Common and Preferred Stock

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



	Years Ended December 31,
	2011		2010		2009
	(millions, except per share amounts)
Numerator - net income	$	1,923	$	1,957	$	1,615
Denominator:
Weighted-average number of common shares outstanding - basic	416.6		410.3		404.4
Performance share awards, options, restricted stock, equity units and warrants^(a)	2.4		2.7		2.8
Weighted-average number of common shares outstanding - assuming dilution	419.0		413.0		407.2
Earnings per share of common stock:
Basic	$	4.62	$	4.77	$	3.99
Assuming dilution	$	4.59	$	4.74	$	3.97

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(a)

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. Options, performance share awards, restricted stock, equity units and warrants are included in diluted weighted-average number of common shares outstanding by applying the treasury stock method.

Common shares issuable pursuant to equity units and stock options, restricted stock and performance share awards which were not included in the denominator above due to their antidilutive effect were approximately 14.6 million, 9.1 million and 0.8 million for the years ended December 31, 2011, 2010 and 2009, respectively.

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.

Employee Stock Ownership Plan - The employee retirement savings plans of NEE include a leveraged ESOP feature. Shares of common stock held by the trust for the employee retirement savings plans (Trust) are used to provide all or a portion of the employers' matching contributions. Dividends received on all shares, along with cash contributions from the employers, are used to pay principal and interest on an ESOP loan held by a subsidiary of NEECH. Dividends on shares allocated to employee accounts and used by the Trust for debt service are replaced with shares of common stock, at prevailing market prices, in an equivalent amount. For purposes of computing basic and fully diluted earnings per share, ESOP shares that have been committed to be released are considered outstanding.

ESOP-related compensation expense was approximately $42 million, $37 million and $42 million in 2011, 2010 and 2009, respectively. The related share release was based on the fair value of shares allocated to employee accounts during the period. Interest income on the ESOP loan is eliminated in consolidation. ESOP-related unearned compensation included as a reduction of common shareholders' equity at December 31, 2011 was approximately $53 million, representing unallocated shares at the original issue price. The fair value of the ESOP-related unearned compensation account using the closing price of NEE common stock at December 31, 2011 was approximately $224 million.

Stock-Based Compensation - Net income for the years ended December 31, 2011, 2010 and 2009 includes approximately $49 million, $57 million and $51 million, respectively, of compensation costs and $19 million, $22 million and $20 million, respectively, of income tax benefits related to stock-based compensation arrangements. Compensation cost capitalized for the years ended December 31, 2011, 2010 and 2009 was not material. As of December 31, 2011, there were approximately $58 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, 2011, approximately 23 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) 2011 Long Term Incentive Plan, (b) 2007 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 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, 2011 was as follows:



	Shares		Weighted- Average Grant Date Fair Value Per Share
Restricted Stock:
Nonvested balance, January 1, 2011	1,154,590		$	50.40
Granted	452,488		$	54.77
Vested	(521,882	)	$	53.22
Forfeited	(52,908	)	$	51.34
Nonvested balance, December 31, 2011	1,032,288		$	50.84
Performance Share Awards:
Nonvested balance, January 1, 2011	1,318,398		$	45.96
Granted	566,386		$	50.13
Vested	(448,416	)	$	58.42
Forfeited	(85,294	)	$	43.34
Nonvested balance, December 31, 2011	1,351,074		$	43.72

The weighted-average grant date fair value per share of restricted stock granted for the years ended December 31, 2010 and 2009 was $46.72 and $51.50 respectively. The weighted-average grant date fair value per share of performance share awards granted for the years ended December 31, 2010 and 2009 was $42.95 and $42.66, respectively.

The total fair value of restricted stock and performance share awards vested was $53 million, $47 million and $46 million for the years ended December 31, 2011, 2010 and 2009, 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:



	2011	2010	2009
Expected volatility^(a)	21.54%	20.74 - 21.64%	19.02 - 20.23%
Expected dividends	4.03%	3.61 - 4.39%	3.35 - 3.71%
Expected term (years)^(b)	6	6	6
Risk-free rate	2.80%	1.65 - 2.91%	2.68 - 2.97%

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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, 2011 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, 2011	5,036,652		$	38.69
Granted	536,302		$	54.59
Exercised	(1,065,939	)	$	29.14
Forfeited	(102,451	)	$	50.49
Expired	(18,699	)	$	47.42
Balance, December 31, 2011	4,385,865		$	42.64	4.7	$	81

Exercisable, December 31, 2011	3,348,329		$	40.15	3.6	$	71

The weighted-average grant date fair value of options granted was $7.78, $6.22 and $6.79 per share for the years ended December 31, 2011, 2010 and 2009, respectively. The total intrinsic value of stock options exercised was approximately $29 million, $32 million and $9 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Cash received from option exercises was approximately $31 million, $41 million and $10 million for the years ended December 31, 2011, 2010 and 2009, respectively. The tax benefits realized from options exercised were approximately $11 million, $12 million and $3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Accelerated Share Repurchase (ASR) of NEE Common Stock - In December 2011, NEE purchased approximately 6.7 million shares of its common stock at a price of $55.76 per share for an aggregate price of $375 million pursuant to an ASR agreement. The approximately 6.7 million shares repurchased were retired, which resulted in a decrease in common stock and additional paid-in capital on NEE's consolidated balance sheet. On February 24, 2012, NEE elected to settle the ASR agreement in cash, which settlement is expected to be complete within three business days of such date; the settlement amount is not expected to be material.

Continuous Offering of NEE Common Stock - In December 2010, NEE completed the program it commenced in January 2009 under which it offered and sold, from time to time, NEE common stock having a gross sales price of up to $400 million. During 2010 and 2009, NEE received gross proceeds through the sale and issuance of common stock under this program of approximately $240 million and $160 million, 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.