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STOCK BASED COMPENSATION
 12 Months Ended
Sep. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
STOCK-BASED COMPENSATION

In January 2007, the NJR 2007 Stock Award and Incentive Plan (2007 Plan) replaced the 2002 Employee and Outside Director Long-Term Incentive Plan (Long-Term Plan). Shares can be issued in the form of options, performance shares or restricted stock. As of September 30, 2012, 1,722,037 and 61,162 shares remain available for future issuance to employees and directors, respectively.

Included in operation and maintenance expense during fiscal 2012 is $2.6 million related to stock-based compensation compared with $2.8 million and $2.7 million in fiscal 2011 and fiscal 2010, respectively. As of September 30, 2012, there remains $2.2 million of deferred compensation related to unvested restricted and performance shares that is expected to be recognized over the next two years.

The following table summarizes all stock-based compensation expense recognized during the following fiscal years:
(Thousands)
2012
2011
2010
Stock-based compensation expense:
 
 
 
Performance shares
$
1,276

$
915

$
813

Restricted stock
1,362

1,932

1,841

Compensation expense included in operation and maintenance expense
2,638

2,847

2,654

Income tax benefit
(1,078
)
(1,163
)
(1,084
)
Total, net of tax
$
1,560

$
1,684

$
1,570



Stock Options

The following table summarizes the stock option activity for the past three fiscal years:
 
Shares

Weighted Average
Exercise Price
Outstanding at September 30, 2009
333,461

 
$26.36
 
Granted
—

 
—

 
Exercised
(68,307
)
 
$23.20
 
Forfeited
(2,026
)
 
$18.32
 
Outstanding at September 30, 2010
263,128

 
$27.24
 
Granted
—

 
—

 
Exercised
(152,448
)
 
$26.86
 
Forfeited
(917
)
 
$18.11
 
Outstanding at September 30, 2011
109,763

 
$27.84
 
Granted
—

 
—

 
Exercised
(28,138
)
 
$25.30
 
Forfeited
—

 
—

 
Outstanding at September 30, 2012
81,625

 
$28.71
 
Exercisable at September 30, 2012
81,625

 
$28.71
 
Exercisable at September 30, 2011
109,763

 
$27.84
 
Exercisable at September 30, 2010
263,128

 
$27.24
 

For the stock options listed above, there are no costs related to unvested options.

The following table summarizes stock options outstanding and exercisable as of September 30, 2012:
 
Outstanding and Exercisable
Exercise Price Range
Number
Of Stock
Options
Weighted Average
Remaining
Contractual Term
(in years)
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
(in thousands)
$20.99 - $26.00
12,000

.7
$22.68
 
$
276

 
$26.01 - $29.00
23,250

2.5
$28.68
 
$
667

 
$29.01 - $30.37
46,375

2.6
$30.29
 
$
1,405

 
Total
81,625

2.3
$28.71
 
$
2,348

 


Performance Shares

In fiscal 2012, the Company granted to various officers 28,418 performance shares, which vest on September 30, 2014, subject to the Company meeting certain performance conditions. In fiscal 2011, the Company granted to various officers 56,325 performance shares, which are market condition awards that vest on September 30, 2013, subject to certain conditions. In fiscal 2010, the Company granted to various officers 29,865 performance shares, which are market condition awards and 24,312 performance shares, which met certain performance milestones (performance conditions). Both performance share grants vested on September 30, 2012. There is $1.4 million of deferred compensation related to unvested performance shares that is expected to be recognized over the next two years.

The following table summarizes the performance share activity under the 2007 Plan for the past three fiscal years:
 
Shares (1)
Weighted Average
Grant Date
Fair Value
Non-vested and outstanding at September 30, 2009
61,980

 
$31.84
 
Granted
54,177

 
$30.05
 
Vested (2)
(55,905
)
 
$31.84
 
Cancelled/forfeited
(9,777
)
 
$31.04
 
Non-vested and outstanding at September 30, 2010
50,475

 
$31.07
 
Granted
56,325

 
$26.24
 
Vested
—

 
—

 
Cancelled/forfeited
(773
)
 
$29.74
 
Non-vested and outstanding at September 30, 2011
106,027

 
$28.04
 
Granted
28,418

 
$47.17
 
Vested (3)
(49,702
)
 
$30.08
 
Cancelled/forfeited
—

 
—

 
Non-vested and outstanding at September 30, 2012
84,743

 
$33.26
 
(1)
The number of common shares issued related to performance shares may range from zero to 150 percent of the number of shares shown in the table above based on the Company's achievement of performance goals associated with NJR total shareowner return relative to a selected peer group of companies.
(2)
The number of common shares related to performance shares earned as of September 30, 2010, was 135 percent , or 75,472 shares. The number represented on this line is the target number of 100 percent. See footnote (1) above.
(3)
As certified by the Company's Leadership and Compensation Committee on November 13, 2012, the number of common shares related to performance shares and market condition shares earned was 68.8 percent , or 15,427 shares and 70 percent, or 19,095 shares, respectively. The number represented on this line is the target number of 100 percent. See footnote (1) above.

The Company measures compensation expense related to performance shares based on the fair value of these awards at their date of grant. In accordance with ASC 718, compensation expense for market condition grants are recognized for awards granted, and are not adjusted based on actual achievement of the performance goals. The Company estimated the fair value of these grants on the date of grant using a lattice model. Performance condition grants are initially fair valued at the company's stock price on grant date, and are subsequently adjusted for actual achievement of the performance goals.

Restricted Stock

In fiscal 2012, the company granted 49,171 deferred restricted shares that vested immediately and 1,929 shares of restricted stock that will vest in October 2014. Both of these grants will be distributed in a lump sum in October 2014. In fiscal 2011, the company granted 36,614 restricted shares, which vest in three equal annual installments, the first installment having occurred on October 15, 2011, and 25,535 restricted shares, all of which will vest on November 17, 2013. In fiscal 2010, the Company issued 24,312 shares of restricted stock, which vest in three equal installments, the first installment having occurred on October 15, 2010. Also, in fiscal 2010 and 2009 the Company issued 24,312 and 115,211 shares of restricted stock, respectively, that vested immediately, of which 106,730 were retention grants with distribution deferred until fiscal 2012, which are now fully distributed. There is $789,000 of deferred compensation related to unvested restricted stock shares that is expected to be recognized over the next two years.

The following table summarizes the restricted stock activity under the 2007 Plan for the past three fiscal years:
 
Shares

Weighted Average
Grant Date
Fair Value
Total Fair Value of Vested Shares (in Thousands)
Non-vested and outstanding at September 30, 2009
111,797

 
$
31.30

 
 
—

 
Granted
24,312

 
$
36.42

 
 
—

 
Vested
(74,888
)
 
$
(31.28
)
 
 
$
2,749

 
Cancelled/forfeited
(4,856
)
 
$
(33.00
)
 
 
—

 
Non-vested and outstanding at September 30, 2010
56,365

 
$
33.40

 
 
—

 
Granted
62,149

 
$
40.74

 
 
—

 
Vested
(41,201
)
 
$
(32.29
)
 
 
$
1,723

 
Cancelled/forfeited
(216
)
 
$
(36.42
)
 
 
—

 
Non-vested and outstanding at September 30, 2011
77,097

 
$
39.90

 
 
—

 
Granted
51,100

 
$
47.17

 
 
—

 
Vested
(68,851
)
 
$
(44.86
)
 
 
$
3,198

 
Cancelled/forfeited
—

 
—

 
 
—

 
Non-vested and outstanding at September 30, 2012
59,346

 
$
40.40