Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

STOCK-BASED COMPENSATION (Entergy Corporation)Entergy grants stock and stock-based awards, which are described more fully in Note 12 to the financial statements in the Form 10-K. Awards under Entergy’s plans generally vest over three years.

Stock Options

Entergy granted options on 530,716 shares of its common stock under the 2019 Omnibus Incentive Plan during the first quarter 2020 with a fair value of $11.45 per option. As of September 30, 2020, there were options on 2,424,013 shares of common stock outstanding with a weighted-average exercise price of $89.66. The intrinsic value, which has no effect on net income, of the outstanding stock options is calculated by the positive difference between the weighted average exercise price of the stock options granted and Entergy Corporation’s common stock price as of September 30, 2020. The aggregate intrinsic value of the stock options outstanding as of September 30, 2020 was $38.7 million.

The following table includes financial information for outstanding stock options for the three months ended September 30, 2020 and 2019:


	2020	2019
	(In Millions)
Compensation expense included in Entergy’s net income	$1.0	$0.9
Tax benefit recognized in Entergy’s net income	$0.3	$0.2
Compensation cost capitalized as part of fixed assets and materials and supplies	$0.4	$0.4

The following table includes financial information for outstanding stock options for the nine months ended September 30, 2020 and 2019:


	2020	2019
	(In Millions)
Compensation expense included in Entergy’s net income	$3.0	$2.9
Tax benefit recognized in Entergy’s net income	$0.8	$0.7
Compensation cost capitalized as part of fixed assets and materials and supplies	$1.2	$1.0

Other Equity Awards

In January 2020 the Board approved and Entergy granted 313,805 restricted stock awards and 134,853 long-term incentive awards under the 2019 Omnibus Incentive Plan. The restricted stock awards were made effective as of January 30, 2020 and were valued at $131.72 per share, which was the closing price of Entergy’s common stock on that date. Shares of restricted stock have the same dividend and voting rights as other common stock, are considered issued and outstanding shares of Entergy upon vesting, and are expensed ratably over the three-year vesting period. One-third of the restricted stock awards and accrued dividends will vest upon each anniversary of the grant date.

In addition, long-term incentive awards were also granted in the form of performance units that represent the value of, and are settled with, one share of Entergy Corporation common stock at the end of the three-year performance period, plus dividends accrued during the performance period on the number of performance units earned. For the 2020-2022 performance period, performance will be measured based eighty percent on relative total shareholder return and twenty percent on a cumulative adjusted earnings per share metric. The performance units were granted as of January 30, 2020 and eighty percent were valued at $169.74 per share based on various factors, primarily market conditions; and twenty percent were valued at $131.72 per share, the closing price of Entergy’s common stock on that date. Performance units have the same dividend rights as shares of Entergy common stock and are considered issued and outstanding shares of Entergy upon vesting. Performance units are expensed ratably over the three-year vesting period and compensation cost for the portion of the award based on cumulative adjusted earnings per share will be adjusted based on the number of units that ultimately vest. See Note 12 to the financial statements in the Form 10-K for a description of the Long-Term Performance Unit Program.

The following table includes financial information for other outstanding equity awards for the three months ended September 30, 2020 and 2019:


	2020	2019
	(In Millions)
Compensation expense included in Entergy’s net income	$8.9	$8.4
Tax benefit recognized in Entergy’s net income	$2.2	$2.1
Compensation cost capitalized as part of fixed assets and materials and supplies	$3.6	$3.0

The following table includes financial information for other outstanding equity awards for the nine months ended September 30, 2020 and 2019:


	2020	2019
	(In Millions)
Compensation expense included in Entergy’s net income	$27.9	$25.6
Tax benefit recognized in Entergy’s net income	$7.1	$6.5
Compensation cost capitalized as part of fixed assets and materials and supplies	$10.8	$8.8