Eversource 2014 Annual Report Download - page 96

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The total defined contribution plan employer matching contributions, including the K-Vantage program contributions, were as follows:
NSTAR
 NU (1) CL&P Electric PSNH WMECO
2014 $29.7 $5.0 $6.3 $3.2 $1.0
2013 37.0 5.1 8.5 3.3 1.0
2012 25.7 4.8 9.0 3.3 0.9
(1) NSTAR amounts were included in NU beginning April 10, 2012.
Allocations of NU common shares were made from NU treasury shares to satisfy the NUSCO 401k Plan obligation to provide 100 percent of the
matching contribution in NU common shares. For treasury shares used to satisfy the NUSCO 401k Plan employer 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, 2014, 2013
and 2012, NU recognized $22 million, $9.1 million and $8.9 million, respectively, of compensation expense related to treasury shares used to satisfy
the matching contribution.
C. 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 21, "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 maintains long-term equity-based incentive plans in which NU, CL&P, NSTAR Electric, PSNH and WMECO employees,
officers and board members are eligible to participate. The incentive plans authorize NU to grant up to 8,000,000 new shares for various types of
awards, including RSUs and performance shares, to eligible employees, officers, and board members. As of December 31, 2014and 2013, NU had
3,112,020 and 3,440,590 common shares, respectively, available for issuance under these plans. 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. Vesting of outstanding performance shares is based upon
both the Company's EPS growth over the requisite service period and the total shareholder return as compared to the Edison Electric Institute
(EEI) Index 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.
ESPP Shares -For shares sold under the ESPP, no compensation expense was recorded as the ESPP qualifies as a non-compensatory plan.