SHAREHOLDERS' EQUITY

Issuance of Common Stock

DOMINION

Dominion maintains Dominion Direct^® and a number of employee savings plans through which contributions may be invested in Dominion's common stock. These shares may either be newly issued or purchased on the open market with proceeds contributed to these plans. In January 2012, Dominion began issuing new common shares for these direct stock purchase plans. In January 2014, Dominion began purchasing its common stock on the open market for these plans.

During 2013, Dominion issued approximately 5.4 million shares of common stock through various programs. Dominion received cash proceeds of $278 million from the issuance of 4.7 million of such shares through Dominion Direct and employee savings plans.

In January 2012, Dominion filed a new SEC shelf registration for the sale of debt and equity securities including the ability to sell common stock through an at the market program. Dominion entered into four separate Sales Agency Agreements to effect sales under the program. However, with the exception of issuing approximately $317 million in equity through employee savings plans, direct stock purchase and dividend reinvestment plans, converted securities and other employee and director benefit plans, Dominion did not issue common stock in 2013.

VIRGINIA POWER

In 2013, 2012 and 2011, Virginia Power did not issue any shares of its common stock to Dominion.

Shares Reserved for Issuance

At December 31, 2013, Dominion had approximately 48 million shares reserved and available for issuance for Dominion Direct^®, employee stock awards, employee savings plans, director stock compensation plans, contingent convertible senior notes and issuance in connection with stock purchase contracts. See Note 17 for more information.

Repurchase of Common Stock

Dominion did not repurchase any shares in 2013 or 2012 and does not plan to repurchase shares during 2014, except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock and purchases of common stock on the open market in 2014 for direct stock purchase plans, which do not count against its stock repurchase authorization.

Accumulated Other Comprehensive Income (Loss)

Presented in the table below is a summary of AOCI by component:



At December 31,	2013			2012
(millions)
Dominion
Net deferred losses on derivatives-hedging activities, net of tax of $196 and $87	$	(288	)	$	(122	)
Net unrealized gains on nuclear decommissioning trust funds, net of tax of $(307) and $(206)	474			326
Net unrecognized pension and other postretirement benefit costs, net of tax of $365 and $745	(510		)	(1,081		)
Total AOCI	$	(324	)	$	(877	)
Virginia Power
Net deferred losses on derivatives-hedging activities, net of tax of $-- and $3	$	—		$	(6	)
Net unrealized gains on nuclear decommissioning trust funds, net of tax of $(30) and $(19)	48			31
Total AOCI	$	48		$	25

The following table presents Dominion’s changes in AOCI by component, net of tax:



	Deferred gains and losses on derivatives-hedging activities			Unrealized gains and losses on investment securities			Unrecognized pension and other postretirement benefit costs			Total
(millions)
Year Ended December 31, 2013
Beginning balance	$	(122	)	$	326		$	(1,081	)	$	(877	)
Other comprehensive income before reclassifications: gains (losses)	(243		)	203			516			476
Amounts reclassified from accumulated other comprehensive income: (gains) losses⁽¹⁾	77			(55		)	55			77
Net current period other comprehensive income (loss)	(166		)	148			571			553
Ending balance	$	(288	)	$	474		$	(510	)	$	(324	)

(1) See table below for details about these reclassifications.

The following table presents Dominion’s reclassifications out of AOCI by component:



Details about AOCI components	Amounts reclassified from AOCI			Affected line item in the Consolidated Statements of Income
(millions)
Year Ended December 31, 2013
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts	$	58		Operating revenue
	47			Purchased gas
	10			Electric fuel and other energy-related purchases
Interest rate contracts	15			Interest and related charges
Total	130
Tax	(53		)	Income tax expense
Total, net of tax	$	77
Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities	$	(98	)	Other income
Impairment	8			Other income
Total	(90		)
Tax	35			Income tax expense
Total, net of tax	$	(55	)
Unrecognized pension and other postretirement benefit costs:
Prior-service costs (credits)	$	(8	)	Other operations and maintenance
Actuarial losses	102			Other operations and maintenance
Total	94
Tax	(39		)	Income tax expense
Total, net of tax	$	55

The following table presents Virginia Power’s changes in AOCI by component, net of tax:



	Deferred gains and losses on derivatives-hedging activities			Unrealized gains and losses on nuclear decommissioning trust funds			Total
(millions)
Year Ended December 31, 2013
Beginning balance	$	(6	)	$	31		$	25
Other comprehensive income before reclassifications: gains (losses)	6			20			26
Amounts reclassified from accumulated other comprehensive income: (gains) losses⁽¹⁾	—			(3		)	(3		)
Net current period other comprehensive income (loss)	6			17			23
Ending balance	$	—		$	48		$	48

(1) See table below for details about these reclassifications.

