Eversource 1999 Annual Report Download - page 48

D. STOCK-BASED COMPENSATION
Employee Stock Purchase Plan (ESPP): Since July 1998, the
NU system has maintained an ESPP for all eligible employees.
Under the ESPP, shares of NU common stock may be pur-
chased at 6-month intervals at 85 percent of the lower of the
price on the first or last day of each 6-month period. Employees
may purchase shares having a value not exceeding 25 percent
of their compensation at the beginning of the purchase period.
During 1999 and 1998, employees purchased 253,853 and
129,471 shares, respectively, at discounted prices ranging
from $13.76 to $14.93 per share in 1999 and $13.60 per
share in 1998. At December 31, 1999 and 1998, 1,616,676
and 1,870,529 shares remained reserved for future issuance
under the ESPP, respectively.
Incentive Plans: The NU system has long-term incentive
plans authorizing various types of share-based awards, includ-
ing stock options, to be made to eligible employees and board
members. The exercise price of stock options, as set at the time
of grant, is generally equal to the fair market value per share
at the date of grant. Under the Northeast Utilities Incentive
Plan (Incentive Plan), the number of shares which may be utilized
for awards granted during a given calendar year may not exceed
one percent of the total number of shares of NU common stock
outstanding as of the first day of that calendar year.
Stock option transactions for 1997, 1998 and 1999 are
as follows:
C. ESOP
NU maintains an Employee Stock Ownership Plan (ESOP) for
purposes of allocating shares to employees participating in
the NU system’s 401(k) Savings Plan. Under this arrangement,
NU issued unsecured notes during 1991 and 1992 totaling $250
million, the proceeds of which were lent to the ESOP trust for
the purchase of 10.8 million newly issued NU common
shares (ESOP Shares). The ESOP trust is obligated to make
principal and interest payments on the ESOP notes at the same
rate that ESOP Shares are allocated to employees. NU makes
annual contributions to the ESOP equal to the ESOP’s debt
service, less dividends received by the ESOP. All dividends
received by the ESOP on unallocated shares are used to pay
debt service and are not considered dividends for financial
reporting purposes. During the fourth quarter of 1999, NU
paid a 10 cent per share dividend. During 1998, there were
no dividends paid on NU stock.
In 1999 and 1998, the ESOP trust issued 556,978 and
584,107 of NU common shares, respectively, to satisfy 401(k)
Savings Plan obligations to employees. As of December 31,
1999 and 1998, the total allocated ESOP shares were 5,281,836
and 4,724,858, respectively, and total unallocated ESOP shares
were 5,518,349 and 6,075,327, respectively. The fair market
value of unallocated ESOP shares as of December 31, 1999
and 1998, was $113.5 million and $97.2 million, respectively.
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Exercise Price Per Share
Weighted
Options Range Average
Outstanding December 31, 1996 — $ — $ —
Granted 500,000 $ 9.625 $ 9.625
Outstanding December 31, 1997 500,000 $ 9.625 $ 9.625
Granted 741,273 $ 14.875 — $16.8125 $ 16.178
Forfeited (7,595) $16.3125 $ 16.3125
Outstanding December 31, 1998 1,233,678 $ 9.625 — $16.8125 $ 13.5213
Granted 644,123 $ 14.9375 — $ 21.125 $ 15.2514
Exercised (19,368) $ 16.3125 — $16.8125 $ 16.3986
Forfeited (32,177) $ 14.9375 — $ 16.3125 $ 15.8714
Outstanding December 31, 1999 1,826,256 $ 9.625 — $ 21.125 $ 14.0585
Exercisable December 31, 1997 — $ — $ —
Exercisable December 31, 1998 232,936 $ 14.875 — $ 16.8125 $ 16.2972
Exercisable December 31, 1999 711,787 $ 9.625 — $ 21.125 $ 14.0102