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Share-Based Compensation
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6 Months Ended | ||
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Jun. 30, 2011
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| Share-Based Compensation | |||
| Share-Based Compensation |
Prior to May 11, 2010, NiSource issued long-term incentive grants to key management employees under a long-term incentive plan approved by stockholders on April 13, 1994 ("1994 Plan"). The 1994 Plan, as amended and restated, permits the following types of grants, separately or in combination: nonqualified stock options, incentive stock options, restricted stock awards, stock appreciation rights, restricted stock units, contingent stock units and dividend equivalents payable on grants of options, performance units and contingent stock awards.
The stockholders approved and adopted the NiSource Inc. 2010 Omnibus Incentive Plan (the "Omnibus Plan"), at the Annual Meeting of Stockholders held on May 11, 2010. The Omnibus Plan provides that the number of shares of common stock of NiSource available for awards is 8,000,000 plus the number of shares subject to outstanding awards granted under either the 1994 Plan or the Director Plan (described below) that expire or terminate for any reason and no further awards are permitted to be granted under the 1994 Plan or the Director Plan. The types of awards authorized under the Omnibus Plan do not significantly differ from those previously allowed under the 1994 Plan. At June 30, 2011, there were 8,031,844 shares reserved for future awards under the Omnibus Plan. NiSource recognized stock-based employee compensation expense of $3.4 million and $3.8 million for the three months ended June 30, 2011 and 2010, respectively, as well as related tax benefits of $1.3 million. For the six months ended June 30, 2011 and 2010, stock-based employee compensation expense of $6.4 million and $6.0 million was recognized, respectively, as well as related tax benefits of $2.3 million and $2.1 million, respectively. As of June 30, 2011, the total remaining unrecognized compensation cost related to nonvested awards amounted to $20.1 million, which will be amortized over the weighted-average remaining requisite service period of 2.0 years. Stock Options. As of June 30, 2011, approximately 3.4 million options were outstanding and exercisable with a weighted average strike price of $21.95. Restricted Awards. During the first six months of 2011, NiSource granted 119,013 restricted stock units, subject to service conditions, at a total grant date fair value of $2.0 million, based on the average market price of NiSource's common stock at the date of each grant less the present value of dividends not received during the vesting period, which will be expensed, net of forfeitures, over the vesting period of approximately three years. The service conditions for 112,605 units lapse in January 2014 when 100% of the shares vest. If before January 2014, the employee terminates employment (1) due to retirement, having attained age 55 and completed ten years of service, or (2) due to death or disability, the employment conditions will lapse with respect to a pro rata portion of the restricted units on the date of termination. Termination due to any other reason will result in all restricted units awarded being forfeited effective the employee's date of termination. Employees will be entitled to receive dividends upon vesting. The service conditions lapse for the remaining 6,408 units between March 2012 and May 2014. As of June 30, 2011, 684,486 nonvested restricted stock units were granted and outstanding. Contingent Stock Units. During the first six months of 2011, NiSource granted 718,231 contingent stock units subject to performance conditions, at a grant date fair-value of $11.5 million, based on the average market price of NiSource's common stock at the date of each grant less the present value of dividends not received during the vesting period which will be expensed, net of forfeitures, over the three year requisite service period. The performance conditions are based on achievement of non-GAAP financial measures. The service conditions lapse on January 31, 2014 when 100% of the shares vest. If the employee terminates employment before January 31, 2014 (1) due to retirement, having attained age 55 and completed ten years of service, or (2) due to death or disability, the employment conditions will lapse with respect to a pro rata portion of the contingent units on the date of termination. Termination due to any other reason will result in all contingent units awarded being forfeited effective the employee's date of termination. Employees will be entitled to receive dividends upon vesting. As of June 30, 2011, 2,220,125 nonvested contingent stock units were granted and outstanding. Non-employee Director Awards. As of May 11, 2010, awards to non-employee directors may be made only under the NiSource Inc. 2010 Omnibus Incentive Plan (the "Omnibus Plan"). The Omnibus Plan provides for awards to employees and non-employee directors of incentive and nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares, performance units, cash-based awards and other stock-based awards. Currently, restricted stock units are granted annually to non-employee directors, subject to a non-employee director's election to defer receipt of such restricted stock unit award. The non-employee director's restricted stock units vest on the last day of the non-employee director's annual term corresponding to the year the restricted stock units were awarded subject to special pro-rata vesting rules in the event of Retirement or Disability (as defined in the award agreement), or death. The vested restricted stock units are payable as soon as practicable following vesting except as otherwise provided pursuant to the non-employee director's election to defer. As of June 30, 2011, 102,752 restricted stock units had been issued under the Omnibus Plan. Only restricted stock units remain outstanding under the prior plan for non-employee directors, the Amended and Restated Non-employee Director Stock Incentive Plan (the "Director Plan"). All such awards are fully vested and shall be distributed to the directors upon their separation from the Board. As of June 30, 2011, 274,315 restricted stock units remain outstanding under the Director Plan and as noted above no further shares may be issued under the Director Plan.
401(k) Match and Profit Sharing. NiSource has a voluntary 401(k) savings plan covering eligible employees that allows for periodic discretionary matches as a percentage of each participant's contributions in newly issued shares of common stock. NiSource also has a retirement savings plan that provides for discretionary profit sharing contributions of shares of common stock to eligible employees based on earnings results. For the six months ended June 2011 and 2010, NiSource recognized 401(k) match and profit sharing expense of $9.1 million and $9.8 million, respectively. |