Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 12. STOCK-BASED COMPENSATION (Entergy Corporation)

Entergy grants stock options and long-term incentive and restricted liability awards to key employees of the Entergy subsidiaries under its Equity Ownership Plans which are shareholder-approved stock-based compensation plans. The Equity Ownership Plan, as restated in February 2003 (2003 Plan), had 722,251 authorized shares remaining for long-term incentive and restricted liability awards as of December 31, 2011. Effective January 1, 2007, Entergy’s shareholders approved the 2007 Equity Ownership and Long-Term Cash Incentive Plan (2007 Plan). The maximum aggregate number of common shares that can be issued from the 2007 Plan for stock-based awards is 7,000,000 with no more than 2,000,000 available for non-option grants. The 2007 Plan, which only applies to awards made on or after January 1, 2007, will expire after 10 years. As of December 31, 2011, there were 1,052,035 authorized shares remaining for stock-based awards, all of which are available for non-option grants. Effective May 6, 2011, Entergy’s shareholders approved the 2011 Equity Ownership and Long-Term Cash Incentive Plan (2011 Plan). The maximum number of common shares that can be issued from the 2011 Plan for stock-based awards is 5,500,000 with no more than 2,000,000 available for incentive stock option grants. The 2011 Plan, which only applies to awards made on or after May 6, 2011, will expire after 10 years. As of December 31, 2011, there were 5,495,276 authorized shares remaining for stock-based awards, including 2,000,000 for incentive stock option grants.

Stock Options

Stock options are granted at exercise prices that equal the closing market price of Entergy Corporation common stock on the date of grant. Generally, stock options granted will become exercisable in equal amounts on each of the first three anniversaries of the date of grant. Unless they are forfeited previously under the terms of the grant, options expire ten years after the date of the grant if they are not exercised.

The following table includes financial information for stock options for each of the years presented:

	2011		2010		2009
	(In Millions)
Compensation expense included in Entergy’s Consolidated Net Income	$	10.4	$	15.0	$	16.8
Tax benefit recognized in Entergy’s Consolidated Net Income	$	4.0	$	5.8	$	6.5
Compensation cost capitalized as part of fixed assets and inventory	$	2.0	$	2.9	$	3.2

Entergy determines the fair value of the stock option grants by considering factors such as lack of marketability, stock retention requirements, and regulatory restrictions on exercisability in accordance with accounting standards. The stock option weighted-average assumptions used in determining the fair values are as follows:

	2011			2010			2009
Stock price volatility		24.25	%		25.73	%		24.39	%
Expected term in years		6.64			5.46			5.33
Risk-free interest rate		2.70	%		2.57	%		2.22	%
Dividend yield		4.20	%		3.74	%		3.50	%
Dividend payment per share	$	3.32		$	3.24		$	3.00

Stock price volatility is calculated based upon the weekly public stock price volatility of Entergy Corporation common stock over the last four to five years. The expected term of the options is based upon historical option exercises and the weighted average life of options when exercised and the estimated weighted average life of all vested but unexercised options. In 2008, Entergy implemented stock ownership guidelines for its senior executive officers. These guidelines require an executive officer to own shares of Entergy common stock equal to a specified multiple of his or her salary. Until an executive officer achieves this ownership position the executive officer is required to retain 75% of the after-tax net profit upon exercise of the option to be held in Entergy Corporation common stock. The reduction in fair value of the stock options due to this restriction is based upon an estimate of the call option value of the reinvested gain discounted to present value over the applicable reinvestment period.

A summary of stock option activity for the year ended December 31, 2011 and changes during the year are presented below:

	Number of Options			Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Contractual Life
Options outstanding as of January 1, 2011		11,225,725		$	72.45
Options granted		388,200		$	72.79
Options exercised		(1,079,008	)	$	42.43
Options forfeited/expired		(75,499	)	$	86.62
Options outstanding as of December 31, 2011		10,459,418		$	75.46	$	—		4.7 years
Options exercisable as of December 31, 2011		9,011,257		$	75.36	$	—		4.1 years
Weighted-average grant-date fair value of options granted during 2011	$	11.48

The weighted-average grant-date fair value of options granted during the year was $13.18 for 2010 and $12.47 for 2009. The total intrinsic value of stock options exercised was $29.6 million during 2011, $36.6 million during 2010, and $35.6 million during 2009. The intrinsic value, which has no effect on net income, of the stock options exercised is calculated by the difference in Entergy Corporation’s common stock price on the date of exercise and the exercise price of the stock options granted. Because Entergy’s year-end stock price is less than the weighted average exercise price, the aggregate intrinsic value of outstanding stock options as of December 31, 2011 was zero. The intrinsic value of “in the money” stock options is $67 million as of December 31, 2011. Entergy recognizes compensation cost over the vesting period of the options based on their grant-date fair value. The total fair value of options that vested was approximately $16 million during 2011, $21 million during 2010, and $22 million during 2009.

