v2.4.0.6
Equity compensation plans
 12 Months Ended
Dec. 31, 2012
Equity compensation plans  
Equity compensation plans

14. Equity compensation plans

  • Long-term incentive plan

        The following table summarizes the changes in outstanding LTIP notional units during the years ended December 31, 2012, 2011 and 2010:

 
   Units   Grant Date
Weighted-Average
Fair Value per Unit		  

Outstanding at December 31, 2009

     471,280   $ 7.30  

Granted

     305,112     13.29  

Additional shares from dividends

     46,854     9.54  

Vested and redeemed

     (222,265 )   7.94  
           

Outstanding at December 31, 2010

     600,981     10.28  

Granted

     216,110     14.02  

Additional shares from dividends

     36,204     11.04  

Forfeitures

     (103,991 )   11.55  

Vested and redeemed

     (263,523 )   9.40  
           

Outstanding at December 31, 2011

     485,781     11.49  

Granted

     233,752     14.67  

Additional shares from dividends

     38,667     13.43  

Forfeitures

     (28,932 )   13.63  

Vested and redeemed

     (236,733 )   10.18  
           

Outstanding at December 31, 2012

     492,535   $ 13.88  
           

        The fair value of all outstanding notional units under the LTIP was $6.3 million and $6.4 million for the years ended December 31, 2012 and 2011. Compensation expense related to LTIP was $2.5 million, $3.2 million and $4.5 million for the years ended December 31, 2012, 2011 and 2010, respectively. Cash payments made for vested notional units were $1.1 million, $1.5 million and $2.8 million for the years ended December 31, 2012, 2011 and 2010, respectively.

        The fair value of awards granted under the amended LTIP with market vesting conditions is based upon a Monte Carlo simulation model on their grant date. The Monte Carlo simulation model utilizes multiple input variables over the performance period in order to determine the likely relative total shareholder return. The Monte Carlo simulation model simulated our total shareholder return and for our peer companies during the remaining time in the performance period with the following inputs: (i) stock price on the measurement date, (ii) expected volatility, (iii) risk-free interest rate, (iv) dividend yield and (v) correlations of historical common stock returns between Atlantic Power Corporation and the peer companies. Expected volatilities utilized in the Monte Carlo model are based on historical volatility of the Company's and the peer companies' stock prices over a period equal in length to that of the remaining vesting period. The risk free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant with a term equal to the performance period assumption at the time of grant. Both the total shareholder return performance and the fair value of the notional units under the Monte Carlo simulation are determined with the assistance of a third party.

        The calculation of simulated total shareholder return under the Monte Carlo model for the remaining time in the performance period included the following assumptions:

 
   December 31, 2012   December 31, 2011  

Weighted average risk free rate of return

     0.05 - 0.28 %   0.15 - 0.28 %

Dividend yield

     10.10 %   7.90 %

Expected volatility—Atlantic Power

     22.49 %   22.20 %

Expected volatility—peer companies

     11.9 - 97.1 %   17.3 - 112.9 %

Weighted average remaining measurement period

     1.39 years     0.87 years  

  • Equity Incentive Plan

        During 2012, 10,000 common shares were granted under the 2012 Equity Incentive Plan with a total compensation expense of $0.1 million.