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Stock-Based Compensation
 3 Months Ended
Mar. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Stock-Based Compensation

Information concerning stock-based compensation under PNMR's Performance Equity Plan ("PEP") is contained in Note 13 of the Notes to Consolidated Financial Statements in the 2011 Annual Reports on Form 10-K. In 2011, the Company changed its approach to awarding stock-based compensation. As a result, no stock options have been granted in 2011 or 2012 and awards of restricted stock have increased.

Stock Options

The following table summarizes activity in stock options for the three months ended March 31, 2012:
 
Shares
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
 
Weighted-
Average
Remaining
Contract Life
Outstanding at beginning of period
3,202,229

 
$
18.95

 
 
 
 
 
Granted
—

 
$
—

 
 
 
 
 
Exercised
(368,895
)
 
$
13.57

 
 
 
 
 
Forfeited
(2,667
)
 
$
12.22

 
 
 
 
 
Expired
(234,091
)
 
$
25.65

 
 
 
 
 
Outstanding at end of period
2,596,576

 
$
19.07

 
$
8,858,517

(1) 
 
4.78 years
Exercisable at end of period
2,439,635

 
$
20.29

 
$
7,933,890

 
 
4.59 years
(1) At March 31, 2012, the exercise price of 1,360,568 outstanding stock options is greater than the closing price of PNMR common stock on that date; therefore, those options have no intrinsic value.
The following table provides additional information concerning stock options:
 
 
Three Months Ended March 31,
 
 
2012
 
2011
Weighted-average grant date fair value of options granted
 
$
—

 
$
—

Total fair value of options that vested (in thousands)
 
$
1,058

 
$
1,179

Total intrinsic value of options exercised (in thousands)
 
$
1,722

 
$
396



Restricted Stock and Performance Shares

PNMR has agreements with employees for awards of restricted stock subject to time vesting requirements as well as performance awards subject to achieving performance targets and, in some cases, time vesting. Compensation expense for restricted stock and performance stock awards is determined based on the market price of PNMR stock on the date of the agreements reduced by the present value of future dividends, which will not be received prior to vesting, applied to the total number of shares that are anticipated to vest, although the number of performance shares ultimately awarded cannot be determined until after the performance periods end.

The following table summarizes restricted stock activity, including performance shares, for the three months ended March 31, 2012:
 
 
Shares
 
Weighted-
Average
Grant-Date
Fair Value
Nonvested at beginning of period
 
418,730

 
$
12.36

Granted
 
293,039

 
$
14.33

Vested
 
(264,422
)
 
$
12.22

Forfeited
 
(2,089
)
 
$
11.44

Nonvested at end of period
 
445,258

 
$
13.57



The following table provides additional information concerning restricted stock, including performance shares:
 
 
Three Months Ended
 
 
March 31,
 
 
2012
 
2011
Weighted-average grant date fair value of shares granted
 
$
14.33

 
$
12.90

Total fair value of shares that vested (in thousands)
 
$
3,232

 
$
758

Expected quarterly dividends per share
 
$
0.145

 
$
0.125

Risk-free interest rate
 
0.43
%
 
1.20
%

Included as granted and vested in the above tables are 42,768 performance shares that were based upon achieving specific performance targets for the period 2009 through 2011. The Board approved these performance shares at maximum levels and the shares fully vested in March 2012. Also included as granted and vested in the tables above are 117,174 performance shares that were based upon achieving specific performance targets for 2011. The Board approved these performance shares at near maximum levels and the shares fully vested in March 2012.

PNMR also has performance share agreements that provide for performance targets through 2014. Excluded from the above tables are maximums of 167,382, 188,401, and 209,776 shares for performance periods ending in 2012, 2013, and 2014 that would be awarded if all performance criteria are achieved and all executives remain eligible. These awards would be fully vested upon award.

In March 2012, the Company entered into a retention award agreement with its Chairman, President, and Chief Executive Officer under which she would receive 135,000 shares of PNMR's common stock if the Company meets specific targets at the end of 2016 and she remains an employee of the Company. If the Company achieves specific targets at the end of 2014 and she remains an employee of the Company, she would receive 35,000 of the total shares at that time. The retention award was made under the PEP and was approved by the Board on February 28, 2012. The above tables do not include any shares under the retention award agreement.