Eversource 2015 Annual Report Download - page 97

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85
C. Share-Based Payments
Share-based compensation awards are recorded using a fair-value-based method at the date of grant. Eversource, 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 for the allocation of costs associated with shares issued or sold to Eversource’s service company employees and officers that
support CL&P, NSTAR Electric, PSNH and WMECO.
Eversource Incentive Plans: Eversource maintains long-term equity-based incentive plans in which Eversource, CL&P, NSTAR Electric, PSNH and
WMECO employees, officers and board members are eligible to participate. The incentive plans authorize Eversource 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, 2015 and 2014, Eversource had 3,005,010 and 3,112,020 common shares, respectively, available for issuance under these plans.
Eversource accounts for its various share-based plans as follows:
• RSUs - Eversource records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period based
upon the fair value of Eversource’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 - Eversource 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 currently outstanding are fully vested.
• ESPP Shares - For shares sold under the ESPP, no compensation expense was recorded as the ESPP qualified as a non-compensatory plan. The
ESPP ended as of February 1, 2016.
RSUs: Eversource 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, or immediate vesting, 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 December 31, 2014
1,380,747 $
35.67
Granted 266,230 $
54.57
Shares issued (888,495) $
33.94
Forfeited (29,174) $
46.68
Outstanding as of December 31, 2015 729,308 $
43.45
The weighted average grant-date fair value of RSUs granted for the years ended December 31, 2015, 2014 and 2013 was $54.57, $42.27 and $39.56,
respectively. As of December 31, 2015 and 2014, the number and weighted average grant-date fair value of unvested RSUs was 469,772 and $48.58
per share, and 1,024,729 and $38.14 per share, respectively. During 2015, there were 784,376 RSUs at a weighted average grant-date fair value of
$37.21 per share that vested and were either paid or deferred. As of December 31, 2015, 259,536 RSUs were fully vested and deferred and an
additional 446,283 are expected to vest.
Performance Shares: Eversource granted performance shares under the annual long-term incentive programs that vest based upon the extent to
which Company goals are achieved at the end of three-year performance measurement periods. Performance shares are paid in shares, after the
performance measurement period. A summary of performance share transactions is as follows:
Performance
Weighted Average
Shares
Grant-Date
(Units) Fair Value
Outstanding as of December 31, 2014
375,644 $
42.20
Granted 172,543 $
55.04
Shares issued (4,604) $
42.23
Forfeited (15,155) $
45.33
Outstanding as of December 31, 2015 528,428 $
46.30
The weighted average grant-date fair value of Performance Shares granted for the years ended December 31, 2015, 2014 and 2013 was $55.04,
$43.40 and $40.96, respectively. As of December 31, 2015, all outstanding performance shares are unvested.