Share-Based Compensation

Incentive Plans Including Share-Based Compensation — Xcel Energy Inc. has three incentive plans that include share-based payment elements. Plans and authorized equity shares for awards:


•	Omnibus Incentive Plan - 7.0 million shares;


•	Long-Term Incentive Plan - 8.3 million shares; and,


•	Executive Annual Incentive Award Plan - 1.2 million shares.

Restricted Stock — The Executive Annual Incentive Award Plan and Omnibus Incentive Plan allow certain employees to elect to receive shares of common or restricted stock. Restricted stock is treated as an equity award and vests and settles in equal annual installments over a three-year period. Restricted stock has a fair value equal to the market trading price of Xcel Energy Inc.’s stock at the grant date.

Shares of restricted stock granted at Dec. 31:



(Shares in Thousands)	2018		2017		2016
Granted shares	18		15		20
Grant date fair value	$	44.68	$	42.00	$	38.82

Changes in nonvested restricted stock:



(Shares in Thousands)	Shares		Weighted Average Grant Date Fair Value
Nonvested restricted stock at Jan. 1, 2018	44		$	39.71
Granted	18		44.68
Forfeited	—		—
Vested	(27	)	37.25
Dividend equivalents	1		46.27
Nonvested restricted stock at Dec. 31, 2018	36		44.29

Other Equity Awards — Xcel Energy Inc.’s Board of Directors has granted equity awards under the Xcel Energy Inc. Long-Term Incentive Plan and the Omnibus Incentive Plan. These plans include various vesting conditions and performance goals. At the end of the restricted period, such grants will be awarded if the vesting conditions and/or performance goals are met.

Certain employees are granted equity awards with a portion subject only to service conditions, and the other portion subject to performance conditions. A total of 0.3 million time-based equity shares subject only to service conditions were granted annually in 2018, 2017 and 2016, respectively.

The performance conditions for a portion of the awards granted from 2016 to 2018 are based on relative TSR and environmental goals. Equity awards with performance conditions will be settled or forfeited after three years, with payouts ranging from zero to 200 percent depending on achievement.

Equity award units granted to employees (excluding restricted stock):



(Units in Thousands)	2018		2017		2016
Granted units	500		503		522
Weighted average grant date fair value	$	47.60	$	41.02	$	36.00

Equity awards vested:



(Units in Thousands)	2018		2017		2016
Vested Units	475		467		530
Total Fair Value	$	23,393	$	22,459	$	21,575

Changes in the nonvested portion of equity award units for 2018:



(Units in Thousands)	Units		Weighted Average Grant Date Fair Value
Nonvested Units at Jan. 1, 2018	995		$	38.48
Granted	500		47.60
Forfeited	(126	)	41.74
Vested	(475	)	35.92
Dividend equivalents	45		40.74
Nonvested Units at Dec. 31, 2018	939		44.30

Stock Equivalent Units — Non-employee members of Xcel Energy Inc. Board of Directors may elect to receive their annual equity grant as stock equivalent units in lieu of common stock. Each unit’s value is equal to one share of Xcel Energy Inc. common stock. The annual equity grant is vested as of the date of each member’s election to the Board of Directors; there is no further service or other condition. Directors may also elect to receive their cash fees as stock equivalent units in lieu of cash. Stock equivalent units are payable as a distribution of common stock upon a director’s termination of service.

Stock equivalent units granted:



(Units in Thousands)	2018		2017		2016
Granted units	36		51		49
Weighted average grant date fair value	$	45.44	$	46.05	$	40.68

Changes in stock equivalent units:



(Units in Thousands)	Units		Weighted Average Grant Date Fair Value
Stock equivalent units at Jan. 1, 2018	753		$	29.83
Granted	36		45.44
Units distributed	(123	)	31.21
Dividend equivalents	22		46.40
Stock equivalent units at Dec. 31, 2018	688		30.93

TSR Liability Awards — Xcel Energy Inc.’s Board of Directors has granted TSR liability awards under the Long-Term Incentive Plan and Omnibus Incentive Plan. The plans allow Xcel Energy to attach various performance goals to the awards granted. The liability awards have been historically dependent on relative TSR measured over a three-year period. Xcel Energy Inc.’s TSR is compared to a 22-member utilities peer group for 2016 - 2018 awards. Potential payouts of the awards range from zero to 200%.

TSR liability awards granted:



(In Thousands)	2018	2017	2016
Awards granted	239	240	264

TSR liability awards settled:



(In Thousands)	2018		2017		2016
Awards settled	482		454		354
Settlement amount (cash, common stock and deferred amounts)	$	21,534	$	19,083	$	13,724

TSR liability awards of $8 million were settled in cash in 2018.

Share-Based Compensation Expense — Vesting of employee equity awards is typically predicated on the achievement of a TSR or environmental measures target, other than for restricted stock. Additionally, approximately 0.3 million of equity award units were granted annually in 2016 - 2018, with vesting subject only to service conditions of three years. Generally these instruments are considered to be equity awards as the award settlement determination (shares or cash) is made by Xcel Energy, not the participants. In addition, these awards have not been previously settled in cash and Xcel Energy plans to continue electing share settlement. Grant date fair value of equity awards is expensed over the service period.

TSR liability awards have been historically settled partially in cash, and do not qualify as equity awards, but rather are accounted for as liabilities. As liability awards, the fair value on which ratable expense is based, as employees vest in their rights to those awards, is remeasured each period based on the current stock price and performance achievement, and final expense is based on the market value of the shares on the date the award is settled.

Compensation costs related to share-based awards:



(Millions of Dollars)	2018		2017		2016
Compensation cost for share-based awards ^(a)	$	45	$	57	$	41
Tax benefit recognized in income	12		22		16


^(a)	Compensation costs for share-based payment are included in O&M expense.

There was approximately $38 million in 2018 and $44 million in 2017 of total unrecognized compensation cost related to nonvested share-based compensation awards. Xcel Energy expects to recognize the unrecognized amount over a weighted average period of 1.6 years.