DTE Energy 2012 Annual Report Download - page 108
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Table of Contents
The number, weighted average exercise price and weighted average remaining contractual life of options outstanding were as follows:
$27.00 — $ 38.00
142,619
$27.98
6.15
$38.01 — $ 42.00
291,982
$41.14
3.22
$42.01 — $ 45.00
605,569
$44.03
5.40
$45.01 — $ 50.00
152,500
$47.62
4.03
1,192,670
$41.86
4.78
The Company determined the fair value for these options at the date of grant in 2010 using a Black-Scholes based option pricing model and the
following assumptions:
Risk-free interest rate
2.91%
Dividend yield
5.08%
Expected volatility
22.96%
Expected life
6 years
The Company includes both historical and implied share-price volatility in option volatility. Implied volatility is derived from exchange traded options
on DTE Energy common stock. The Company’s expected life estimate is based on historical data.
Stock Awards
Stock awards granted under the plan are restricted for varying periods, generally for three years. Participants have all rights of a shareholder with
respect to a stock award, including the right to receive dividends and vote the shares. Prior to vesting in stock awards, the participant: (i) may not sell,
transfer, pledge, exchange or otherwise dispose of shares; (ii) shall not retain custody of the share certificates; and (iii) will deliver to the Company a stock
power with respect to each stock award upon request.
The stock awards are recorded at cost that approximates fair value on the date of grant. The cost is amortized to compensation expense over the vesting
period.
Stock award activity for the periods ended December 31 was:
Fair value of awards vested (in millions)
$13
$19
Restricted common shares awarded
381,840
238,405
Weighted average market price of shares awarded
$47.98
$44.08
Compensation cost charged against income (in millions)
$12
$12
The following table summarizes the Company’s stock awards activity for the period ended December 31, 2012:
Balance at January 1, 2012 726,224
$42.25
Grants 167,320
$53.71
Forfeitures (37,767)
$48.46
Vested and issued (258,129)
$34.41
Balance at December 31, 2012 597,648
$48.33
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