The following table presents Virginia Power’s reclassifications out of AOCI by component:



Details about AOCI components	Amounts reclassified from AOCI			Affected line item in the Consolidated Statements of Income
(millions)
Year Ended December 31, 2013
Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities	$	(6	)	Other income
Impairment	1			Other income
Total	(5		)
Tax	2			Income tax expense
Total, net of tax	$	(3	)

Stock-Based Awards

The 2005 Incentive Compensation Plan permits stock-based awards that include restricted stock, performance grants, goal-based stock, stock options, and stock appreciation rights. The Non-Employee Directors Compensation Plan permits grants of restricted stock and stock options. Under provisions of both plans, employees and non-employee directors may be granted options to purchase common stock at a price not less than its fair market value at the date of grant with a maximum term of eight years. Option terms are set at the discretion of the CGN Committee of the Board of Directors or the Board of Directors itself, as provided under each plan. At December 31, 2013, approximately 32 million shares were available for future grants under these plans.

Dominion measures and recognizes compensation expense relating to share-based payment transactions over the vesting period based on the fair value of the equity or liability instruments issued. Dominion's results for the years ended December 31, 2013, 2012 and 2011 include $31 million, $25 million, and $39 million, respectively, of compensation costs and $11 million, $8 million, and $13 million, respectively of income tax benefits related to Dominion's stock-based compensation arrangements. Stock-based compensation cost is reported in other operations and maintenance expense in Dominion's Consolidated Statements of Income. Excess tax benefits are classified as a financing cash flow. During the years ended December 31, 2013, 2012, and 2011, Dominion realized less than $1 million, $10 million and $2 million, respectively, of excess tax benefits from the vesting of restricted stock awards and exercise of stock options.

STOCK OPTIONS

The following table provides a summary of changes in amounts of stock options outstanding as of and for the years ended December 31, 2012 and 2011. There were no stock options outstanding in 2013. No options were granted under any plan in 2013, 2012 or 2011.



	Shares		Weighted - average Exercise Price		Weighted - average Remaining Contractual Life	Aggregated Intrinsic Value⁽¹⁾
	(thousands)				(years)	(millions)
Outstanding and exercisable at December 31, 2010	1,810		$	31.76		20
Exercised	(1,174	)	$	32.46		$	17
Forfeited/expired	(8	)	$	31.57
Outstanding and exercisable at December 31, 2011	628		$	30.81		$	14
Exercised	(622	)	$	30.79		$	13
Forfeited/expired	(6	)	$	32.26
Outstanding and exercisable at December 31, 2012	—		$	—		$	—


(1)	Intrinsic value represents the difference between the exercise price of the option and the market value of Dominion's stock.

Dominion issues new shares to satisfy any stock option exercises. Dominion received cash proceeds from the exercise of stock options of approximately $19 million, and $38 million in the years ended December 31, 2012 and 2011, respectively.

RESTRICTED STOCK

Restricted stock grants are made to officers under Dominion's LTIP and may also be granted to certain key non-officer employees from time to time. The fair value of Dominion's restricted stock awards is equal to the closing price of Dominion's stock on the date of grant. New shares are issued for restricted stock awards on the date of grant and generally vest over a three-year service period. The following table provides a summary of restricted stock activity for the years ended December 31, 2013, 2012 and 2011:



	Shares		Weighted - average Grant Date Fair Value
	(thousands)
Nonvested at December 31, 2010	1,476		$	38.20
Granted	299		43.68
Vested	(617	)	40.72
Cancelled and forfeited	(25	)	36.29
Converted from goal-based stock to restricted stock	168		30.99
Nonvested at December 31, 2011	1,301		$	37.37
Granted	390		51.14
Vested	(596	)	33.31
Cancelled and forfeited	(10	)	42.99
Nonvested at December 31, 2012	1,085		$	44.46
Granted	312		54.70
Vested	(356	)	39.00
Cancelled and forfeited	(34	)	51.11
Nonvested at December 31, 2013	1,007		$	49.35

As of December 31, 2013, unrecognized compensation cost related to nonvested restricted stock awards totaled $21 million and is expected to be recognized over a weighted-average period of 1.8 years. The fair value of restricted stock awards that vested was $20 million, $30 million, and $28 million in 2013, 2012 and 2011, respectively. Employees may elect to have shares of restricted stock withheld upon vesting to satisfy tax withholding obligations. The number of shares withheld will vary for each employee depending on the vesting date fair market value of Dominion stock and the applicable federal, state and local tax withholding rates.

