Equity

12 Months Ended

Dec. 31, 2020

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


	Years Ended December 31,
	2020		2019		2018
	(millions, except per share amounts)
Numerator:
Net income attributable to NEE - basic	$	2,919	$	3,769	$	6,638
Adjustment for the impact of dilutive securities at NEP(a)	—		—		(19)
Net income attributable to NEE - assuming dilution	$	2,919	$	3,769	$	6,619

Denominator:
Weighted-average number of common shares outstanding - basic	1,959.0		1,927.9		1,892.8
Equity units, stock options, performance share awards and restricted stock(b)	9.8		14.0		15.1
Weighted-average number of common shares outstanding - assuming dilution	1,968.8		1,941.9		1,907.9
Earnings per share attributable to NEE:
Basic	$	1.49	$	1.95	$	3.51
Assuming dilution	$	1.48	$	1.94	$	3.47

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(a)The 2018 adjustment is related to both the NEP Series A convertible preferred units and the NEP senior unsecured convertible notes issued in 2017 (see Potentially Dilutive Securities at NEP below).

(b)Calculated using the treasury stock method. 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.

Common shares issuable pursuant to equity units, stock options and/or performance share awards, as well as restricted stock which were not included in the denominator above due to their antidilutive effect were approximately 27.1 million, 3.0 million and 0.5 million for the years ended December 31, 2020, 2019 and 2018, respectively.

On September 14, 2020, NEE's board of directors approved a four-for-one split of NEE common stock effective October 26, 2020. NEE's authorized common stock increased from 800 million to 3.2 billion shares. Prior years' share and share-based data included in NEE's consolidated financial statements have been retrospectively adjusted to reflect the 2020 stock split.

Potentially Dilutive Securities at NEP - Convertible preferred units representing limited partner interests in NEP (NEP preferred units) and NEP senior unsecured convertible notes, when outstanding, are potentially dilutive securities to NEE. In 2017, NEP issued approximately $550 million of Series A NEP preferred units and $300 million of senior unsecured convertible notes. As of December 31, 2020, all of the Series A NEP preferred units and all of the senior unsecured convertible notes issued in 2017 were no longer outstanding.

In December 2020, NEP issued $600 million principal amount of new senior unsecured convertible notes. Holders of these notes may convert all or a portion of the notes in accordance with the related indenture. Upon conversion, NEP will pay cash up to the principal amount of the notes to be converted and pay or deliver, as the case may be, cash, NEP common units or a combination of cash and common units, at NEP's election, in respect of the remainder, if any, of NEP's conversion obligation in excess of the principal amount of the notes being converted.

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.

Stock-Based Compensation - Net income for the years ended December 31, 2020, 2019 and 2018 includes approximately $107 million, $100 million and $82 million, respectively, of compensation costs and $21 million, $17 million and $21 million, respectively, of income tax benefits related to stock-based compensation arrangements. Compensation cost capitalized for the years ended December 31, 2020, 2019 and 2018 was not material. At December 31, 2020, there were approximately $109 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 1.7 years.

At December 31, 2020, approximately 60 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) Amended and Restated 2011 Long Term Incentive Plan, (b) 2017 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 for the majority 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, 2020 was as follows:


	Shares	Weighted- Average Grant Date Fair Value Per Share
Restricted Stock:
Nonvested balance, January 1, 2020	1,980,592	$	39.93
Granted	631,186	$	68.25
Vested	(870,780)	$	39.58
Forfeited	(66,756)	$	49.21
Nonvested balance, December 31, 2020	1,674,242	$	50.26
Performance Share Awards:
Nonvested balance, January 1, 2020	2,680,584	$	35.61
Granted	1,535,436	$	46.09
Vested	(2,081,264)	$	32.93
Forfeited	(196,148)	$	44.85
Nonvested balance, December 31, 2020	1,938,608	$	47.46

The weighted-average grant date fair value per share of restricted stock granted for the years ended December 31, 2019 and 2018 was $46.64 and $38.92 respectively. The weighted-average grant date fair value per share of performance share awards granted for the years ended December 31, 2019 and 2018 was $34.75 and $31.06, respectively.

