Vectren 2013 Annual Report Download - page 105

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103
Weighted average Aggregate
Shares Exercise
Price
Remaining
Contractual
Term (years)
Intrinsic
Value
(In millions)
Outstanding at January 1, 2013 386,565 $ 25.88
Exercised (378,592) $ 25.87
Forfeited or expired (727) $ 22.57
Outstanding at December 31, 2013 7,246 $ 26.70 1.0 $ 0.6
Exercisable at December 31, 2013 7,246 $ 26.70 1.0 $ 0.6
The total intrinsic value of options exercised during the year ended December 31, 2013 , 2012, and 2011 was $3.8 million, $0.1
million, and $2.4 million respectively. The actual tax benefit realized for tax deductions from option exercises was approximately
$1.5 million , $0.1 million, and $1.0 million in 2013 , 2012, and 2011, respectively.
The Company periodically issues new shares and also from time to time repurchases shares to satisfy share option exercises.
During the year ended December 31, 2013 , 2012, and 2011 the Company received cash upon exercise of stock options totaling
approximately $9.7 million , $0.3 million, and $12.3 million respectively. During these periods, the Company repurchased shares
totaling approximately $12.3 million , $0.1 million, and $12.8 million respectively.
The fair value of option awards granted in prior years was estimated on the date of grant using a Black-Scholes option valuation
model. Expected volatilities were based on historical volatility of the Company’s stock and other factors. The Company used
historical data to estimate the expected term and forfeiture patterns of the options. The risk-free rate for periods within the
contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant.
Deferred Compensation Plans
The Company has nonqualified deferred compensation plans, which permit eligible executives and non-employee directors to
defer portions of their compensation and vested share-based compensation. A record keeping account is established for each
participant, and the participant chooses from a variety of measurement funds for the deemed investment of their accounts. The
measurement funds are similar to the funds in the Company's defined contribution plan and include an investment in phantom
stock units of the Company. The account balance fluctuates with the investment returns on those funds. At December 31, 2013
and 2012, the liability associated with these plans totaled $26.1 million and $22.9 million, respectively. Other than $1.6 million
and $1.3 million which are classified in Accrued liabilities at December 31, 2013 and 2012, respectively, the liability is included in
Deferred credits & other liabilities. The impact of these plans on Other operating expenses was expense of $4.0 million in 2013,
$1.7 million in 2012 and $2.1 million in 2011. The amount recorded in earnings related to the investment activities in Vectren
phantom stock associated with these plans during the years ended December 31, 2013, 2012, and 2011, was a cost of $2.6
million, $0.6 million and $1.7 million, respectively.
The Company has certain investments currently funded primarily through corporate-owned life insurance policies. These
investments, which are consolidated, are available to pay deferred compensation benefits. These investments are also subject
to the claims of the Company's creditors. The cash surrender value of these policies included in Other corporate & utility
investments on the Consolidated Balance Sheets were $32.9 million and $29.1 million at December 31, 2013 and 2012,
respectively. Earnings from those investments, which are recorded in Other-net, were earnings of $4.8 million in 2013, $1.8
million in 2012, and $0.1 million in 2011.
17. Commitments & Contingencies
Commitments
Future minimum lease payments required under operating leases that have initial or remaining noncancelable lease terms in
excess of one year during the five years following 2013 and thereafter (in millions) are $6.9 in 2014, $5.0 in 2015, $2.9 in 2016,
$1.3 in 2017, $1.2 in 2018, and $5.0 thereafter. Total lease expense (in millions) was $9.9 in 2013, $8.5 in 2012, and $6.9 in
2011.