Equity

Earnings Per Share - The reconciliation of NEE's basic and diluted earnings per share attributable to NEE is as follows:



	Years Ended December 31,
	2017		2016		2015
	(millions, except per share amounts)
Numerator - net income attributable to NEE	$	5,378	$	2,912	$	2,752
Denominator:
Weighted-average number of common shares outstanding - basic	468.8		463.1		450.5
Equity units, stock options, performance share awards, forward sale agreements and restricted stock^(a)	3.7		2.7		3.5
Weighted-average number of common shares outstanding - assuming dilution	472.5		465.8		454.0
Earnings per share attributable to NEE:
Basic	$	11.47	$	6.29	$	6.11
Assuming dilution	$	11.38	$	6.25	$	6.06

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(a)	Calculated using the treasury stock method. Performance share awards are included in diluted weighted-average number of common shares outstanding based upon what would be issued if the end of the reporting period was the end of the term of the award.

Common shares issuable pursuant to equity units, stock options, performance share awards and forward sale agreements, as well as restricted stock which were not included in the denominator above due to their antidilutive effect were approximately 3.1 million, 7.9 million and 3.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. NEP's senior unsecured convertible notes (see Note 11) and NEP Series A Preferred Units (see below) are potentially dilutive securities; however, their effect on the calculation of NEE's diluted EPS for the year ended December 31, 2017 was not material.

Forward Sale Agreements - In November 2016, NEE entered into forward sale agreements with several forward counterparties for 12 million shares of its common stock to be settled on a date or dates to be specified at NEE’s direction, no later than November 1, 2017. During 2017, NEE issued 1,711,345 shares of its common stock to net share settle the forward sale agreements. The forward sale price used to determine the net share settlement amount was calculated based on the initial forward sale price of $124.00 per share, less certain adjustments as specified in the forward sale agreements.

Common Stock Dividend Restrictions - NEE's charter does not limit the dividends that may be paid on its common stock. FPL's mortgage securing FPL's first mortgage bonds contains provisions which, under certain conditions, restrict the payment of dividends and other distributions to NEE. These restrictions do not currently limit FPL's ability to pay dividends to NEE.

Stock-Based Compensation - Net income for the years ended December 31, 2017, 2016 and 2015 includes approximately $76 million, $77 million and $60 million, respectively, of compensation costs and $29 million, $30 million and $23 million, respectively, of income tax benefits related to stock-based compensation arrangements. Compensation cost capitalized for the years ended December 31, 2017, 2016 and 2015 was not material. At December 31, 2017, there were approximately $85 million of unrecognized compensation costs related to nonvested/nonexercisable stock-based compensation arrangements. These costs are expected to be recognized over a weighted-average period of 1.8 years.

At December 31, 2017, approximately 16 million shares of common stock were authorized for awards to officers, employees and non-employee directors of NEE and its subsidiaries under NEE's: (a) Amended and Restated 2011 Long Term Incentive Plan, (b) 2017 Non-Employee Directors Stock Plan and (c) earlier equity compensation plans under which shares are reserved for issuance under existing grants, but no additional shares are available for grant under the earlier plans. NEE satisfies restricted stock and performance share awards by issuing new shares of its common stock or by purchasing shares of its common stock in the open market. NEE satisfies stock option exercises by issuing new shares of its common stock. NEE generally grants most of its stock-based compensation awards in the first quarter of each year.

Restricted Stock and Performance Share Awards - Restricted stock typically vests within three years after the date of grant and is subject to, among other things, restrictions on transferability prior to vesting. The fair value of restricted stock is measured based upon the closing market price of NEE common stock as of the date of grant. Performance share awards are typically payable at the end of a three-year performance period if the specified performance criteria are met. The fair value of performance share awards is estimated primarily based upon the closing market price of NEE common stock as of the date of grant less the present value of expected dividends, multiplied by an estimated performance multiple which is subsequently trued up based on actual performance.

The activity in restricted stock and performance share awards for the year ended December 31, 2017 was as follows:



	Shares		Weighted- Average Grant Date Fair Value Per Share
Restricted Stock:
Nonvested balance, January 1, 2017	556,648		$	103.26
Granted	237,662		$	130.16
Vested	(261,940	)	$	101.31
Forfeited	(21,057	)	$	112.91
Nonvested balance, December 31, 2017	511,313		$	116.36
Performance Share Awards:
Nonvested balance, January 1, 2017	834,433		$	95.76
Granted	483,958		$	107.39
Vested	(463,511	)	$	87.24
Forfeited	(46,472	)	$	100.38
Nonvested balance, December 31, 2017	808,408		$	110.98

The weighted-average grant date fair value per share of restricted stock granted for the years ended December 31, 2016 and 2015 was $112.86 and $103.58 respectively. The weighted-average grant date fair value per share of performance share awards granted for the years ended December 31, 2016 and 2015 was $89.23 and $77.12, respectively.

