Entergy 2007 Annual Report Download - page 95

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93
Entergy Corporation and Subsidiaries 2007
Notes to Consolidated Financial Statements continued
e weighted-average grant-date fair value of options granted during the year was $9.21 for 2006 and $8.17 for 2005. e total intrinsic value of
stock options exercised was $116.7 million during 2007, $65 million during 2006, and $100 million during 2005. e intrinsic value, which has
no eect on net income, of the stock options exercised is calculated by the dierence in Entergy’s Corporation common stock price on the date of
exercise and the exercise price of the stock options granted. With the adoption of the fair value method of SFAS 123 and the application of SFAS
123R, Entergy recognizes compensation cost over the vesting period of the options based on their grant-date fair value. e total fair value of
options that vested was approximately $15 million during 2007, $15 million during 2006, and $28 million during 2005.
e following table summarizes information about stock options outstanding as of December 31, 2007:
Stock-based compensation cost related to non-vested stock options outstanding as of December 31, 2007 not yet recognized is approximately $23
million and is expected to be recognized on a weighted-average period of 1.8 years.
Options outstanding at January 1, 2007
Options granted
Options exercised
Options forfeited/expired
Options outstanding at December 31, 2007
Options exercisable at December 31, 2007
Weighted-average grant-date fair value of options granted during 2007
Options Outstanding
Weighted-
As of Average Remaining Weighted-Average Number Exercisable Weighted-Average
Range of Exercise Prices 12/31/2007 Contractual Life-Yrs. Exercise Price at 12/31/2007 Exercise Price
$23 – $36.99 880,777 2.2 $25.61 880,777 $25.61
$37 – $50.99 3,672,508 4.1 $41.39 3,672,508 $41.39
$51 – $64.99 1,224,627 5.9 $58.21 1,224,627 $58.21
$65 – $78.99 2,938,821 7.5 $69.30 1,391,996 $69.49
$79 – $91.82 1,814,698 9.1 $91.81 23,898 $ 91.14
$23 – $91.82 10,531,431 5.9 $58.50 7,193,806 $47.92
A summary of stock option activity for the year ended December 31, 2007 and changes during the year are presented below:
LO N G -TE R M IN C E N T I V E AW A R D S
Entergy grants long-term incentive awards earned under its stock
benet plans in the form of performance units, which are equal to
the cash value of shares of Entergy Corporation common stock
at the end of the performance period, which is the last trading day
of the year. Performance units will pay out to the extent that the
performance conditions are satised. In addition to the potential for
equivalent share appreciation or depreciation, performance units will
earn the cash equivalent of the dividends paid during the three-year
performance period applicable to each plan. e costs of incentive
awards are charged to income over the three-year period.
e following table includes nancial information for the long-
term incentive awards for each of the years presented (in millions):
2007 2006 2005
Fair value of long-term incentive
awards at December 31, $54 $37 $34
Compensation expense included in
Entergy’s net income for the year $35 $22 $16
Tax benet recognized in Entergy’s
net income for the year $14 $ 8 $ 6
Compensation cost capitalized as
part of xed assets and inventory $ 6 $ 3 $ 2
Entergy paid $20.5 million in 2007 for awards earned under the Long-
Term Incentive Plan. e distribution is applicable to the 2004 – 2006
performance period.
RE S T R I C T E D AWA R D S
Entergy grants restricted awards earned under its stock benet plans
in the form of stock units that are subject to time-based restrictions.
e restricted units are equal to the cash value of shares of Entergy
Corporation common stock at the time of vesting. e costs of
restricted awards are charged to income over the restricted period,
which varies from grant to grant. e average vesting period for
restricted awards granted is 52 months. As of December 31, 2007,
there were 161,012 unvested restricted units that are expected to vest
over an average period of 29 months.
e following table includes nancial information for restricted
awards for each of the years presented (in millions):
2007 2006 2005
Fair value of restricted awards at
December 31, $11.2 $3.6 $ –
Compensation expense included in
Entergy’s net income for the year $ 6.5 $3.1 $3.5
Tax benet recognized in Entergy’s
net income for the year $ 2.5 $1.2 $1.4
Compensation cost capitalized as
part of xed assets and inventory $ 1.1 $0.5 $ –
Entergy made no payments in 2007 for awards earned under the
Restricted Awards Plan.
Weighted-Average Aggregate Weighted-Average
Number of Options Exercise Price Intrinsic Value Contractual Life
10,802,923 $51.16
1,854,900 $91.82
(1,969,765) $48.37
(156,627) $74.21
10,531,431 $58.50 $643 million 5.9 years
7,193,806 $47.92 $515 million 4.8 years
$14.15
Options Exercisable