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Stock-Based Compensation
 6 Months Ended
Jun. 30, 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 six months ended June 30, 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
(400,462
)
 
$
13.47

 
 
 
 
 
Forfeited
(5,101
)
 
$
12.22

 
 
 
 
 
Expired
(238,491
)
 
$
25.69

 
 
 
 
 
Outstanding at end of period
2,558,175

 
$
19.20

 
$
8,558,342

(1) 
 
4.52 years
Exercisable at end of period
2,413,913

 
$
20.34

 
$
7,695,622

 
 
4.33 years
(1) At June 30, 2012, the exercise price of 1,356,468 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:
 
 
Six Months Ended June 30,
 
 
2012
 
2011
Weighted-average grant date fair value of options granted
 
$
—

 
$
—

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

 
$
1,189

Total intrinsic value of options exercised (in thousands)
 
$
1,917

 
$
2,199



Restricted Stock and Performance Shares

PNMR has agreements with employees for awards of restricted stock subject to time vesting requirements. PNMR also has awards subject to achieving performance or market targets, some of which also have time vesting requirements. The grant date fair value for restricted stock and stock awards with performance targets is determined based on the market price of PNMR common 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 grant date fair value of stock awards with market targets is determined using Monte Carlo simulation models, which provided grant date fair values that include an expectation of the number of shares to be issued.

Compensation expense for restricted stock awards is recognized ratably over the vesting period. Compensation expense for performance-based shares is recognized ratably over the performance period and is adjusted periodically to reflect the level of achievement expected to be attained. Compensation expense related to market-based shares is recognized ratably over the measurement period, regardless of the actual level of achievement, provided the employees remain with the Company during the period.

The following table summarizes restricted stock activity, including performance-based and market-based shares, for the six months ended June 30, 2012:
 
 
Shares
 
Weighted-
Average
Grant-Date
Fair Value
Nonvested at beginning of period
 
418,730

 
$
12.36

Granted
 
320,597

 
$
15.63

Vested
 
(313,176
)
 
$
12.22

Forfeited
 
(6,837
)
 
$
12.77

Nonvested at end of period
 
419,314

 
$
14.00



The following table provides additional information concerning restricted stock, including performance-based and market-based shares:
 
 
Six Months Ended
 
 
June 30,
 
 
2012
 
2011
Weighted-average grant date fair value of shares granted
 
$
15.63

 
$
13.10

Total fair value of shares that vested (in thousands)
 
$
3,828

 
$
1,073

Expected quarterly dividends per share
 
$
0.145

 
$
0.125

Risk-free interest rate
 
0.76
%
 
1.20
%

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

PNMR also has share agreements that provide for performance or market targets through 2014. Excluded from the above tables are maximums of 169,732, 193,712, and 212,902 shares for periods ending in 2012, 2013, and 2014 that would be awarded if all performance or market criteria are achieved and all executives remain eligible.

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 market targets at the end of 2016 and she remains an employee of the Company. If the Company achieves specific market 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.