Share-Based Compensation

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation - MGE Energy and MGE.

Under MGE Energy's Director Incentive Plan and its Performance Unit Plan, non-employee directors and eligible employees may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period. In accordance with the plans' provisions, these awards are subject to prescribed vesting schedules and must be settled in cash. Accordingly, no shares of common stock will be issued in connection with the plans.

On the grant date, MGE Energy and MGE measure the cost of the director or employee services received in exchange for a performance unit award based on the current market value of MGE Energy common stock. The fair value of the awards is re-measured quarterly, including at December 31, 2017, as required by applicable accounting standards. Changes in fair value as well as the original grant are recognized as compensation cost. Since this amount is re-measured throughout the vesting period, the compensation cost is subject to variability.

Units granted under the Director Incentive Plan are subject to a three-year vesting schedule. The most recent three years of units granted under this plan are as follows:

	Grant Date		MGE Energy Units Granted
	January 19, 2018		4,704
	January 20, 2017		4,608
	January 15, 2016		3,773

Units granted under the Performance Unit Plan are subject to a five-year vesting schedule. The most recent units granted under this plan are as follows:

	Grant Date		MGE Energy Units Granted
	February 16, 2018		17,830
	March 1, 2017		14,704
	February 19, 2016		19,055
	February 20, 2015		18,948
	February 21, 2014		21,991

For nonretirement eligible employees, stock-based compensation costs are accrued and recognized using the graded vesting method. Compensation cost for retirement eligible employees or employees that will become retirement eligible during the vesting schedule are recognized on an abridged horizon.

During the years ended December 31, 2017 and 2015, MGE recorded $1.0 million in compensation expense as a result of awards under the plans. During the year ended December 31, 2016, MGE recorded $3.1 million in compensation expense as a result of awards under the plans. In January 2017, cash payments of $1.7 million were distributed relating to awards that were settled based on the prescribed vesting schedules. During the year ended December 31, 2015, MGE recorded a $0.2 million gain on 4,676 units forfeited. No forfeitures occurred during the years ended December 31, 2017 and 2016. At December 31, 2017, $5.9 million of outstanding awards are vested, and of this amount, no cash settlements have occurred.