8. Share-Based Compensation

Stock Options - Xcel Energy Inc. has incentive compensation plans under which stock options and other performance incentives are awarded to key employees. Xcel Energy Inc. has not granted stock options since December 2001.

Activity in stock options was as follows:

	2011					2010					2009
				Average					Average					Average
				Exercise					Exercise					Exercise
(Awards in Thousands)	Awards			Price		Awards			Price		Awards			Price
Outstanding and exercisable at Jan. 1		2,498		$	30.42		6,657		$	28.17		8,460		$	27.05
Exercised		(1,173	)		25.90		(51	)		19.31	(794		)		19.84
Forfeited		-			-		-			-	(11		)		20.04
Expired		(1,325	)		34.42		(4,108	)		26.91	(998		)		25.40
Outstanding and exercisable at Dec. 31		-			-		2,498			30.42	6,657				28.17

The total market value and the total intrinsic value of stock options exercised were as follows for the years ended Dec. 31:

(Thousands of Dollars)	2011		2010		2009
Market value of exercises	$	30,761	$	1,087	$	16,429
Intrinsic value of options exercised (a)		380		93		670

(a)	Intrinsic value is calculated as market price at exercise date less the option exercise price.

Cash received from stock options exercised and the actual tax benefit realized for the tax deductions from stock options exercised during the years ended Dec. 31 were as follows:

(Thousands of Dollars)	2011		2010		2009
Cash received from stock options exercised	$	30,381	$	1,033	$	15,759
Tax benefit realized for the tax deductions from stock options exercised		157		40		277

Restricted Stock - Certain employees may elect to receive shares of common or restricted stock under the Xcel Energy Inc. Executive Annual Incentive Award Plan. Restricted stock vests and settles in equal annual installments over a three-year period. Xcel Energy Inc. reinvests dividends on the restricted stock it holds while restrictions are in place. Restrictions also apply to the additional shares of restricted stock acquired through dividend reinvestment. If the restricted shares are forfeited, the employee is not entitled to the dividends on those shares. Restricted stock has a fair value equal to the market trading price of Xcel Energy Inc.'s stock at the grant date.

Xcel Energy Inc. granted shares of restricted stock for the years ended Dec. 31 as follows:

(Shares in Thousands)	2011		2010		2009
Granted shares		15		44			-
Grant date fair value	$	23.62	$	20.47		$	-

A summary of the changes of nonvested restricted stock for the year ended Dec. 31, 2011 were as follows:

(Shares in Thousands)	Shares			Weighted Average Grant Date Fair Value
Nonvested restricted stock at Jan. 1		55		$	20.28
Granted		15			23.62
Vested		(25	)		20.53
Dividend equivalents		2			24.37
Nonvested restricted stock at Dec. 31		47			21.36

Restricted Stock Units(RSUs) - Xcel Energy Inc.'s Board of Directors has granted RSUs under the Xcel Energy Inc. 2005 Long-term Incentive Plan (as amended and restated in 2010). The plan allows the attachment of various performance goals to the RSUs granted. The performance goals may vary by plan year. At the end of the restricted performance period, the grants will be awarded if the performance goals are met. If the goals are not achieved by the end of the restricted performance period, all associated restricted stock units and dividend equivalents are forfeited.

For RSUs issued in 2009 and 2010, if the performance criteria have not been met within four years of the grant date, all RSUs, plus associated dividend equivalents, shall be forfeited. The performance conditions for RSUs granted in 2011 will be measured three years after the grant date, at which time the RSUs, plus associated dividend equivalents, will either be settled or forfeited. Payout of the RSUs and the lapsing of restrictions on the transfer of units are based on one of two separate performance criteria.

The performance conditions for a portion of the awarded units are based on EPS growth, with an additional condition that Xcel Energy Inc.'s annual dividend paid on its common stock remains at a specified amount per share or greater. RSUs issued in 2009 and 2010, plus associated dividend equivalents, will be settled and the restricted period will lapse after Xcel Energy Inc. achieves a specified level of EPS growth. RSUs issued in 2011, plus associated dividend equivalents, will be settled or forfeited and the restricted period will lapse after three years, with potential payouts ranging from 0 percent to 150 percent, depending on the level of EPS growth.

The performance conditions for the remaining awarded units are based on environmental performance. RSUs issued in 2009 and 2010, plus associated dividend equivalents, will be settled and the restricted period will lapse after Xcel Energy Inc. achieves a specified level of environmental performance, based on established indicators. RSUs issued in 2011, plus associated dividend equivalents, will be settled or forfeited and the restricted period will lapse after three years with potential payouts ranging from 0 percent to 150 percent, depending on the level of environmental performance, based on established indicators.

The 2007 environmental RSUs met their target as of Dec. 31, 2009 and were settled in shares in February 2010. The 2007 RSUs measured on EPS growth and all 2008 RSUs met their targets as of Dec. 31, 2010 and were settled in shares in February 2011. The 2010 RSUs measured on EPS growth and all 2009 RSUs met their targets as of Dec. 31, 2011, and will be settled in shares in February 2012.

