12.

STOCK-BASED COMPENSATION: Stock Options – Stock options may be granted to Nucor’s key employees, officers and non-employee directors with exercise prices at 100% of the market value on the date of the grant. The stock options granted in 2010, 2011 and 2012 are exercisable at the end of three years and have a term of 10 years. There are no options exercisable as of September 29, 2012. All stock options granted prior to 2010 were fully exercised at September 29, 2012. New shares are issued upon exercise of stock options.

A summary of activity under Nucor’s stock option plans for the first nine months of 2012 is as follows (in thousands, except year and per share amounts):

Shares

Weighted -
Average
Exercise
Price

Weighted -
Average
Remaining
Contractual
Life

Aggregate
Intrinsic
Value

Number of shares under option:

Outstanding at beginning of year

1,156

38.26

Granted

754

35.76

Exercised

(354

)

29.67

4,272

Canceled

—

Outstanding at September 29, 2012

1,556

39.01

9.0 years

1,886

Options exercisable at September 29, 2012

—

Compensation expense for stock options was $0.3 million and $1.9 million in the third quarter of 2012 and 2011, respectively, and $9.5 million and $9.3 million in the first nine months of 2012 and 2011, respectively. As of September 29, 2012, unrecognized compensation expense related to options was $0.8 million, which is expected to be recognized over 0.7 years. The amount of cash received from the exercise of stock options totaled $4.3 million and $10.5 million in the third quarter and first nine months of 2012, respectively.

Restricted Stock Units – Nucor annually grants restricted stock units (“RSUs”) to key employees, officers and non-employee directors. The RSUs typically vest and are converted to common stock in three equal installments on each of the first three anniversaries of the grant date. A portion of the RSUs awarded to senior officers vest upon the officer’s retirement. Retirement, for purposes of vesting in these RSUs only, means termination of employment with approval of the Compensation and Executive Development Committee of the Board of Directors after satisfying age and years of service requirements. RSUs granted to non-employee directors are fully vested on the grant date and are payable to the non-employee director in the form of common stock after the termination of the director’s service on the board of directors.

RSUs granted to employees who are eligible for retirement on the date of grant are expensed immediately, and RSUs granted to employees who will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible since these awards vest upon retirement from the Company. Compensation expense for RSUs granted to employees who are not retirement-eligible is recognized on a straight-line basis over the vesting period.

Cash dividend equivalents are paid to participants each quarter. Dividend equivalents paid on units expected to vest are recognized as a reduction in retained earnings.

The fair value of the RSUs is determined based on the closing stock price of Nucor’s common stock on the day before the grant. A summary of Nucor’s RSU activity for the first nine months of 2012 is as follows (shares in thousands):


	Shares			Grant Date Fair Value
Restricted stock units:
Unvested at beginning of year		962		$	46.09
Granted		1,101		$	35.76
Vested		(898	)	$	40.23
Canceled		(29	)	$	39.85

Unvested at September 29, 2012		1,136		$	40.86


Shares reserved for future grants (stock options and RSUs)		11,833

Compensation expense for RSUs was $4.7 million and $6.5 million in the third quarter of 2012 and 2011, respectively, and $29.6 million and $26.2 million in the first nine months of 2012 and 2011, respectively. As of September 29, 2012, unrecognized compensation expense related to unvested RSUs was $32.3 million, which is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock Awards – Nucor’s Senior Officers Long-Term Incentive Plan (the “LTIP”) and Annual Incentive Plan (the “AIP”) authorize the award of shares of common stock to officers subject to certain conditions and restrictions.

The LTIP provides for the award of shares of restricted common stock at the end of each LTIP performance measurement period at no cost to officers if certain financial performance goals are met during the period. One-third of the LTIP restricted stock award vests upon each of the first three anniversaries of the award date or, if earlier, upon the officer’s attainment of age fifty-five while employed by Nucor. Although participants are entitled to cash dividends and may vote such awarded shares, the sale or transfer of such shares is limited during the restricted period.

The AIP provides for the payment of annual cash incentive awards. An AIP participant may elect, however, to defer payment of up to one-half of an annual incentive award. In such event, the deferred AIP award is converted into common stock units and credited with a deferral incentive, in the form of additional common stock units, equal to 25% of the number of common stock units attributable to the deferred AIP award. Common stock units attributable to deferred AIP awards are fully vested. Common stock units credited as a deferral incentive vest upon the AIP participant’s attainment of age fifty-five while employed by Nucor. Vested common stock units are paid to AIP participants in the form of shares of common stock following their termination of employment with Nucor.

A summary of Nucor’s restricted stock activity under the AIP and LTIP for the first nine months of 2012 is as follows (shares in thousands):


	Shares			Grant Date Fair Value
Restricted stock awards and units:
Unvested at beginning of year		94		$	42.46
Granted		122		$	42.20
Vested		(144	)	$	41.62
Canceled		—			—

Unvested at September 29, 2012		72		$	43.72


Shares reserved for future grants		1,360

Compensation expense for common stock and common stock units awarded under the AIP and LTIP is recorded over the performance measurement and vesting periods based on the anticipated number and market value of shares of common stock and common stock units to be awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of amounts payable in cash, was $0.5 million and $0.4 million in the third quarter of 2012 and 2011, respectively, and $3.6 million and $4.7 million in the first nine months of 2012 and 2011, respectively. At September 29, 2012, unrecognized compensation expense related to unvested restricted stock awards was $0.8 million, which is expected to be recognized over a weighted-average period of 1.6 years.