9. EQUITY COMPENSATION

Great Plains Energy's Long-Term Incentive Plan is an equity compensation plan approved by Great Plains Energy's shareholders. The Long-Term Incentive Plan permits the grant of restricted stock, restricted stock units, bonus shares, stock options, stock appreciation rights, limited stock appreciation rights, director shares, director deferred share units and performance shares to directors, officers and other employees of Great Plains Energy and KCP&L. The maximum number of shares of Great Plains Energy common stock that can be issued under the plan is 8.0 million. Common stock shares delivered by Great Plains Energy under the Long-Term Incentive Plan may be authorized but unissued, held in the treasury or purchased on the open market (including private purchases) in accordance with applicable securities laws. Great Plains Energy has a policy of delivering newly issued shares, or shares surrendered by Long-Term Incentive Plan participants on account of withholding taxes and held in treasury, or both, and does not expect to repurchase common shares during 2013 to satisfy performance share payments and director deferred share unit conversion. Forfeiture rates are based on historical forfeitures and future expectations and are reevaluated annually.

The following table summarizes Great Plains Energy's and KCP&L's equity compensation expense and the associated income tax benefit.



	2012		2011		2010
Great Plains Energy	(millions)
Compensation expense	$	3.3	$	5.2	$	4.3
Income tax benefit	1.4		1.9		1.0
KCP&L
Compensation expense	$	2.3	$	3.5	$	3.0
Income tax benefit	1.0		1.3		0.5

Performance Shares

The payment of performance shares is contingent upon achievement of specific performance goals over a stated period of time as approved by the Compensation and Development Committee of the Board. The number of performance shares ultimately paid can vary from the number of shares initially granted depending on Great Plains Energy's performance over stated performance periods. Compensation expense for performance shares is calculated by taking the change in fair value between reporting periods for the portion for which the requisite service has been rendered. Dividends are accrued over the vesting period and paid in cash based on the number of performance shares ultimately paid.

The fair value of performance share awards is estimated using a Monte Carlo simulation technique that uses the closing stock price at the valuation date and incorporates assumptions for inputs of expected volatilities, dividend yield and risk-free rates. Expected volatility is based on daily stock price change during a historical period commensurate with the remaining term of the performance period of the grant. The risk-free rate is based upon the rate at the time of the evaluation for zero-coupon government bonds with a maturity consistent with the remaining performance period of the grant. The dividend yield is based on the most recent dividends paid and the actual closing stock price on the valuation date. For shares granted in 2012, inputs for expected volatility, dividend yield and risk-free rates ranged from 20%-21%, 4.27%-4.32%, and 0.33%-0.40%, respectively.

Performance share activity for 2012 is summarized in the following table. Performance adjustment represents the number of shares of common stock related to performance shares ultimately issued that can vary from the number of performance shares initially granted depending on Great Plains Energy's performance over a stated period of time.



	Performance Shares			Grant Date Fair Value*
Beginning balance		442,042			$	21.06
Granted		164,158			19.37
Forfeited		(74,923	)		20.10
Performance adjustment		(160,717	)		15.04
Ending balance		370,560			23.05

* weighted-average

At December 31, 2012, the remaining weighted-average contractual term was 0.9 years. The weighted-average grant-date fair value of shares granted was $19.37, $26.15 and $23.37 in 2012, 2011 and 2010, respectively. At December 31, 2012, there was $1.8 million of total unrecognized compensation expense, net of forfeiture rates, related to performance shares granted under the Long-Term Incentive Plan, which will be recognized over the remaining weighted-average contractual term. There were no performance shares earned and paid in 2012. The total fair value of performance shares earned and paid in 2011 was $0.8 million. The total fair value of performance shares earned and paid in 2010 was insignificant.

Restricted Stock

Restricted stock cannot be sold or otherwise transferred by the recipient prior to vesting and has a value equal to the fair market value of the shares on the issue date. Restricted stock shares vest over a stated period of time with accruing reinvested dividends subject to the same restrictions. Compensation expense, calculated by multiplying shares by the grant-date fair value related to restricted stock, is recognized over the stated vesting period. Restricted stock activity for 2012 is summarized in the following table.



	Nonvested Restricted Stock			Grant Date Fair Value*
Beginning balance		386,183			$	17.06
Granted and issued		165,910			19.75
Vested		(206,838	)		15.78
Forfeited		(67,816	)		19.49
Ending balance		277,439			19.03

* weighted-average

At December 31, 2012, the remaining weighted-average contractual term was 1.5 years. The weighted-average grant-date fair value of shares granted was $19.75, $19.03 and $17.80 in 2012, 2011 and 2010, respectively. At December 31, 2012, there was $2.5 million of total unrecognized compensation expense, net of forfeiture rates, related to nonvested restricted stock granted under the Long-Term Incentive Plan, which will be recognized over the remaining weighted-average contractual term. The total fair value of shares vested was $3.3 million, $2.6 million and $7.3 million in 2012, 2011 and 2010, respectively.

Director Deferred Share Units

Non-employee directors receive shares of Great Plains Energy's common stock as part of their annual retainer. Each director may elect to defer receipt of their shares until the end of January in the year after they leave the Board. Director Deferred Share Units have a value equal to the market value of Great Plains Energy's common stock on the grant date with accruing dividends. Compensation expense, calculated by multiplying the director deferred share units by the related grant-date fair value, is recognized at the grant date. The total fair value of shares of Director Deferred Share Units issued was insignificant for 2012 and 2011. Director Deferred Share Units activity for 2012 is summarized in the following table.



	Share Units		Grant Date Fair Value*
Beginning balance		54,231		$	20.19
Issued		15,587		20.96
Ending balance		69,818		20.36

* weighted-average