The following table summarizes information about stock options outstanding as of December 31, 2011:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	As of 12/31/2011		Weighted-Avg. Remaining Contractual Life-Yrs.		Weighted- Avg. Exercise Price		Number Exercisable as of 12/31/2011		Weighted- Avg. Exercise Price
$37 - $50.99		1,468,761		0.6	$	43.22		1,468,761	$	43.22
$51 - $64.99		966,155		2.2	$	58.58		966,155	$	58.58
$65 - $78.99		4,911,618		5.8	$	73.09		3,463,457	$	71.86
$79 - $91.99		1,627,384		5.1	$	91.82		1,627,384	$	91.82
$92 - $108.20		1,485,500		6.1	$	108.20		1,485,500	$	108.20
$37 - $108.20		10,459,418		4.7	$	75.46		9,011,257	$	75.36

Stock-based compensation cost related to non-vested stock options outstanding as of December 31, 2011 not yet recognized is approximately $10 million and is expected to be recognized on a weighted-average period of 1.3 years.

Restricted Stock Awards

In January 2011, the Board approved and Entergy granted 166,800 restricted stock awards under the 2007 Equity Ownership and Long-term Cash Incentive Plan. The grants were made effective as of January 27, 2011 and were valued at $72.79 per share, which was the closing price of Entergy’s common stock on that date. One-third of the restricted stock awards will vest upon each anniversary of the grant date and are expensed ratably over the three year vesting period. Shares of restricted stock have the same dividend and voting rights as other common stock and are considered issued and outstanding shares of Entergy upon vesting.

The following table includes financial information for restricted stock for each of the years presented:

	2011		2010		2009
	(In Millions)
Compensation expense included in Entergy’s Consolidated Net Income	$	3.9	$	—	$	—
Tax benefit recognized in Entergy’s Consolidated Net Income	$	1.5	$	—	$	—
Compensation cost capitalized as part of fixed assets and inventory	$	0.7	$	—	$	—

Long-Term Incentive Awards

Entergy grants long-term incentive awards earned under its stock benefit plans in the form of performance units, which are equal to the cash value of shares of Entergy Corporation common stock at the end of the performance period, which is the last trading day of the year. Performance units will pay out to the extent that the performance conditions are satisfied. In addition to the potential for equivalent share appreciation or depreciation, performance units will earn the cash equivalent of the dividends paid during the three-year performance period applicable to each plan. The costs of incentive awards are charged to income over the three-year period.

The following table includes financial information for the long-term incentive awards for each of the years presented:

	2011		2010			2009
	(In Millions)
Fair value of long-term incentive awards as of December 31,	$	7.3	$	10.1		$	17.2
Compensation expense included in Entergy’s Consolidated Net Income for the year	$	0.7	($	0.9	)	$	5.6
Tax benefit (expense) recognized in Entergy’s Consolidated Net Income for the year	$	0.3	($	0.4	)	$	2.2
Compensation cost capitalized as part of fixed assets and inventory	$	0.1	$	0.1		$	1.0

Entergy paid $0.7 million in 2011 for awards earned under the Long-Term Incentive Plan. The distribution is applicable to the 2008 – 2010 performance period.

Restricted Unit Awards

Entergy grants restricted unit awards earned under its stock benefit plans in the form of stock units that are subject to time-based restrictions. The restricted units are equal to the cash value of shares of Entergy Corporation common stock at the time of vesting. The costs of restricted unit awards are charged to income over the restricted period, which varies from grant to grant. The average vesting period for restricted unit awards granted is 36 months. As of December 31, 2011, there were 138,965 unvested restricted units that are expected to vest over an average period of 10 months.

The following table includes financial information for restricted unit awards for each of the years presented:

	2011		2010		2009
	(In Millions)
Fair value of restricted awards as of December 31,	$	6.6	$	8.3	$	4.6
Compensation expense included in Entergy’s Consolidated Net Income for the year	$	3.7	$	3.9	$	2.0
Tax benefit recognized in Entergy’s Consolidated Net Income for the year	$	1.4	$	1.5	$	0.8
Compensation cost capitalized as part of fixed assets and inventory	$	0.7	$	0.9	$	0.5

Entergy paid $5.9 million in 2011 for awards under the Restricted Units Awards Plan.