The RSUs granted for the years ended Dec. 31 were as follows:

(Units in Thousands)	2011		2010		2009
Granted units		828		601		597
Weighted average grant date fair value	$	23.63	$	21.26	$	18.88

A summary of the changes of nonvested RSUs for the year ended Dec. 31, 2011, were as follows:

(Units in Thousands)	Units			Weighted Average Grant Date Fair Value
Nonvested restricted stock units at Jan. 1		1,138		$	20.12
Granted		828			23.63
Forfeited		(270	)		21.50
Vested		(1,091	)		20.45
Dividend equivalents		68			21.18
Nonvested restricted stock units at Dec. 31		673			23.46

The total fair value of nonvested RSUs as of Dec. 31, 2011 was $18.6 million and the weighted average remaining contractual life was 2.0 years.

Approximately 1.1 million RSUs vested during 2011 at a total fair value of $30.1 million. Approximately 0.6 million RSUs vested during 2010 at a total fair value of $14.8 million. Approximately 0.04 million RSUs vested during 2009 at a total fair value of $0.8 million.

Stock Equivalent Unit Plan - Non-employee members of the Xcel Energy Inc. Board of Directors receive annual awards of stock equivalent units, with each unit having a value equal to one share of Xcel Energy Inc. common stock. The annual grants are vested as of the date of each member's election to the board of directors; there is no further service or other condition attached to the annual grants after the member has been elected to the board. Additionally, directors may elect to receive their fees in stock equivalent units in lieu of cash, and similarly have no further service or other conditions attached. Dividends on Xcel Energy Inc.'s common stock are converted to stock equivalent units and granted based on the number of stock equivalent units held by each participant as of the dividend date. The stock equivalent units are payable as a distribution of Xcel Energy Inc.'s common stock upon a director's termination of service.

The stock equivalent units granted for the years ended Dec. 31 were as follows:

(Units in Thousands)	2011		2010		2009
Granted units		60		66		72
Grant date fair value	$	25.12	$	21.14	$	17.87

A summary of the stock equivalent unit changes for the year ended Dec. 31, 2011 are as follows:

(Units in Thousands)	Units			Weighted Average Grant Date Fair Value
Stock equivalent units at Jan. 1		471		$	19.90
Granted		60			25.12
Units distributed		(29	)		20.31
Dividend equivalents		20			24.38
Stock equivalent units at Dec. 31		522			20.65

PSP Awards - Xcel Energy Inc.'s Board of Directors has granted PSP awards under the Xcel Energy Inc. 2005 Long-term Incentive Plan (as amended and restated effective in 2010). The plan allows Xcel Energy to attach various performance goals to the PSP awards granted. The PSP awards have been historically dependent on a single measure of performance, Xcel Energy Inc.'s TSR measured over a three-year period. Xcel Energy Inc.'s TSR is compared to the TSR of other companies in the EEI Investor-Owned Electrics index. At the end of the three-year period, potential payouts of the PSP awards range from 0 percent to 200 percent, depending on Xcel Energy Inc.'s TSR compared to the peer group.

The PSP awards granted for the years ended Dec. 31 were as follows:

(In Thousands)		2011				2010				2009
Awards granted			311				225				207

The total amounts of performance awards settled during the years ended Dec. 31 were as follows:

(In Thousands)	2011		2010		2009
Awards settled		305		267		293
Settlement amount (cash and common stock)	$	7,200	$	5,460	$	5,195

The amount of cash used to settle Xcel Energy's PSP awards was $3.6 million and $2.7 million in 2011 and 2010, respectively.

Share-Based Compensation Expense - The vesting of the RSUs is predicated on the achievement of a performance condition, which is the achievement of an earnings per share or environmental measures target. RSU awards and restricted stock are considered to be equity awards, since the plan settlement determination (shares or cash) resides with Xcel Energy and not the participants. In addition, these awards have not been previously settled in cash and Xcel Energy plans to continue electing share settlement. The grant date fair value of RSUs and restricted stock is expensed as employees vest in their rights to those awards.

The PSP awards have been historically settled partially in cash, and therefore, do not qualify as an equity award, but rather are accounted for as a liability award. 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 conditions, and final expense is based on the market value of the shares on the date the award is settled.

The compensation costs related to share-based awards for the years ended Dec. 31 were as follows:

(Thousands of Dollars)	2011		2010		2009
Compensation cost for share-based awards (a) (b)	$	45,006	$	35,807	$	29,672
Tax benefit recognized in income		17,559		13,964		11,471
Total compensation cost capitalized		3,857		3,646		3,636

(a)	Compensation costs for share-based payment arrangements is included in other O&M expense in the consolidated statements of income.

(b)	Included in compensation cost for share-based awards are matching contributions related to the Xcel Energy 401(k) plan, which totaled $21.6 million, $20.7 million and $19.3 million for the years ended 2011, 2010 and 2009, respectively.

The maximum aggregate number of shares of common stock available for issuance under the Xcel Energy Inc. 2005 Long-term Incentive Plan (as amended and restated effective Feb. 17, 2010) is 8.3 million shares. Under the Xcel Energy Inc. Executive Annual Incentive Award Plan (as amended and restated effective Feb. 17, 2010), the total number of shares approved for issuance is 1.2 million shares.

As of Dec. 31, 2011 and 2010, there was approximately $15.4 million and $18.6 million, respectively, of total unrecognized compensation cost related to nonvested share-based compensation awards. Xcel Energy expects to recognize that cost over a weighted average period of 1.9 years.