Stock-Based Compensation

9 Months Ended

Sep. 30, 2022

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 444,028 shares of its common stock under the 2019 Omnibus Incentive Plan during the first quarter 2022 with a fair value of $16.25 per option. As of September 30, 2022, there were options on 2,789,088 shares of common stock outstanding with a weighted-average exercise price of $96.37. 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, 2022. The aggregate intrinsic value of the stock options outstanding as of September 30, 2022 was $30.9 million.

The following table includes financial information for outstanding stock options for the three months ended September 30, 2022 and 2021:


	2022	2021
	(In Millions)
Compensation expense included in Entergy’s consolidated net income	$0.9	$1.2
Tax benefit recognized in Entergy’s consolidated net income	$0.2	$0.3
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, 2022 and 2021:


	2022	2021
	(In Millions)
Compensation expense included in Entergy’s consolidated net income	$3.2	$3.2
Tax benefit recognized in Entergy’s consolidated net income	$0.8	$0.8
Compensation cost capitalized as part of fixed assets and materials and supplies	$1.2	$1.2

Other Equity Awards

In January 2022 the Board approved and Entergy granted 328,849 restricted stock awards and 170,966 long-term incentive awards under the 2019 Omnibus Incentive Plan. The restricted stock awards were made effective on January 27, 2022 and were valued at $109.59 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. To emphasize the importance of strong cash generation for the long-term health of its business, a credit measure – adjusted funds from operations/debt ratio – was selected for the 2022-2024 performance period. Performance will be measured based eighty percent on relative total shareholder return and twenty percent on the credit measure. The performance units were granted on January 27, 2022 and eighty percent were valued at $138.99 per share based on various factors, primarily market conditions; and twenty percent were valued at $109.59 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, 2022 and 2021:


	2022	2021
	(In Millions)
Compensation expense included in Entergy’s consolidated net income	$9.1	$10.6
Tax benefit recognized in Entergy’s consolidated net income	$2.3	$2.7
Compensation cost capitalized as part of fixed assets and materials and supplies	$3.9	$4.1

The following table includes financial information for other outstanding equity awards for the nine months ended September 30, 2022 and 2021:


	2022	2021
	(In Millions)
Compensation expense included in Entergy’s consolidated net income	$31.1	$31.1
Tax benefit recognized in Entergy’s consolidated net income	$7.9	$7.9
Compensation cost capitalized as part of fixed assets and materials and supplies	$12.6	$12.1