GOAL-BASED STOCK

Goal-based stock awards are granted under Dominion's LTIP to officers who have not achieved a certain targeted level of share ownership, in lieu of cash-based performance grants. Goal-based stock awards may also be made to certain key non-officer employees from time to time. Current outstanding goal-based shares include awards granted to officers in February 2012 and February 2013.

The issuance of awards is based on the achievement of two performance metrics during a two-year period: TSR relative to that of companies listed as members of the Philadelphia Utility Index as of the end of the performance period and ROIC. The actual number of shares issued will vary between zero and 200% of targeted shares depending on the level of performance metrics achieved. The fair value of goal-based stock is equal to the closing price of Dominion's stock on the date of grant. Goal-based stock awards granted to key non-officer employees convert to restricted stock at the end of the two-year performance period and generally vest three years from the original grant date. Awards to officers vest at the end of the two-year performance period. All goal-based stock awards are settled by issuing new shares.

After the performance period for the February 2010 grants ended on December 31, 2011, the CGN Committee determined the actual performance against metrics established for those awards. For awards to officers, 9 thousand shares of the outstanding goal-based stock awards were converted to 15 thousand non-restricted shares and issued to the officers.

After the performance period for the February 2011 grants ended on December 31, 2012, the CGN Committee determined the actual performance against metrics established for those awards. For awards to officers, 3 thousand shares of the outstanding goal-based stock awards were converted to 2 thousand non-restricted shares and issued to the officers.

The following table provides a summary of goal-based stock activity for the years ended December 31, 2013, 2012 and 2011:



	Targeted Number of Shares		Weighted - average Grant Date Fair Value
	(thousands)
Nonvested at December 31, 2010	161		$	31.79
Granted	3		43.54
Vested	(20	)	34.62
Cancelled and forfeited	(132	)	30.99
Nonvested at December 31, 2011	12		$	39.19
Granted	1		52.48
Vested	(9	)	37.46
Nonvested at December 31, 2012	4		$	45.60
Granted	4		54.17
Vested	(2	)	43.54
Cancelled and forfeited	(1	)	43.54
Nonvested at December 31, 2013	5		$	53.85

At December 31, 2013, the targeted number of shares expected to be issued under the February 2012 and February 2013 awards was approximately 5 thousand. In January 2014, the CGN Committee determined the actual performance against metrics established for the February 2012 awards with a performance period that ended December 31, 2013. Based on that determination, the total number of shares to be issued under the February 2012 goal-based stock awards was approximately 1 thousand.

As of December 31, 2013, unrecognized compensation cost related to nonvested goal-based stock awards was not material.

CASH-BASED PERFORMANCE GRANTS

Cash-based performance grants are made to Dominion's officers under Dominion's LTIP. The actual payout of cash-based performance grants will vary between zero and 200% of the targeted amount based on the level of performance metrics achieved.

In February 2010, a cash-based performance grant was made to officers. A portion of the grant, representing $14 million was paid in December 2011, based on the achievement of two performance metrics during 2010 and 2011: ROIC and TSR relative to that of a peer group of companies. The total amount of the award under the grant was $20 million and the remaining $6 million of the grant was paid in February 2012.

In February 2011, a cash-based performance grant was made to officers. A portion of the grant, representing $6 million was paid in December 2012, based on the achievement of two performance metrics during 2011 and 2012: ROIC and TSR relative to that of a peer group of companies. The total amount of the award under the grant was $8 million and the remaining $2 million of the grant was paid in February 2013.

In February 2012, a cash-based performance grant was made to officers. A portion of the grant, representing the initial payout of $8 million was paid in December 2013, based on the achievement of two performance metrics during 2012 and 2013: TSR relative to that of companies listed as members of the Philadelphia Utility Index as of the end of the performance period and ROIC. The total expected award under the grant is $12 million and the remaining portion of the grant is expected to be paid by March 15, 2014. At December 31, 2013, a liability of $4 million had been accrued for the remaining portion of the award.

In February 2013, a cash-based performance grant was made to officers. Payout of the performance grant is expected to occur by March 15, 2015 based on the achievement of two performance metrics during 2013 and 2014: TSR relative to that of companies listed as members of the Philadelphia Utility Index as of the end of the performance period and ROIC. At December 31, 2013, the targeted amount of the grant was $13 million and a liability of $6 million had been accrued for this award.