The total fair value of restricted stock and performance share awards vested was $96 million, $99 million and $108 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Options - Options typically vest within three years after the date of grant and have a maximum term of ten years. The exercise price of each option granted equals the closing market price of NEE common stock on the date of grant. The fair value of the options is estimated on the date of the grant using the Black-Scholes option-pricing model and based on the following assumptions:



	2017	2016	2015
Expected volatility^(a)	14.91%	16.37%	18.91%
Expected dividends	3.16%	3.16%	3.11%
Expected term (years)^(b)	7.0	7.0	7.0
Risk-free rate	2.23%	1.50%	1.84%

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(a)	Based on historical experience.


(b)	Based on historical exercise and post-vesting cancellation experience adjusted for outstanding awards.

Option activity for the year ended December 31, 2017 was as follows:



	Shares Underlying Options		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (millions)
Balance, January 1, 2017	2,505,208		$	71.08
Granted	407,216		$	126.86
Exercised	(429,402	)	$	52.47
Balance, December 31, 2017	2,483,022		$	83.45	5.6	$	181

Exercisable, December 31, 2017	1,825,151		$	70.17	4.5	$	157

The weighted-average grant date fair value of options granted was $13.25, $11.74 and $13.62 per share for the years ended December 31, 2017, 2016 and 2015, respectively. The total intrinsic value of stock options exercised was approximately $41 million, $42 million and $11 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Cash received from option exercises was approximately $23 million, $36 million and $9 million for the years ended December 31, 2017, 2016 and 2015, respectively. The tax benefits realized from options exercised were approximately $16 million, $16 million and $4 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Preferred Stock - NEE's charter authorizes the issuance of 100 million shares of serial preferred stock, $0.01 par value, none of which are outstanding. FPL's charter authorizes the issuance of 10,414,100 shares of preferred stock, $100 par value, 5 million shares of subordinated preferred stock, no par value, and 5 million shares of preferred stock, no par value, none of which are outstanding.

NEP Series A Preferred Units - In November 2017, NEP issued approximately $550 million of Series A convertible preferred units representing limited partner interests in NEP (NEP preferred units), which are reflected in noncontrolling interests on NEE's consolidated balance sheets. Holders of the NEP preferred units are entitled to receive certain cumulative quarterly distributions from NEP, which will be paid, at NEP’s election and subject to certain limitations, in cash, additional NEP preferred units or a combination thereof. Each holder of NEP preferred units (together with its affiliates) may elect to convert all or any portion of its NEP preferred units into common units of NEP initially on a one-for-one basis, subject to certain adjustments (the conversion rate), at any time after June 20, 2019, subject to certain conditions. NEP may elect to convert all or a portion of the NEP preferred units into NEP common units based on the conversion rate at any time after November 15, 2018 if certain conditions are met and subject to certain maximum conversion amounts prior to November 2020.

Accumulated Other Comprehensive Income (Loss) - The components of AOCI, net of tax, are as follows:



	Accumulated Other Comprehensive Income (Loss)
	Net Unrealized Gains (Losses) on Cash Flow Hedges				Net Unrealized Gains (Losses) on Available for Sale Securities				Defined Benefit Pension and Other Benefits Plans			Net Unrealized Gains (Losses) on Foreign Currency Translation			Other Comprehensive Income (Loss) Related to Equity Method Investee			Total
	(millions)
Balances, December 31, 2014	$	(156	)		$	218			$	(20	)	$	(58	)	$	(24	)	$	(40	)
Other comprehensive loss before reclassifications	(88		)		(7		)		(42		)	(27		)	—			(164		)
Amounts reclassified from AOCI	63			^(a)	(37		)	^(b)	—			—			—			26
Net other comprehensive loss	(25		)		(44		)		(42		)	(27		)	—			(138		)
Less other comprehensive loss attributable to noncontrolling interests	(11		)		—				—			—			—			(11		)
Balances, December 31, 2015	(170		)		174				(62		)	(85		)	(24		)	(167		)
Other comprehensive income (loss) before reclassifications	—				69				(21		)	(5		)	2			45
Amounts reclassified from AOCI	70			^(a)	(18		)	^(b)	—			—			—			52
Net other comprehensive income (loss)	70				51				(21		)	(5		)	2			97
Less other comprehensive income attributable to noncontrolling interests	—				—				—			—			—			—
Balances, December 31, 2016	(100		)		225				(83		)	(90		)	(22		)	(70		)
Other comprehensive income before reclassifications	—				127				44			24			2			197
Amounts reclassified from AOCI	32			^(a)	(36		)	^(b)	—			—			—			(4		)
Net other comprehensive income	32				91				44			24			2			193
Less other comprehensive income attributable to noncontrolling interests	9				—				—			3			—			12
Balances, December 31, 2017	$	(77	)		$	316			$	(39	)	$	(69	)	$	(20	)	$	111

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(a)	Reclassified to interest expense and also to other - net in 2015 in NEE's consolidated statements of income. See Note 3 - Income Statement Impact of Derivative Instruments.


(b)	Reclassified to gains on disposal of investments and other property - net in NEE's consolidated statements of income.