STOCK COMPENSATION PLANS

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 11. HYPERLINK \l "Stock"STOCK COMPENSATION PLANS

NVE's executive long-term incentive plan for key management employees, which was approved by shareholders in May 2004 and amended and restated in 2011, provides for the issuance of up to 7,750,000 of NVE's shares to key employees through December 31, 2013. The plan permits the following types of grants, separately or in combination: nonqualified and qualified stock options, stock appreciation rights, restricted stock units, performance units, performance shares, and bonus stock. During 2012, NVE granted restricted stock units, performance units and performance shares under the long-term incentive plan. The Company also has an employee stock purchase plan which is available to all employees who meet minimum service requirements. The employees can choose to have amounts deducted from their paychecks which will be used to buy NVE's common stock at a discount. The plans are discussed in more detail below.

Under the long-term incentive plan and employee stock purchase plan, NVE may settle awards by either new issuances of shares, open market purchases, or issuance of treasury shares. See Note 13, Common Stock and Other Paid-In Capital, for further discussion on treasury stock.

Total stock-based compensation expense for the following years was as follows (dollars in thousands):

	2012
	Total		NVE		NPC		SPPC
Non-Qualified Stock Options	$	-	$	-	$	-	$	-
Performance Units and Performance Shares		21,684		277		14,967		6,440
Restricted Stock Units		3,552		74		2,501		977
Employee Stock Purchase Plan		294		9		212		73
Total Stock Compensation Expense	$	25,530	$	360	$	17,680	$	7,490

	2011
	Total		NVE		NPC		SPPC
Non-Qualified Stock Options	$	-	$	-	$	-	$	-
Performance Units and Performance Shares		16,523		163		10,438		5,922
Restricted Stock Units		2,151		35		1,492		624
Employee Stock Purchase Plan		327		18		215		94
Total Stock Compensation Expense	$	19,001	$	216	$	12,145	$	6,640

	2010
	Total		NVE		NPC		SPPC
Non-Qualified Stock Options	$	71	$	1	$	51	$	19
Performance Units and Performance Shares		7,145		54		4,966		2,125
Restricted Stock Units		902		10		610		282
Employee Stock Purchase Plan		376		28		134		214
Total Stock Compensation Expense	$	8,494	$	93	$	5,761	$	2,640

Non-Qualified Stock Options

Elected officers and key employees specifically designated by a committee of the BOD are eligible to be awarded non-qualified stock options (NQSO's) based on the guidelines in the plan. These grants are at 100% of the then current fair market value, and vest over different periods as stated in the grant. These options have to be exercised within ten years of award, and no earlier than one year from the date of grant. At the time of grant, rights to dividend equivalents may be awarded; however, historically, dividend equivalents have not been granted. The options may be exercised using either cash or previously acquired shares valued at the current market price, or a combination of both. The Committee also allows cashless exercises, subject to applicable securities law restrictions or other means consistent with the purpose of the plan and the applicable law.

There have been no grants of non-qualified stock options made to employees since 2007.

A summary of the status of NVE's nonqualified stock option plan as of December 31, 2012, 2011, and 2010, and changes during the year is presented below:

		2012				2011				2010
				Weighted-				Weighted-				Weighted-
				Average				Average				Average
				Exercise				Exercise				Exercise
		Shares		Price		Shares		Price		Shares		Price
NQSO’s outstanding at beginning of year			539,450	$	16.56		728,688	$	15.50		854,717	$	15.40
	Granted		-	$	-		-	$	-		-	$	-
	Exercised		(134,601)	$	12.80		(118,175)	$	10.26		(44,730)	$	8.83
	Forfeited		(48,412)	$	14.99		(71,063)	$	16.64		(81,299)	$	18.18
NQSO’s outstanding at end of year			356,437	$	17.90		539,450	$	16.56		728,688	$	15.50
Options exercisable at year-end		$	356,437	$	17.90	$	539,450	$	16.56	$	728,688	$	15.50
Intrinsic value of options exercised		$	660,530	$	-	$	545,695	$	-	$	146,102	$	-

Cash received from options exercised was $1.7 million, $0.8 million and $0.5 million in 2012, 2011 and 2010, respectively. The tax benefit realized for the tax deductions from option exercises was immaterial for all years. The fair value of options vested was zero for all years presented.

The fair value of each nonqualified option has been estimated on the date of grant using the Black-Scholes option pricing model using the following assumptions: Average Dividend Yield, Average Expected Volatility, Average Risk-Free Rate of Return, and Average Expected Life. As of January 1, 2011 all of the nonqualified stock options have been fully vested and expensed.

The following table summarizes information about nonqualified stock options outstanding at December 31, 2012:

	Options Outstanding				Options Exercisable
	Weighted-				Weighted-		Number
	Average		Number	Remaining	Average		Vested and
	Exercise		Outstanding at	Contractual	Exercise		Exercisable at
Year of Grant	Price		12/31/12	Life	Price		12/31/12
2005	$	10.05	6,599	2.1 years	$	10.05	6,599
2006	$	13.29	23,233	3.1 years	$	13.29	23,233
2007	$	18.38	326,605	4.1-4.8 years	$	18.38	326,605
Weighted Average Remaining
Contractual Life (years)		4.15				4.15
Intrinsic Value	$	166,066			$	166,066

Performance Awards

Performance Units

Performance Units vest at the end of a three-year period to the extent that specific stock price related performance targets are met, as determined by the Compensation Committee. If the established objectives are not met, the Performance Units are forfeited. Performance Units are typically paid in shares after vesting. At the time of grant, rights to dividend equivalents may be awarded; however, historically, dividend equivalents have not been granted. These awards do not have any voting rights associated with them. Performance Units granted are measured based on NVE's TSR relative to the average TSR of companies listed in the S&P Super Composite Electric Utility Index throughout the three-year performance period. The Committee determined that the awards will vest according to the table shown below (a proportionate amount of shares will vest in the case of performance between the percentiles listed below):

Performance	Shares Vested
Below 35th Percentile	0% of grant
35th Percentile	50% of grant
50th Percentile	100% of grant
75th Percentile	150% of grant

Performance Shares

Performance Shares vest at the end of a three-year period, based on average aggregate Corporate Goal performance under the Short Term Incentive Plan (STIP) and the average STIP payout over those three years. If the established objectives are not met, the Performance Shares are forfeited. Performance Shares are paid in shares, minus applicable taxes, based on the then fair market value of the shares. At the time of grant, rights to dividend equivalents may be awarded; however, historically, dividend equivalents have not been granted. Performance shares do not have any voting rights associated with them.

