Eversource 2010 Annual Report Download - page 119

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102
Performance Shares: NU has granted performance shares under the 2009 and 2010 incentive programs that vest based upon the
achievement of Company targets at the end of a three-year performance measurement period. Performance shares are paid in shares,
subsequent to the performance measurement period. A summary of performance share transactions as follows:
Performance Shares
Performance
Shares
(Units)
Weighted
Average
Grant-Date
Fair Value
Total
Grant-Date
Fair Value
(Millions)
Outstanding as of December 31, 2008 - $ - $ -
Granted 104,150 $ 23.93 $ 2.5
Shares issued - $ - $ -
Forfeited (5,064) $ 23.96 $ 0.1
Outstanding as of December 31, 2009 99,086 $ 23.93 $ 2.4
Granted 149,520 $ 25.24 $ 3.8
Shares issued - $ - $ -
Forfeited (47) $ 23.96 $ -
Outstanding as of December 31, 2010 248,559 $ 24.72 $ 6.1
As of December 31, 2010, 120 percent of performance shares are expected to vest under the 2009 incentive program and 106 percent
are expected to vest under the 2010 incentive program, based upon the probable outcome of certain performance metrics.
The total compensation cost recognized by NU (by CL&P, PSNH and WMECO) for share-based compensation awards was $10.5
million ($6.2 million, $2.1 million and $1.1 million), $8.8 million ($5.3 million, $1.7 million and $0.9 million) and $6.5 million ($4 million,
$1.2 million and $0.7 million) for the years ended December 31, 2010, 2009 and 2008, respectively. The associated future income tax
benefit recognized was $4.2 million ($2.5 million, $0.9 million and $0.4 million), $3.5 million ($2.1 million, $0.7 million and $0.4 million)
and $2.6 million ($1.6 million, $0.5 million and $0.3 million) for the years ended December 31, 2010, 2009 and 2008, respectively.
As of December 31, 2010, there was $7.6 million of total unrecognized compensation cost related to nonvested share-based awards for
NU, $4.5 million for CL&P, $1.4 million for PSNH and $0.9 million for WMECO. This cost is expected to be recognized ratably over a
weighted-average period of 1.75 years for NU, 1.76 years for CL&P, 1.69 years for PSNH and 1.75 years for WMECO.
Stock Options: Prior to 2003, NU granted stock options to certain employees. The options expire ten years from the date of grant.
These options were fully vested as of December 31, 2005. The fair value of each stock option grant was estimated on the date of grant
using the Black-Scholes option pricing model. The weighted average remaining contractual lives for the options outstanding as of
December 31, 2010 is 1.0 years. A summary of stock option transactions is as follows:
Exercise Price Per Share
Options Range
Weighted
Average
Intrinsic Value
(Millions)
Outstanding and exercisable - December 31, 2007 397,180 $14.9375 - $21.0300 $ 18.3369
Exercised (76,260) $ 16.2473 $ 0.6
Forfeited and cancelled - $ -
Outstanding and exercisable - December 31, 2008 320,920 $14.9375 - $21.0300 $ 18.8335
Exercised (95,704) $ 18.5418 $ 0.6
Forfeited and cancelled - $ -
Outstanding and exercisable - December 31, 2009 225,216 $17.4000 - $21.0300 $ 18.9574
Exercised (112,617) $ 19.1196 $ 1.0
Forfeited and cancelled - $ -
Outstanding and exercisable - December 31, 2010 112,599 $17.4000 - $21.0300 $ 18.7952 $ 1.5
Cash received for options exercised during the year ended December 31, 2010 totaled $2.2 million. The tax benefit realized from stock
options exercised totaled $0.4 million for the year ended December 31, 2010.
Employee Share Purchase Plan: NU maintains an ESPP for all eligible NU, CL&P, PSNH, and WMECO employees, which allows for
NU common shares to be purchased by employees at six-month intervals at 95 percent of the closing market price on the last day of
each six-month period. Employees are permitted to purchase shares having a value not exceeding 25 percent of their compensation as
of the beginning of the purchase period up to a limit of $25,000 per annum. The ESPP qualifies as a non-compensatory plan under
accounting guidance for share-based payments, and no compensation expense is recorded for ESPP purchases.
During 2010 and 2009, employees purchased 38,672 and 39,264 shares, respectively, at discounted prices of $26.45 and $24.05 in
2010 and $22.61 and $21.86 in 2009. As of December 31, 2010 and 2009, 932,178 and 970,850 shares, respectively, remained
available for future issuance under the ESPP.
An income tax rate of 40 percent is used to estimate the tax effect on total share-based payments determined under the fair value-
based method for all awards. The Company generally settles stock option exercises and fully vested RSUs and performance shares
with the issuance of new common shares.