The total fair value of restricted stock and performance share awards vested was $177 million, $125 million and $115 million for the years ended December 31, 2020, 2019 and 2018, 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:


	2020	2019	2018
Expected volatility(a)	14.63 – 16.31%	14.20 - 14.31%	14.41%
Expected dividends	2.50 – 2.72%	2.85 - 2.93%	3.05%
Expected term (years)(b)	7.0	7.0	7.0
Risk-free rate	0.49 – 1.52%	2.24 - 2.54%	2.83%

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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, 2020 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, 2020	9,666,752	$	30.77
Granted	1,519,712	$	68.76
Exercised	(1,513,324)	$	64.53
Forfeited	(54,936)	$	59.18

Balance, December 31, 2020	9,618,204	$	38.32	6.2	$	373

Exercisable, December 31, 2020	6,382,356	$	29.69	5.1	$	303

The weighted-average grant date fair value of options granted was $7.08, $5.01 and $4.51 per share for the years ended December 31, 2020, 2019 and 2018, respectively. The total intrinsic value of stock options exercised was approximately $71 million, $81 million and $35 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Cash received from option exercises was approximately $30 million, $34 million and $18 million for the years ended December 31, 2020, 2019 and 2018, respectively. The tax benefits realized from options exercised were approximately $17 million, $19 million and $9 million for the years ended December 31, 2020, 2019 and 2018, 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.

Accumulated Other Comprehensive Income (Loss) - The components of AOCI, net of tax, are as follows:


	Accumulated Other Comprehensive Income (Loss)
	Net Unrealized Gains (Losses) on Cash Flow Hedges			Net Unrealized Gains (Losses) on Available for Sale Securities			Defined Benefit Pension and Other Benefits Plans			Net Unrealized Gains (Losses) on Foreign Currency Translation			Other Comprehensive Income (Loss) Related to Equity Method Investees		Total
	(millions)
Balances, December 31, 2017	$	(77)		$	316		$	(39)		$	(69)		$	(20)	$	111
Other comprehensive income (loss) before reclassifications	—			(12)			(14)			(31)			4		(53)
Amounts reclassified from AOCI	26		(a)	1		(b)	(3)		(c)	—			—		24
Net other comprehensive income (loss)	26			(11)			(17)			(31)			4		(29)
Impact of NEP deconsolidation(d)	3			—			—			37			18		58
Adoption of accounting standards updates	(7)			(312)			(9)			—			—		(328)
Balances, December 31, 2018	(55)			(7)			(65)			(63)			2		(188)
Other comprehensive income (loss) before reclassifications	—			20			(46)			22			1		(3)
Amounts reclassified from AOCI	29		(a)	(2)		(b)	(3)		(c)	—			—		24
Net other comprehensive income (loss)	29			18			(49)			22			1		21
Less other comprehensive income attributable to noncontrolling interests	—			—			—			1			—		1
Acquisition of Gulf Power (see Note 6)	(1)			—			—			—			—		(1)

Balances, December 31, 2019	(27)			11			(114)			(42)			3		(169)
Other comprehensive income before reclassifications	—			12			37			13			1		63
Amounts reclassified from AOCI	12		(a)	(3)		(b)	2		(c)	—			—		11
Net other comprehensive income	12			9			39			13			1		74
Less other comprehensive income attributable to noncontrolling interests	—			—			—			7			—		7
Impact of disposal of a business	23		(e)	—			—			(13)		(e)	—		10

Balances, December 31, 2020	$	8		$	20		$	(75)		$	(49)		$	4	$	(92)
Attributable to noncontrolling interests	$	—		$	—		$	—		$	(8)		$	—	$	(8)
Attributable to NEE	$	8		$	20		$	(75)		$	(41)		$	4	$	(84)

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(a)Reclassified to interest expense in NEE's consolidated statements of income. See Note 3 - Income Statement Impact of Derivative Instruments.

(b)Reclassified to gains on disposal of investments and other property - net in NEE's consolidated statements of income.

(c)Reclassified to other net periodic benefit income in NEE's consolidated statements of income.

(d)Reclassified and included in gain on NEP deconsolidation. See Note 1 - Basis of Presentation.

(e)Reclassified to gains on disposal of businesses/assets - net and interest expense in NEE's consolidated statements of income. See Note 3 - Income Statement Impact of Derivative Instruments and Note 1 - Disposal of Businesses/Assets.