Exelon 2014 Annual Report Download - page 254

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Concurrent with the forward equity transaction, Exelon also issued $1.15 billion of junior subordinated notes in the form of 23 million
equity units. See Note 13—Debt and Credit Agreements for further information on the equity units.
Share Repurchases
Share Repurchase Programs. In April 2004, Exelon’s Board of Directors approved a discretionary share repurchase program that
allowed Exelon to repurchase shares of its common stock on a periodic basis in the open market. The share repurchase program
was intended to mitigate, in part, the dilutive effect of shares issued under Exelon’s employee stock option plan and Exelon’s ESPP.
The aggregate value of the shares of common stock repurchased pursuant to the program cannot exceed the economic benefit
received after January 1, 2004 due to stock option exercises and share purchases pursuant to Exelon’s ESPP. The economic benefit
consists of the direct cash proceeds from purchases of stock and the tax benefits associated with exercises of stock options. The
2004 share repurchase program had no specified limit on the number of shares that could be repurchased and no specified
termination date. In 2008, Exelon management decided to defer indefinitely any share repurchases. Any shares repurchased are
held as treasury shares, at cost, unless cancelled or reissued at the discretion of Exelon’s management. Under the share repurchase
programs, 35 million shares of common stock are held as treasury stock with a cost of $2.3 billion at December 31, 2014. During
2014, 2013 and 2012, Exelon had no common stock repurchases.
Stock-Based Compensation Plans
Exelon grants stock-based awards through its LTIP, which primarily includes stock options, restricted stock units and performance
share awards. At December 31, 2014, there were approximately 16 million shares authorized for issuance under the LTIP. For the
years ended December 31, 2014, 2013 and 2012, exercised and distributed stock-based awards were primarily issued from
authorized but unissued common stock shares.
The Compensation Committee of Exelon’s Board of Directors changed the mix of awards granted under the LTIP in 2013 by
eliminating stock options in favor of the use of full value shares, consisting of 67% performance shares and 33% restricted stock
units. The performance share awards granted in 2013 will cliff vest at the end of a three-year performance period. The performance
share awards granted in 2012 and earlier had a one-year performance period and vested ratably over three years. To address the
reduction in annual award opportunity resulting from the transition to a three-year cliff vesting performance period, the Compensation
Committee also approved a one-time grant of performance share transition awards in 2013, which vested one-third after one year,
with the remaining balance vesting over a two-year performance period. These one-time 2013 performance share transition awards
will be settled 50% in common stock and 50% in cash, except for awards granted to executive vice presidents and higher officers
that may be settled 100% in cash if certain Exelon stock ownership requirements are satisfied. In addition to this change, in 2013
ComEd and in 2014 PECO and BGE transitioned from Exelon stock-based awards to cash award programs with payouts based on
the performance of each respective utility. The following tables do not include expense related to these plans as they are not
considered stock-based compensation plans under the applicable accounting guidance.
The following table presents the stock-based compensation expense included in Exelon’s Consolidated Statements of Operations
and Comprehensive Income for the years ended December 31, 2014, 2013 and 2012:
Year Ended
December 31,
Components of Stock-Based Compensation Expense 2014 2013 2012
Performance share awards ..................................................................... $ 59 $ 48 $ 46
Restricted stock units .......................................................................... 61 61 50
Stock options ................................................................................ 2 3 15
Other stock-based awards ...................................................................... 5 6 4
Total stock-based compensation expense included in operating and maintenance expense ................ 127 118 115
Income tax benefit ............................................................................ (47) (44) (44)
Total after-tax stock-based compensation expense ................................................. $ 80 $ 74 $ 71
There were no significant stock-based compensation costs capitalized during the years ended December 31, 2014, 2013 and 2012.
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