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The following tables present the effect of derivative instruments on
the Company’s Consolidated Statement of Income in 2011.
Amount
Reclassified
from
Amount Accumulated
Recognized Other
in Other Comprehensive Amount
Comprehensive Income (Loss) Recognized
(In millions) Income into Income in Income
Derivatives in cash flow
hedging relationships
NGLs financial options $(8.4) $÷(9.8) $«–
Natural gas financial futures/swaps 2.9 (30.4) –
Interest rate swap – (0.4) –
Total $(5.5) $(40.6) $«–
Amount
Recognized
(In millions) in Income
Derivatives not designated
as hedging instruments
Natural gas physical purchases/sales $(10.0)
Natural gas financial futures/swaps 0.4
Total $÷(9.6)
The following tables present the effect of derivative instruments on
the Company’s Consolidated Statement of Income in 2010.
Amount
Reclassified
from
Amount Accumulated
Recognized Other
in Other Comprehensive Amount
Comprehensive Income (Loss) Recognized
(In millions) Income into Income in Income
Derivatives in cash flow
hedging relationships
NGLs financial options $÷(9.7) $÷«1.2 $÷«–
NGLs financial futures/swaps 1.7 (3.7) –
Natural gas financial futures/swaps (14.9) (25.9) 0.2
Interest rate swap – (0.4) –
Total $(22.9) $(28.8) $0.2
Amount
Recognized
(In millions) in Income
Derivatives not designated
as hedging instruments
Natural gas physical purchases/sales $(11.7)
Natural gas financial futures/swaps 3.2
Total $÷(8.5)
For derivatives designated as cash flow hedges in the tables above,
amounts reclassified from Accumulated Other Comprehensive Income
(Loss) into income (effective portion) and amounts recognized in income
(ineffective portion) for the years ended December 31, 2012, 2011 and
2010, if any, are reported in Operating Revenues. For derivatives not
designated as hedges in the tables above, amounts recognized in
income for the years ended December 31, 2012, 2011 and 2010, if any,
are reported in Operating Revenues.
Credit-Risk Related Contingent Features in Derivative Instruments
In the event Moody’s Investors Services or Standard & Poor’s Ratings
Services were to lower the Company’s senior unsecured debt rating to
a below investment grade rating, at December 31, 2012, the Company
would have been required to post $0.2 million of cash collateral to sat-
isfy its obligation under its financial and physical contracts relating to
derivative instruments that are in a net liability position at December 31,
2012. In addition, the Company could be required to provide additional
credit assurances in future dealings with third parties, which could
include letters of credit or cash collateral.
8. Stock-Based Compensation
In 2008, the Company adopted, and its shareowners approved,
the 2008 Stock Incentive Plan. Under the 2008 Stock Incentive Plan,
restricted stock, stock options, stock appreciation rights and perform-
ance units may be granted to officers, directors and other key employees
of the Company and its subsidiaries. The Company has authorized the
issuance of up to 2,750,000 shares under the 2008 Stock Incentive Plan.
The following table summarizes the Company’s pre-tax compensation
expense and related income tax benefit for the years ended December 31,
2012, 2011 and 2010 related to the Company’s performance units and
restricted stock.
(In millions, year ended December 31) 2012 2011 2010
Performance units
Total shareholder return $÷8.0 $÷8.2 $÷6.8
Earnings per share 4.2 5.5 2.5
Total performance units 12.2 13.7 9.3
Restricted stock 0.6 1.0 0.9
Total compensation expense $12.8 $14.7 $10.2
Income tax benefit $÷4.9 $÷5.7 $÷3.9
The Company has issued new shares to satisfy stock option
exercises, restricted stock grants and payouts of earned performance
units. In 2012, 2011 and 2010, there were 424,555 shares, 311,623 shares
and 255,389 shares, respectively, of new common stock issued pursuant
to the Company’s stock incentive plans related to exercised stock options,
restricted stock grants (net of forfeitures) and payouts of earned perform-
ance units. In 2012, there were 5,911 shares of restricted stock returned
to the Company to satisfy tax liabilities.
In November 2012, the Company purchased 60,000 shares of its
common stock at an average cost of $55.41 per share on the open
market. These shares will be used to satisfy Enogex’s portion of the
Company’s obligation to deliver shares of common stock related to
long-term incentive payouts of earned performance units in 2013. The
Company expects to purchase shares in the future to satisfy a portion
of its obligation under its incentive plan. The Company records treasury
stock purchases at cost. Treasury stock is presented as a reduction of
stockholders’ equity in the Company’s Consolidated Balance Sheet.
62 OGE Energy Corp.