Eversource 2012 Annual Report Download - page 119

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The NSTAR 401(k) Savings Plan covers eligible employees of NSTAR Electric & Gas. These defined contribution plans provide for
employee and employer contributions up to statutory limits.
The NUSCO 401(k) Savings Plan matches employee contributions up to a maximum of three percent of eligible compensation with one
percent invested in cash and two percent invested in the NU common share fund. The NUSCO 401(k) Savings Plan also contains a K-
Vantage feature (company contribution based on age and years of service), which covers the majority of NU non-represented
employees hired on or after January 1, 2006 and certain NU bargaining unit employees, hired on or after January 1, 2007 or as subject
to collective bargaining agreements. In addition, all newly hired non-represented NSTAR Electric & Gas employees and certain
represented NSTAR Electric & Gas employees are eligible to participate in the K-Vantage program effective October 1, 2012 and
November 1, 2012, respectively. Participants in the K-Vantage program are not eligible to actively participate in any NU defined benefit
plan.
The NSTAR 401(k) Savings Plan matches employee contributions of 50 percent on up to the first 8 percent of eligible compensation.
All employer contributions are invested in the NU common share fund.
The total defined contribution plan matching contributions, including the K-Vantage program contributions, are as follows:
NSTAR
(Millions of Dollars)
NU
CL&P
Electric(1)
PSNH
WMECO
2012
$
25.7
$
4.8
$
9.0
$
3.3
$
0.9
2011 17.4
4.5
8.7
3.1
0.9
2010
16.1
4.4
8.1
2.8
0.9
(1) NSTAR Electric amounts are included in NU consolidated from the date of the merger, April 10, 2012, through December 31, 2012.
NSTAR Electric amounts are not included in NU consolidated for the years ended December 31, 2011 and 2010.
C. Employee Stock Ownership Plan
NU maintains an ESOP for purposes of allocating shares to employees participating in the NUSCO 401(k) Savings Plan. Allocations of
NU common shares were made from NU treasury shares to satisfy the NUSCO 401(k) Savings Plan obligation to provide a portion of
the matching contribution in NU common shares.
For treasury shares used to satisfy the 401(k) Savings Plan matching contributions, compensation expense is recognized equal to the
fair value of shares that have been allocated to participants. Any difference between the fair value and the average cost of the
allocated treasury shares is charged or credited to Capital Surplus, Paid In. For the years ended December 31, 2012, 2011 and 2010,
NU recognized $8.9 million, $8.8 million and $8.5 million, respectively, of expense related to the ESOP.
D. Share-Based Payments
Share-based compensation awards are recorded using the fair value-based method at the date of grant. NU, CL&P, NSTAR Electric,
PSNH and WMECO record compensation cost related to these awards, as applicable, for shares issued or sold to their respective
employees and officers, as well as the allocation of costs associated with shares issued or sold to NU's service companies' employees
and officers that support CL&P, NSTAR Electric, PSNH and WMECO.
Upon consummation of the merger with NSTAR, the NSTAR 1997 Share Incentive Plan and the NSTAR 2007 Long-Term Incentive
Plan were assumed by NU. Share-based awards granted under the NSTAR Plans and held by NSTAR employees and officers were
generally converted into outstanding NU share-based compensation awards with an estimated fair value of $53.2 million. Refer to
Note 2, "Merger of NU and NSTAR," for further information regarding the merger transaction. Specifically, as of the merger closing,
and as adjusted by the exchange ratio, (1) NU converted outstanding NSTAR stock options into 2,664,894 NU stock options valued at
$30.5 million, (2) NU converted NSTAR deferred shares and NSTAR performance shares into 421,775 NU RSU’s valued at $15.5
million, and (3) NU converted NSTAR RSU retention awards into 195,619 NU RSU retention awards valued at $7.2 million.
NU Incentive Plan: NU maintains long-term equity-based incentive plans under the NU Incentive Plan in which NU, CL&P, PSNH and
WMECO employees, officers and board members are entitled to participate. The NU Incentive Plan was approved in 2007, and
authorized NU to grant up to 4,500,000 new shares for various types of awards, including RSUs and performance shares, to eligible
employees, officers, and board members. As of December 31, 2012 and 2011, NU had 2,502,512 and 2,685,615 common shares,
respectively, available for issuance under the NU Incentive Plan. In addition to the NU Incentive Plan, NU maintains an ESPP for
eligible employees.
NSTAR Incentive Plans: Awards may continue to be granted following the merger under the NSTAR 2007 Long-Term Incentive Plan;
however, no additional awards will be granted under the NSTAR 1997 Share Incentive Plan. The aggregate number of common shares
initially authorized for issuance under the NSTAR 2007 Long-Term Incentive Plan was 3,500,000. As of December 31, 2012, there
were 977,922 NU common shares available for issuance under the NSTAR 2007 Long-Term Incentive Plan.
NU accounts for its various share-based plans as follows:
 RSUs - NU records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period
based upon the fair value of NU's common shares at the date of grant. The par value of RSUs is reclassified to Common Stock
from APIC as RSUs become issued as common shares.