At December 31, 2011 and 2010, Exelon's common stock without par value consisted of 2,000,000,000 shares authorized and 663,368,958 shares and 661,845,411, shares outstanding, respectively. At December 31, 2011 and 2010, ComEd's common stock with a $12.50 par value consisted of 250,000,000 shares authorized and 127,016,529 shares and 127,016,519 shares outstanding, respectively. At December 31, 2011 and 2010, PECO's common stock without par value consisted of 500,000,000 shares authorized and 170,478,507 shares outstanding.

ComEd had 75,096 and 75,139 warrants outstanding to purchase ComEd common stock at December 31, 2011 and 2010, respectively. The warrants entitle the holders to convert such warrants into common stock of ComEd at a conversion rate of one share of common stock for three warrants. At December 31, 2011 and 2010, 25,032 and 25,046 shares of common stock, respectively, were reserved for the conversion of warrants.

Share Repurchase Programs. In April 2004, Exelon's Board of Directors approved a discretionary share repurchase program that allowed Exelon to repurchase shares of its common stock on a periodic basis in the open market. The share repurchase program was intended to mitigate, in part, the dilutive effect of shares issued under Exelon's employee stock option plan and Exelon's ESPP. The aggregate value of the shares of common stock repurchased pursuant to the program cannot exceed the economic benefit received after January 1, 2004 due to stock option exercises and share purchases pursuant to Exelon's ESPP. The economic benefit consists of the direct cash proceeds from purchases of stock and the tax benefits associated with exercises of stock options. The 2004 share repurchase program had no specified limit on the number of shares that could be repurchased and no specified termination date. Any shares repurchased are held as treasury shares, at cost, unless cancelled or reissued at the discretion of Exelon's management.

In the third quarter of 2008, Exelon's Board of Directors approved a share repurchase program for $1.5 billion of its common stock. Subsequently, Exelon's management determined to defer indefinitely any share repurchases. This decision was made in light of a variety of factors, including: developments affecting the world economy and commodity markets, including those for electricity and gas; the continued uncertainty in capital and credit markets and the potential impact of those events on Exelon's future cash needs; projected cash needs to support investment in the business, including maintenance capital and nuclear uprates; and value-added growth opportunities.

Under the share repurchase programs dating back to 2004, 34.7 million shares of common stock are held as treasury stock with a cost of $2.3 billion at December 31, 2011. During 2011, 2010 and 2009, Exelon had no common stock repurchases.

Exelon grants stock-based awards through its LTIP, which primarily includes performance share awards, stock options and restricted stock units. At December 31, 2011, there were approximately 24 million shares authorized for issuance under the LTIP. For the years ended December 31, 2011, 2010 and 2009, exercised and distributed stock-based awards were primarily issued from authorized but unissued common stock shares.

As the LTIP sponsor, Exelon is the sole issuer of all stock-based compensation awards. All awards are recorded as equity or a liability in Exelon's Consolidated Balance Sheets. The stock-based compensation expense specifically attributable to the employees of Generation, ComEd and PECO is directly recorded to operating and maintenance expense within each of their respective Consolidated Statements of Operations. Stock-based compensation expense attributable to BSC employees is allocated to the Registrants using a cost-causative allocation method.

The following table presents the stock-based compensation expense included in Exelon's Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009:

		Year Ended
		December 31,

Components of Stock-Based Compensation Expense		2011		2010		2009

Performance share awards		$	26	$	6	$	31
Stock options			8		10		20
Restricted stock units			31		21		26
Other stock-based awards			4		4		4

Total stock-based compensation expense included in
	operating and maintenance expense		69		41		81

Income tax benefit			(27)		(16)		(32)

Total after-tax stock-based compensation expense		$	42	$	25	$	49

The following table presents stock-based compensation expense (pre-tax) for the years ended December 31, 2011, 2010 and 2009:

	Year Ended
	December 31,

Subsidiaries	2011		2010		2009

Generation	$	31	$	21	$	38
ComEd		5		3		4
PECO		5		3		6
BSC (a)		28		14		33

Total	$	69	$	41	$	81

(a) These amounts primarily represent amounts billed to Exelon's subsidiaries through intercompany allocations.

There were no significant stock-based compensation costs capitalized during the years ended December 31, 2011, 2010 and 2009.

Exelon receives a tax deduction based on the intrinsic value of the award on the exercise date for stock options and distribution date for performance share awards and restricted stock units. For each award, throughout the requisite service period, Exelon recognizes the tax benefit related to compensation costs. The tax deductions in excess of the benefits recorded throughout the requisite service period are recorded to common stock and are included in other financing activities within Exelon's Consolidated Statements of Cash Flows. The following table presents information regarding Exelon's tax benefits for the years ended December 31, 2011, 2010 and 2009:

			Year Ended
			December 31,

			2011		2010		2009
Realized tax benefit when exercised/distributed:

		Stock options	$	2	$	5	$	6
		Restricted stock units		8		9		7
		Performance share awards		7		13		19
		Stock deferral plan		1		1		1

Excess tax benefits included in other financing activities of Exelon’s
	Consolidated Statements of Cash Flows:
		Stock options	$	1	$	3	$	4

Non-qualified stock options to purchase shares of Exelon's common stock are granted under the LTIP. The exercise price of the stock options is equal to the fair market value of the underlying stock on the date of option grant. Stock options granted under the LTIP generally become exercisable upon a specified vesting date. The vesting period of stock options is generally four years. All stock options expire ten years from the date of grant.

The value of stock options at the date of grant is expensed over the requisite service period using the straight-line method. The requisite service period for stock options is generally four years. However, certain stock options become fully vested upon the employee reaching retirement-eligibility. The value of the stock options granted to retirement-eligible employees is either recognized immediately upon the date of grant or through the date at which the employee reaches retirement eligibility.

