $11 million
and $10 million, respectively, of income tax benefits related to
our stock-based compensation arrangements. Stock-based
compensation cost is reported in other operations and main-
tenance expense in our Consolidated Statements of Income.
S
TOCK O PTIONS
The following table provides a summary of changes in amounts of
stock options outstanding as of and for the years ended
December 31, 2007, 2006 and 2005. No options were granted
under any plan in 2007, 2006 or 2005.
Shares
Weighted-
average
Exercise Price
Weighted-
average
Remaining
Contractual
Life
Aggregated
Intrinsic
Value (1)
(thousands) (years) (millions)
Outstanding at
December 31,
2004 27,616 $30.09
Exercisable at
December 31,
2004 21,536 $30.01
Exercised (11,158) $29.90 $ 77
Forfeited/expired (30) $31.27
Outstanding and
exercisable at
December 31,
2005 16,428 $30.21
Exercised (1,895) $29.88 $ 19
Forfeited/expired (42) $30.40
Outstanding and
exercisable at
December 31,
2006 14,491 $30.26
Exercised (7,453) $30.06 $108
Forfeited/expired (17) $30.44
Outstanding and
exercisable at
December 31,
2007 7,021 $30.46 2.8 $120
(1) Intrinsic value represents the difference between the exercise price of the
option and the market value of our stock.
We issue new shares to satisfy stock option exercises. We
received cash proceeds from the exercise of stock options of
approximately $226 million, $54 million and $335 million in the
years ended December 31, 2007, 2006 and 2005, respectively.
R
ESTRICTED S TOCK
The fair value of our restricted stock awards is equal to the market
price of our stock on the date of grant. These awards generally
vest over a three-year service period and are settled by issuing new
shares. The following table provides a summary of restricted stock
activity for the years ended December 31, 2007, 2006 and 2005:
Shares
Weighted-
average
Grant
Date Fair
Value
(thousands)
Nonvested at December 31, 2004 1,920 $30.17
Granted 498 37.26
Vested (60) 31.23
Cancelled and forfeited (96) 31.64
Nonvested at December 31, 2005 2,262 $31.64
Granted 675 35.22
Vested (361) 30.38
Cancelled and forfeited (83) 33.77
Nonvested at December 31, 2006 2,493 $32.72
Granted 508 44.53
Vested (897) 33.00
Cancelled and forfeited (90) 38.33
Nonvested at December 31, 2007 2,014 $35.31
As of December 31, 2007, unrecognized compensation cost
related to nonvested restricted stock awards totaled $25 million
and is expected to be recognized over a weighted-average period
of 1.5 years. The fair value of restricted stock awards that vested
was $30 million, $14 million and $2 million in 2007, 2006 and
2005, respectively. Employees may elect to have shares of
restricted stock withheld upon vesting to satisfy tax withholding
obligations. The number of shares withheld will vary for each
employee depending on the vesting date fair value of Dominion
stock and the applicable federal, state and local tax withholding
rates.
94 Dominion 2007 Annual Report