Share-Based Compensation

3 Months Ended

Mar. 31, 2013

Share-based Compensation [Abstract]

Share-Based Compensation

Note 8 - Share-Based Compensation

Questar may issue stock options, restricted shares, RSUs and performance shares to certain officers, employees and non-employee directors under its LTSIP. Questar recognizes expense over time as the stock options, restricted shares, RSUs and performance shares vest. Total share-based compensation expense amounted to $3.1 million for the first quarter of 2013 compared to $2.7 million in 2012. Deferred share-based compensation, representing the unvested value of restricted share and RSU awards, amounted to $10.4 million at March 31, 2013. Deferred share-based compensation is included in common stock on the Condensed Consolidated Balance Sheets. For the first quarter, cash flow from income tax benefits in excess of recognized compensation expense amounted to $1.4 million in 2013 compared to $3.5 million in 2012. There were 5,956,958 shares available for future grants at March 31, 2013.

Unvested stock options decreased by 29,398 shares to zero shares in the first quarter of 2013. Questar did not grant any stock options in the first quarter of 2013. Stock option transactions under the terms of the LTSIP are summarized below:

	Options Outstanding		Exercise Price Range					Weighted-Average Exercise Price
Balance at December 31, 2012	770,923		$	4.37	-	$	17.35	$	11.35
Exercised	(50,750	)				4.37		4.37
Balance at March 31, 2013	720,173		$	7.84	-	$	17.35	$	11.84

Options Outstanding									Options Exercisable
Range of exercise prices					Number outstanding at March 31, 2013	Weighted-average remaining term in years	Weighted-average exercise price		Number exercisable at March 31, 2013	Weighted-average exercise price
$	7.84	-	$	11.40	404,174	2.6	$	10.52	404,174	$	10.52
13.10		-	17.35		315,999	3.3	13.54		315,999	13.54
					720,173	2.9	$	11.84	720,173	$	11.84

Restricted share grants typically vest in equal installments over a three- or four-year period from the grant date. Several grants vest in a single installment after a specified period. The weighted-average remaining vesting period of unvested restricted shares at March 31, 2013, was 15 months. Transactions involving restricted shares under the terms of the LTSIP are summarized below:

	Restricted Shares Outstanding		Price Range					Weighted-Average Price
Balance at December 31, 2012	810,342		$	13.10	-	$	20.90	$	17.74
Granted	658					21.53		21.53
Vested	(338,750	)	13.10		-	19.39		17.54
Balance at March 31, 2013	472,250		$	13.10	-	$	21.53	$	17.89

Starting in the first quarter of 2013, Questar granted to certain officers, employees and non-employee directors 317,807 RSUs under its LTSIP at a weighted-average price of $23.61. One share of Questar common stock will be distributed for each RSU at the time of vesting. RSU grants typically vest in equal installments over a three-year period from the grant date. Several grants vest in a single installment after a specified period. The weighted-average remaining vesting period of unvested RSUs at March 31, 2013, was 23 months.

Grants of RSUs with deferred share distributions (deferred RSUs) typically vest in equal installments over a three-year period from the grant date. At March 31, 2013, Questar's outstanding deferred RSUs totaled 71,947 with a weighted-average price of $15.55 per share and a weighted-average remaining vesting period of three months. One share of Questar common stock will be distributed for each vested deferred RSU (including accrued reinvested dividend equivalents) at the time of the grantee's separation from service.

Questar grants performance shares to certain Company executive officers under the terms of the LTSIP. The awards are designed to motivate and reward these executives for long-term Company performance and provide an incentive for them to remain with the Company. The target number of performance shares for each executive officer is subject to adjustment upward or downward based on the Company's performance relative to a specified peer group of companies over a three-year performance period with respect to defined performance criteria. Each three-year performance period commences at the beginning of the year of grant. The actual performance shares awarded, if any, are distributed in the quarter following the conclusion of the performance period so long as such executive officer was employed by the Company or its affiliates as of the last day of the performance period.

Half of any award will be distributed in shares of Questar common stock and half in cash. Equity- and liability-based performance share compensation expense amounted to $0.8 million in the first quarter of 2013 and $0.4 million in the first quarter of 2012. The weighted-average remaining vesting period of unvested performance shares at March 31, 2013 was 21 months. Performance share transactions under the terms of the LTSIP are summarized below:

	Target Number of Performance Shares Outstanding	Grant-Date Fair Value Range					Weighted- Average Grant-Date Fair Value
Balance at December 31, 2012	264,867	$	18.23	-	$	25.42	$	21.94
Granted	126,606				39.62		39.62
Balance at March 31, 2013	391,473	$	18.23	-	$	39.62	$	27.66