Share-Based Compensation

12 Months Ended

Dec. 31, 2019

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

Share-Based Compensation

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, respectively, 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 performance period set in the award. 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, the cost of the director or employee services received in exchange for a performance unit award is measured based on the current market value of MGE Energy common stock. The fair value of the awards is remeasured quarterly, including as of December 31, 2019, 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 remeasured 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. Grants since January 1, 2018, under this plan are as follows:

Grant Date	MGE Energy Units Granted
January 17, 2020	5,048
January 18, 2019	5,175
March 1, 2018	1,106
January 19, 2018	4,704

Units granted under the Performance Unit Plan are subject to a five-year vesting schedule. Grants since January 1, 2016, under this plan are as follows:

Grant Date	MGE Energy Units Granted
February 15, 2019	17,022
February 16, 2018	17,830
March 1, 2017	14,704
February 19, 2016	19,055

For nonretirement eligible employees under the Performance Unit Plan, 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 as retirement eligibility accelerates vesting.During the years ended December 31, 2019, 2018 and 2017, MGE recorded $3.0 million, $1.1 million, and $1.0 million, respectively, in compensation expense as a result of awards under the plans. In January 2019, cash payments of $1.5 million were distributed relating to awards that were granted under the plans in 2016, for the Director Incentive Plan, and 2014, for the Performance Unit Plan. No forfeitures of units occurred during the years ended December 31, 2019, 2018, and 2017. As of December 31, 2019, $6.2 million of outstanding awards are vested. Of this amount, no cash settlements have occurred as cash payments are only made at the end of the period covered by the awards.