Duke Energy's 2010 Long-Term Incentive Plan (the 2010 Plan) reserved 25 million shares of common stock for awards to employees and outside directors. Duke Energy has historically issued new shares upon exercising or vesting of share-based awards. However, Duke Energy may use a combination of new share issuances and open market repurchases for share-based awards that are exercised or become vested in the future. Duke Energy has not determined with certainty the amount of such new share issuances or open market repurchases.

The 2010 Plan allows for a maximum of 6.25 million shares of common stock to be issued under various stock-based awards other than options and stock appreciation rights.

In connection with the acquisition of Progress Energy in July 2012, Duke Energy assumed Progress Energy's 2007 Equity Incentive Plan (EIP). Stock-based awards granted under the Progress Energy EIP and held by Progress Energy employees were generally converted into outstanding Duke Energy stock-based compensation awards. The estimated fair value of these awards allocated to purchase price was $62 million. Refer to Note 2 for further information regarding the merger transaction.

The following table summarizes the total expense recognized by each of the Duke Energy Registrants, net of tax, for stock-based compensation.


	Years Ended December 31,
(in millions)	2013		2012		2011
Duke Energy	$	52	$	48	$	32
Duke Energy Carolinas		13		12		17
Progress Energy		23		25		20
Duke Energy Progress		14		16		12
Duke Energy Florida		9		9		8
Duke Energy Ohio		4		4		6
Duke Energy Indiana		4		4		4

Pretax stock-based compensation costs, the tax benefit associated with stock-based compensation expense, and stock-based compensation costs capitalized are included in the following table.


	Years Ended December 31,
(in millions)	2013		2012		2011
Stock options	$	2	$	2	$	2
Restricted stock unit awards		49		43		27
Performance awards		34		33		23
Pretax stock-based compensation cost	$	85	$	78	$	52
Tax benefit associated with stock-based compensation expense	$	33	$	30	$	20
Stock-based compensation costs capitalized		3		2		2

STOCK OPTIONS

The following table summarizes information about stock options outstanding.

	Options (in thousands)		Weighted-Average Exercise Price		Weighted-Average Remaining Life		Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2012		1,654	$	51
Granted		310		69
Exercised		(1,162)		48
Forfeited or expired		(9)		41
Outstanding at December 31, 2013		793		61		7y, 3m	$	6
Exercisable at December 31, 2013		137		46		1y, 5m		3
Options expected to vest		656		64		8y, 5m		3

The exercise price of each option granted cannot be less than the market price of Duke Energy's common stock on the date of grant and the maximum option term is 10 years. The vesting periods range from immediate to three years. Options granted in 2013 and 2012 were expensed immediately; therefore, there is no future compensation cost associated with these options. The following table includes information related to Duke Energy's stock options.

	Years Ended December 31,
(in millions)	2013		2012		2011
Intrinsic value of options exercised	$	26	$	17	$	26
Tax benefit related to options exercised		10		7		10
Cash received from options exercised		9		21		74
Stock options granted (in thousands)		310		340		358

The following assumptions were used to determine the grant date fair value of stock options granted in 2013.

Risk-free interest rate^(a)		1.0	%
Expected dividend yield^(b)		4.7	%
Expected life^(c)		6 years
Expected volatility^(d)		18.1	%

(a)	The risk-free rate is based upon the average of five-year and seven-year U.S. Treasury Constant Maturity rates as of the grant date.
(b)	The expected dividend yield is based upon the most recent annualized dividend and the one-year average closing stock price.
(c)	The expected life of options is derived from the simplified method approach.
(d)	Volatility is based equally between historical and implied volatility. Historic volatility is based on Duke Energy's historical volatility over the expected life using daily stock prices. Implied volatility is the average for all option contracts with a term greater than six months using the strike price closest to the stock price on the valuation date.

Restricted stock unit awards issued and outstanding generally vest over periods from immediate to three years. The following table includes information related to restricted stock unit awards.


		Years Ended December 31,
		2013		2012		2011
Shares awarded (in thousands)			612		443		636
Fair value (in millions)^(a)		$	42	$	28	$	34

(a)	Based on the market price of Duke Energy's common stock at the grant date.

The following table summarizes information about restricted stock unit awards outstanding.

	Shares (in thousands)		Weighted-Average Per Share Grant Date Fair Value
Outstanding at December 31, 2012		1,607	$	64
Granted		612		69
Vested		(794)		63
Forfeited		(25)		68
Outstanding at December 31, 2013		1,400		66
Restricted stock unit awards expected to vest		1,365		66

The total grant date fair value of shares vested during the years ended December 31, 2013, 2012 and 2011 was $50 million, $34 million and $19 million, respectively. At December 31, 2013, Duke Energy had $21 million of unrecognized compensation cost, which is expected to be recognized over a weighted-average period of 1 year and 9 months.

Stock-based awards issued and outstanding generally vest over three years if performance targets are met.

Certain performance awards granted in 2013, 2012 and 2011 contain market conditions based on the total shareholder return (TSR) of Duke Energy stock relative to a pre-defined peer group (relative TSR). These awards are valued using a path-dependent model that incorporates expected relative TSR into the fair value determination of Duke Energy's performance-based share awards. The model uses three-year historical volatilities and correlations for all companies in the pre-defined peer group, including Duke Energy, to simulate Duke Energy's relative TSR as of the end of the performance period. For each simulation, Duke Energy's relative TSR associated with the simulated stock price at the end of the performance period plus expected dividends within the period results in a value per share for the award portfolio. The average of these simulations is the expected portfolio value per share. Actual life to date results of Duke Energy's relative TSR for each grant is incorporated within the model.

Other performance awards not containing market conditions were awarded in 2012 and 2011. The performance goal for these awards is Duke Energy's return on equity over a three-year period. Awards are measured at grant date price.

The following table summarizes information about stock-based performance awards outstanding at the maximum level.

	Shares (in thousands)		Weighted-Average Per Share Grant Date Fair Value
Outstanding at December 31, 2012		2,346	$	47
Granted		633		45
Vested		(858)		49
Forfeited		(299)		46
Outstanding at December 31, 2013		1,822		46
Stock-based performance awards expected to vest		1,646		47

The total grant date fair value of shares vested during the years ended December 31, 2013, 2012 and 2011 was $42 million, $56 million and $33 million, respectively. At December 31, 2013, Duke Energy had $22 million of unrecognized compensation cost, which is expected to be recognized over a weighted-average period of 1 year and 11 months.