Stock Based Compensation Plans

9 Months Ended

Sep. 30, 2011

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

STOCK-BASED COMPENSATION PLANS

STOCK-BASED COMPENSATION PLANS

FirstEnergy has four types of stock-based compensation programs — LTIP, EDCP, ESOP and DCPD, as described below.

Allegheny’s stock-based awards were converted into FirstEnergy stock-based awards as of the date of the merger. These awards, referred to below as converted Allegheny awards, were adjusted in terms of the number of awards and, where applicable, the exercise price thereof, to reflect the merger’s common stock exchange ratio of 0.667 of a share of FirstEnergy common stock for each share of AE common stock.

(A) LTIP

FirstEnergy’s LTIP includes four forms of stock-based compensation awards — stock options, performance shares, restricted stock and restricted stock units.

Under FirstEnergy’s LTIP, total awards cannot exceed 29.1 million shares of common stock or their equivalent. Only stock options, restricted stock and restricted stock units have currently been designated to be settled in common stock, with vesting periods ranging from two months to ten years. Performance share awards are currently designated to be settled in cash rather than common stock and therefore do not count against the limit on stock-based awards. There were 5.6 million shares available for future awards under the LTIP as of September 30, 2011.

Restricted Stock and Restricted Stock Units

Restricted common stock (restricted stock) and restricted stock unit (stock unit) activity for the nine months endedSeptember 30, 2011, was as follows:

	Nine Months Ended
	September 30, 2011
Restricted stock and stock units outstanding as of January 1, 2011	1,878,022
Granted	907,898
Converted AE restricted stock	645,197
Exercised	(435,358	)
Forfeited	(213,039	)
Restricted stock and stock units outstanding as of September 30, 2011	2,782,720

The 907,898 shares of restricted common stock granted during the nine months endedSeptember 30, 2011, had a grant-date fair value of $33.8 million and a weighted-average vesting period of 2.76 years.

Restricted stock units include awards that will be settled in a specific number of shares of common stock after the service condition has been met. Restricted stock units also include performance-based awards that will be settled after the service condition has been met in a specified number of shares of common stock based on FirstEnergy’s performance compared to annual target performance metrics.

Compensation expense recognized during the nine months endedSeptember 30, 2011 and 2010, for restricted stock and restricted stock units, net of amounts capitalized, was approximately $43 million and $40 million, respectively.

Stock Options

Stock option activity for the nine months endedSeptember 30, 2011 was as follows:

Stock Option Activities	Number of Shares		Weighted Average Exercise Price
Stock options outstanding as of January 1, 2011 (all exercisable)	2,889,066		$	35.18
Options granted	662,122		37.75
Converted AE options	1,805,811		41.75
Options exercised	(847,261	)	31.20
Options forfeited/expired	(110,085	)	71.65
Stock options outstanding as of September 30, 2011	4,399,653		$	38.12
(3,737,531 options exercisable)

Compensation expense recognized for stock options during the nine months endedSeptember 30, 2011, was $0.5 million. No expense was recognized during the nine months endedSeptember 30, 2010. Options granted during the nine months endedSeptember 30, 2011, had a grant-date fair value of $3.3 million and an expected weighted-average vesting period of 3.79 years.

Options outstanding by exercise price as of September 30, 2011, were as follows:

Exercise Prices	Shares Under Options	Weighted Average Exercise Price		Remaining Contractual Life in Years
$20.02 – $30.74	987,607	$	26.83	1.77
$30.89 – $40.93	3,061,503	37.36		3.96
$42.72 – $51.82	3,883	51.02		0.45
$53.06 – $62.97	41,219	53.94		2.90
$64.52 – $71.82	8,671	67.53		4.05
$73.39 – $80.47	294,102	80.22		3.71
$81.19 – $89.59	2,668	85.39		2.81
Total	4,399,653	$	38.12	3.44

Performance Shares

Performance shares will be settled in cash and are accounted for as liability awards. Compensation expense (income) recognized for performance shares during the nine months endedSeptember 30, 2011 and 2010, net of amounts capitalized, totaled $2 million and $(8) million, respectively. No performance shares under the FirstEnergy LTIP were settled during the nine months endedSeptember 30, 2011 and 2010.

(B) ESOP

During 2011, shares of FirstEnergy common stock were purchased on the open market and contributed to participants’ accounts. Total ESOP-related compensation expense for the nine months endedSeptember 30, 2011 and 2010, net of amounts capitalized and dividends on common stock, was approximately $34 million and $31 million, respectively.

(C) EDCP

There was no material compensation expense recognized on EDCP stock units during the nine months endedSeptember 30, 2011, and 2010.

(D) DCPD

DCPD expenses recognized during the nine months endedSeptember 30, 2011, and 2010 were approximately $3 million in each period. The net liability recognized for DCPD of approximately $6 million as of September 30, 2011, is included in the caption “Retirement benefits” on the Consolidated Balance Sheets.

Of the 1.7 million stock units authorized under the EDCP and DCPD, 1,075,080 stock units were available for future awards as of September 30, 2011.