Entergy 2008 Annual Report Download - page 98

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96
97
ENTERGY CORPORATION AND SUBSIDIARIES 2008
96
Notes to Consolidated Financial Statements continued
The weighted-average grant-date fair value of options granted during the year was $14.15 for 2007 and $9.21 for 2006. The total intrinsic
value of stock options exercised was $63.7 million during 2008, $116.7 million during 2007, and $65 million during 2006. The intrinsic
value, which has no effect on net income, of the stock options exercised is calculated by the difference 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. The total fair value of options that vested was approximately $18 million during 2008, $15 million during 2007, and
$15 million during 2006.
The following table summarizes information about stock options outstanding as of December 31, 2008:
Stock-based compensation cost related to non-vested stock options outstanding as of December 31, 2008 not yet recognized is
approximately $24 million and is expected to be recognized on a weighted-average period of 1.7 years.
Options outstanding at January 1, 2008
Options granted
Options exercised
Options forfeited/expired
Options outstanding at December 31, 2008
Options exercisable at December 31, 2008
Weighted-average grant-date fair value of options granted during 2008
Options Outstanding Options Exercisable
Weighted-
As of Average Remaining Weighted-Average Number Exercisable Weighted-Average
Range of Exercise Prices 12/31/2008 Contractual Life-Yrs. Exercise Price at 12/31/2008 Exercise Price
$23 – $36.99 528,683 1.7 $ 23.66 528,683 $ 23.66
$37 – $50.99 3,430,450 3.0 $ 41.40 3,430,450 $ 41.40
$51 – $64.99 1,135,716 5.0 $ 58.18 1,135,716 $ 58.18
$65 – $78.99 2,676,647 6.5 $ 69.25 2,158,516 $ 69.34
$79 – $91.99 1,735,935 8.1 $ 91.81 610,139 $ 91.79
$92 – $108.20 1,590,900 9.1 $108.20 22,800 $108.20
$23 – $108.20 11,098,331 5.7 $ 66.45 7,886,304 $ 54.37
A summary of stock option activity for the year ended December 31, 2008 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
benefit 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 satisfied. 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. The
costs of incentive awards are charged to income over the three-
year period.
The following table includes financial information for the
long-term incentive awards for each of the years presented
(in millions):
2008 2007 2006
Fair value of long-term incentive
awards at December 31, $41 $54 $37
Compensation expense included in
Entergy’s net income for the year $20 $35 $22
Tax benefit recognized in Entergy’s
net income for the year $ 8 $14 $ 8
Compensation cost capitalized as
part of fixed assets and inventory $ 5 $ 6 $ 3
Entergy paid $36.6 million in 2008 for awards earned under the
Long-Term Incentive Plan. The distribution is applicable to the
2005 - 2007 performance period.
RE S T R I C T E D AW A R D S
Entergy grants restricted awards earned under its stock benefit
plans in the form of stock units that are subject to time-based
restrictions. The restricted units are equal to the cash value
of shares of Entergy Corporation common stock at the time of
vesting. The costs of restricted awards are charged to income over
the restricted period, which varies from grant to grant. The average
vesting period for restricted awards granted is 48 months. As of
December 31, 2008, there were 148,900 unvested restricted units
that are expected to vest over an average period of 29 months.
The following table includes financial information for restricted
awards for each of the years presented (in millions):
2008 2007 2006
Fair value of restricted awards at
December 31, $7.5 $11.2 $3.6
Compensation expense included in
Entergy’s net income for the year $2.0 $ 6.5 $3.1
Tax benefit recognized in Entergy’s
net income for the year $0.8 $ 2.5 $1.2
Compensation cost capitalized as
part of fixed assets and inventory $0.4 $ 1.1 $0.5
Entergy paid $5.7 million in 2008 for awards under the Restricted
Awards Plan.
Weighted-Average Aggregate Weighted-Average
Number of Options Exercise Price Intrinsic Value Contractual Life
10,531,431 $ 58.49
1,617,400 $108.20
(976,018) $ 47.76
(74,482) $ 91.75
11,098,331 $ 66.45 $185 million 5.7 years
7,886,304 $ 54.37 $227 million 4.6 years
$14.41