The following table summarizes Performance Units and Performance Shares activity for the following years:

		2012				2011					2010
				Weighted-				Weighted-				Weighted-
				Average				Average				Average
				Grant Date				Grant Date				Grant Date
			Shares	Value			Shares	Value			Shares	Value
Nonvested performance units and
performance shares at beginning of year			652,184	$	13.64		763,386	$	11.47		765,143	$	11.73
	Shares granted		1,380,621	$	17.37		890,252	$	15.18		753,612	$	11.78
	Shares vested		(1,126,932)	$	15.91		(958,750)	$	13.40		(666,856)	$	12.08
	Shares forfeited		(53,635)	$	13.99		(42,704)	$	12.51		(88,513)	$	11.81
Nonvested performance units and
performance shares at end of year			852,238	$	15.90		652,184	$	13.64		763,386	$	11.47
Weighted average grant date fair value of shares granted		$	23,977,660			$	13,514,025			$	8,877,549
Fair value of shares issued		$	16,793,342			$	5,441,944			$	-
Unrecognized compensation expense at end of year		$	15,459,606			$	10,663,208			$	10,725,573
Weighted average remaining vesting period (years)			1.67				1.63				1.65

There were no performance units or performance shares issued in 2010.

Compensation expense for performance units and performance shares is recognized ratably over the three year vesting period. In the event the conditional criteria are not met, the awards are forfeited and the expense is reversed. Performance units and performance shares are accounted for as liability awards and compensation costs are measured at each balance sheet date using the Company's closing stock price for that date. The closing trading price of NVE stock on December 31, 2012 was $18.14.

Restricted Stock Units

Elected officers and key employees specifically designated by a committee of the BOD are eligible to be awarded restricted stock units based on the guidelines in the plan. These grants vest over different periods as stated within the terms of each grant. The issuance of these shares is conditional upon the employee retaining employment with NVE throughout the entire vesting period. Of the 169,000 units granted in 2012, 125,000 are eligible for dividend equivalents over the vesting period.

The following table summarizes Restricted Stock Units activity for the following years:

		2012				2011				2010
				Weighted-				Weighted-				Weighted-
				Average				Average				Average
				Grant Date				Grant Date				Grant Date
		Shares		Value		Shares		Value		Shares		Value
Nonvested shares at beginning of year			289,210	$	13.77		149,779	$	11.54		64,667	$	11.41
	Shares granted		169,000	$	17.05		267,750	$	14.51		169,000	$	11.65
	Shares vested		(175,009)	$	14.31		(123,413)	$	12.76		(75,708)	$	11.73
	Shares forfeited		(7,500)	$	14.32		(4,906)	$	11.58		(8,180)	$	11.14
Nonvested shares at end of year			275,701	$	15.43		289,210	$	13.77		149,779	$	11.54
Weighted average grant date fair value of shares granted		$	2,882,200			$	3,885,053			$	1,968,850
Fair value of shares issued		$	904,135			$	671,162			$	-
Unrecognized compensation expense at end of year		$	5,001,210			$	4,728,581			$	2,104,393
Weighted average remaining vesting period (years)			1.96				2.55				2.14

There were no restricted stock units issued in 2010.

Compensation expense for restricted stock units is recognized ratably over the vesting period of each grant. If employment is terminated prior to the end of the vesting period, the award is forfeited and the expense is reversed. Restricted stock units are accounted for as liability awards and compensation costs are measured at each balance sheet date using the Company's closing stock price for that date. The closing trading price of NVE stock on December 31, 2012 was $18.14.

Employee Stock Purchase Plan

The employee stock purchase plan is available to all employees who meet minimum service requirements. In 2010, shareholders approved an additional 1,000,000 shares for distribution under the plan, bringing the total authorized up to an aggregate of 1,900,162 shares of common stock. According to the terms of the plan, employees can choose twice each year to have up to 15% of their base earnings withheld to purchase NVE's common stock. The option price discount is 15%, and the purchase price is the lesser of 85% of the market value on the offering commencement date, or 85% of the market value on the offering exercise date. Employees can withdraw from the plan at any time prior to the exercise date. Under the plan NVE sold 134,069, 134,266 and 147,457 shares to employees in 2012, 2011 and 2010, respectively.

In accordance with the Stock Compensation Topic of the FASC, NVE recognized compensation expense in 2012, 2011 and 2010 related to the employee stock purchase plan. The expense for 2012 was calculated for the employees' purchase rights based on the stock price at the exercise date. The expense for 2011 and 2010 was estimated for the employees' purchase rights on the date of grant, using the Black-Scholes option-pricing model. The following assumptions were used for those years, with an option life of six months:

			Average
	Average	Average	Risk-Free	Weighted-
	Dividend	Expected	Rate of	Average
Year	Yield	Volatility	Return	Fair Value
2011	3.42%	13.99%	0.11%	$	2.82
2010	2.79%	20.02%	0.22%	$	2.55