Eversource 2013 Annual Report Download - page 111

99
The NSTAR Savings Plan matches employee contributions of 50 percent on up to the first 8 percent of eligible compensation.
The total defined contribution plan matching contributions, including the K-Vantage program contributions, are as follows:
NSTAR
(Millions of Dollars)
NU (1)
CL&P
Electric
PSNH
WMECO
2013
$
37.0
$
5.1
$
8.5
$
3.3
$
1.0
2012
25.7
4.8
9.0
3.3
0.9
2011
17.4
4.5
8.7
3.1
0.9
(1) NSTAR amounts were included in NU beginning April 10, 2012.
Effective January 1, 2014, the NSTAR Savings Plan merged into the NUSCO 401(k) Plan. The merged Plan is a defined contribution
plan that continues to provide for employer and employee contributions up to statutory limits. The merged Plan also retained the match
guidelines and K-Vantage features for eligible employees as described above.
C. Employee Stock Ownership Plan
NU maintains an ESOP for purposes of allocating shares to employees participating in the NUSCO 401(k) Plan. Allocations of NU
common shares were made from NU treasury shares to satisfy the NUSCO 401(k) Plan obligation to provide a portion of the matching
contribution in NU common shares.
For treasury shares used to satisfy the 401(k) 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, 2013, 2012 and 2011, NU recognized
$9.1 million, $8.9 million and $8.8 million, respectively, of compensation expense related to the ESOP.
D. Share-Based Payments
Share-based compensation awards are recorded using a fair-value-based method at the date of grant. NU, CL&P, NSTAR Electric,
PSNH and WMECO record compensation expense 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 company 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, NU converted (1) outstanding NSTAR stock options into 2,664,894 NU stock options valued at
$30.5 million, (2) NSTAR deferred shares and NSTAR performance shares into 421,775 NU RSU’s valued at $15.5 million, and (3)
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, NSTAR
Electric, 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, 2013 and 2012, NU had 2,462,668 and 2,502,512 common
shares, respectively, available for issuance under the NU Incentive Plan. The aggregate number of common shares authorized for
issuance under the NSTAR 2007 Long-Term Incentive Plan was 3,500,000. As of both December 31, 2013 and 2012, there were
977,922 NU common shares available for issuance under this Plan. No additional awards will be granted under the NSTAR 1997
Share Incentive Plan. NU also maintains an ESPP for eligible employees.
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.
• 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. As of December 31, 2013,
vesting of outstanding performance shares is based upon both the Company’s EPS growth over the requisite service period and
the achievement of the Company's share price as compared to an index of similar equity securities during the requisite service
period. The fair value of performance shares is determined at the date of grant using a lattice model.
• 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 was recorded for these stock options. Additionally, no compensation expense
was recorded for stock options issued under the NU Incentive Plan as these stock options were fully vested prior to January 1,
2006.