Eversource 2012 Annual Report Download - page 120

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107
Performance Shares - NU records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite
service period. Performance shares vest based upon the extent to which Company goals are achieved. For the majority of
performance shares, fair value is based upon the value of NU's common shares at the date of grant and compensation expense is
recorded based upon the probable outcome of the achievement of Company targets. For the remaining performance shares,
vesting is based upon the achievement of the Company's share price as compared to an index of similar equity securities. The fair
value at the date of grant for these remaining performance shares was determined using a lattice model and compensation
expense is recorded over the requisite service period.
Stock Options - Stock options issued under the NSTAR Incentive Plan that were outstanding immediately prior to the completion of
the merger with NSTAR converted into fully vested options to acquire NU common shares, as adjusted by the exchange ratio. The
fair value of these awards on the merger date was included in the purchase price as it represented consideration transferred in the
merger. Accordingly, no compensation expense is recorded for these stock options. Additionally, no compensation expense is
recorded for stock options issued under the NU Incentive Plan as these stock options were fully vested prior to January 1, 2006.
ESPP Shares - For shares sold under the ESPP, no compensation expense is recorded, as the ESPP qualifies as a non-
compensatory plan.
RSUs: NU granted RSUs under the annual Long-Term incentive programs that are subject to three-year graded vesting schedules for
employees, and one-year graded vesting schedules for board members. RSUs are paid in shares, reduced by amounts sufficient to
satisfy withholdings for income taxes, subsequent to vesting. A summary of RSU transactions is as follows:
Weighted Average
RSUs
Grant-Date
(Units)
Fair Value
Outstanding as of January 1, 2010
1,037,912
$
24.07
Granted
258,174
$
26.03
Shares issued
(267,951)
$
25.05
Forfeited
(13,656)
$
24.26
Outstanding as of December 31, 2010
1,014,479
$
24.31
Granted
208,533
$
33.87
Shares issued (244,782)
$ 24.47
Forfeited
(18,310)
$
23.74
Outstanding as of December 31, 2011
959,920
$
26.36
Granted
614,930
$
33.04
Converted NSTAR Awards upon Merger
617,394
$
36.79
Converted from NU Performance Shares upon Merger
451,358
$
34.32
Shares issued (363,779)
$ 29.05
Forfeited
(96,504)
$
34.97
Outstanding as of December 31, 2012
2,183,319
$
31.99
As of December 31, 2012 and 2011, the number and weighted average grant-date fair value of unvested RSUs was 1,417,688 and
$34.70 per share, and 403,108 and $28.70 per share, respectively. The number and weighted average grant-date fair value of RSUs
vested during 2012 was 471,323 and $30.20 per share, respectively. As of December 31, 2012, 765,631 RSUs were fully vested and
an additional 1,346,804 are expected to vest.