Progress Energy 2010 Annual Report Download - page 83

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Progress Energy Annual Report 2010
use total shareholder return and earnings growth as two
equally weighted performance measures. The outcome
of the performance measures can result in an increase
or decrease from the target number of performance
shares granted. We distribute common stock shares to
participants equivalent to the number of performance
shares that ultimately vest. Through December 31, 2010,
we issued new shares of common stock to satisfy the
requirements of the PSSP program. Also, the fair value
of the stock-settled award is generally established at the
grant date based on the fair value of common stock on
that date, with subsequent adjustments made to reflect
the status of the performance measure. Compensation
expense for all awards is reduced by estimated
forfeitures. At December 31, 2010, there were an
immaterial number of stock-settled performance target
shares outstanding. The final number of shares issued
will be dependent upon the outcome of the performance
measures discussed above.
Beginning in 2007, we began issuing restricted stock
units (RSUs) rather than the previously issued restricted
stock awards for our officers, vice presidents, managers
and key employees. RSUs awarded to eligible employees
are generally subject to either three- or five-year cliff
vesting or three- or five-year graded vesting. Through
December 31, 2010, we issued new shares of common
stock to satisfy the requirements of the RSU program.
Compensation expense, based on the fair value of
common฀ stock฀ at฀ the฀ grant฀ date,฀ is฀ recognized฀ over฀
the applicable vesting period, with corresponding
increases in common stock equity. RSUs are included
as shares outstanding in the basic earnings per share
calculation and are converted to shares upon vesting. At
December 31, 2010, there were an immaterial number of
RSUs outstanding.
The total fair value of RSUs vested during the years
ended December 31, 2010, 2009 and 2008, was
$24 million, $16 million and $9 million, respectively. No
cash was expended to purchase stock to satisfy RSU
plan obligations in 2010, 2009 and 2008. The RSUs vested
during 2010 had a weighted-average grant date fair value
of $43.58.
Our Consolidated Statements of Income included total
recognized฀expense฀for฀other฀stock-based฀compensation฀
plans of $27 million for the year ended December 31, 2010,
with฀ a฀ recognized฀ tax฀ benefit฀ of฀ $11฀ million.฀ The฀ total฀
expense฀recognized฀on฀our฀Consolidated฀Statements฀of฀
Income for other stock-based compensation plans was
$37฀million,฀with฀a฀recognized฀tax฀benefit฀of฀$14฀million,฀
and฀ $34฀ million,฀ with฀ a฀ recognized฀ tax฀ benefit฀ of฀
$13 million, for the years ended December 31, 2009 and
2008, respectively. No compensation cost related to other
stock-based฀compensation฀plans฀was฀capitalized.
At฀December฀31,฀2010,฀unrecognized฀compensation฀cost฀
related to nonvested other stock-based compensation
plan awards totaled $25 million, which is expected to be
recognized฀over฀a฀weighted-average฀period฀of฀1.6฀years.
C. Earnings Per Common Share
Basic earnings per common share are based on
the weighted-average number of common shares
outstanding, which includes the effects of unvested
share-based payment awards that contain nonforfeitable
rights to dividends or dividend equivalents. Diluted
earnings per share include the effects of the nonvested
portion of performance share awards and the effect of
stock options outstanding.
A reconciliation of the weighted-average number
of common shares outstanding for the years ended
December 31 for basic and dilutive purposes follows:
(in millions) 2010 2009 2008
Weighted-average common shares – basic 290.7 279.4 261.6
Net effect of dilutive stock-based
compensation plans 0.1 0.1 0.1
Weighted-average shares – fully diluted 290.8 279.5 261.7
There were no adjustments to net income or to income
from continuing operations attributable to controlling
interests between the calculations of basic and fully
diluted earnings per common share. There were 0.8 million,
1.5 million and 1.6 million stock options outstanding at
December 31, 2010, 2009 and 2008, respectively, which
were not included in the weighted-average number of
shares for computing the fully diluted earnings per share
because they were antidilutive.
D. Accumulated Other Comprehensive Loss
Components of accumulated other comprehensive loss,
net of tax, at December 31 were as follows:
(in millions) 2010 2009
Cash flow hedges $(63) $(35)
Pension and other postretirement benefits (62) (52)
Total accumulated other comprehensive loss $(125) $(87)