Exelon grants most of its stock options in the first quarter of each year. Stock options granted during the remaining quarters of 2011, 2010 and 2009 were not significant.

The fair value of each option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The following table presents the weighted average assumptions used in the pricing model for grants and the resulting weighted average grant date fair value of stock options granted for the years ended December 31, 2011, 2010 and 2009:

	Year Ended December 31,

	2011			2010			2009

Dividend yield		4.84	%		4.56	%		3.72	%
Expected volatility		24.40	%		27.10	%		36.70	%
Risk-free interest rate		2.65	%		2.96	%		2.01	%
Expected life (years)		6.25			6.25			6.25
Weighted average grant date fair value (per share)	$	6.22		$	8.08		$	14.43

The dividend yield is based on several factors, including Exelon's most recent dividend payment at the grant date and the average stock price over the previous year. Expected volatility is based on implied volatilities of traded stock options in Exelon's common stock and historical volatility over the estimated expected life of the stock options. The risk-free interest rate for a security with a term equal to the expected life is based on a yield curve constructed from U.S. Treasury strips at the time of grant. For each year presented, the expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Exelon believes that the simplified method is appropriate due to several factors that result in historical exercise data not being sufficient to determine a reasonable estimate of expected term. Exelon uses historical data to estimate employee forfeitures, which are compared to actual forfeitures on a quarterly basis and adjusted as necessary.

The following table presents information with respect to stock option activity for the year ended December 31, 2011:

		Weighted		Weighted
		Average		Average
		Exercise		Remaining
		Price		Contractual	Aggregate
		(per		Life	Intrinsic
	Shares	share)		(years)	Value

Balance of shares outstanding at December 31, 2010	11,209,003	$	48.39
Options granted	1,017,000		43.40
Options exercised	(424,228)		30.25
Options forfeited	(68,175)		49.82
Options expired	(179,839)		55.68

Balance of shares outstanding at December 31, 2011	11,553,761	$	48.49	4.64	$	30

Exercisable at December 31, 2011 (a)	10,676,711	$	48.48	4.34	$	30

The following table summarizes additional information regarding stock options exercised for the years ended December 31, 2011, 2010 and 2009:

	Year Ended
	December 31,

	2011		2010		2009

Intrinsic value (a)	$	5	$	13	$	15
Cash received for exercise price		13		24		20

(a) The difference between the market value on the date of exercise and the option exercise price.

The following table summarizes Exelon's nonvested stock option activity for the year ended December 31, 2011:


		Weighted Average
		Exercise Price
	Shares	(per share)

Nonvested at December 31, 2010 (a)	942,525	$	54.35
Granted (b)	1,017,000		43.40
Vested (b)	(902,636)		47.27
Forfeited	(179,839)		55.68

Nonvested at December 31, 2011 (a)	877,050	$	48.66

(a) Excludes 1,348,000 and 1,209,225 of stock options issued to retirement-eligible employees as of December 31, 2011 and December 31, 2010, respectively, as they are fully vested.

(b) Includes 620,800 of stock options issued to retirement-eligible employees in 2011 that vested immediately upon the employee reaching retirement eligibility.

At December 31, 2011, $3 million of total unrecognized compensation costs related to nonvested stock options are expected to be recognized over the remaining weighted-average period of 2.09 years.

Exelon grants restricted stock units under the LTIP. The majority of Exelon's restricted stock units will be settled in common stock. In accordance with the authoritative guidance for share-based payments, the cost of services received from employees in exchange for the issuance of restricted stock units to be settled in stock is required to be measured based on the grant date fair value of the restricted stock unit issued. On a very limited basis, Exelon has granted restricted stock units to certain ComEd executives that will be settled in cash. The obligations related to these restricted stock units have been classified as liabilities on Exelon's Consolidated Balance Sheets and are remeasured each reporting period throughout the requisite service period.

The value of the restricted stock units is expensed over the requisite service period using the straight-line method. The requisite service period for restricted stock units is generally three to five years. However, certain restricted stock unit awards become fully vested upon the employee reaching retirement-eligibility. The value of the restricted stock units granted to retirement-eligible employees is either recognized immediately upon the date of grant or through the date at which the employee reaches retirement eligibility. Exelon uses historical data to estimate employee forfeitures, which are compared to actual forfeitures on a quarterly basis and adjusted as necessary.

The following table summarizes Exelon's nonvested restricted stock unit activity for the year ended December 31, 2011:


		Weighted Average
		Grant Date Fair
	Shares	Value (per share)

Nonvested at December 31, 2010 (a)	791,820	$	57.95
Granted	1,015,706		43.33
Vested	(337,970)		60.22
Forfeited	(53,099)		53.16
Undistributed vested awards (b)	(341,973)		44.03

Nonvested at December 31, 2011 (a)	1,074,484	$	48.08

(a) Excludes 448,827 and 233,794 of restricted stock units issued to retirement-eligible employees as of December 31, 2011 and December 31, 2010, respectively, as they are fully vested.

(b) Represents restricted stock units that vested but were not distributed to retirement-eligible employees during 2011.

The weighted average grant date fair value (per share) of restricted stock units granted for the years ended December 31, 2011, 2010 and 2009 was $43.33, $44.23 and $56.08, respectively. At December 31, 2011 and 2010, Exelon had obligations related to outstanding restricted stock units not yet settled of $46 million and $38 million, respectively, which are included in common stock in Exelon's Consolidated Balance Sheets. In addition, Exelon had obligations related to outstanding restricted stock units that will be settled in cash of $1 million at December 31, 2011 and 2010, which are included in deferred credits and other liabilities in Exelon's Consolidated Balance Sheets. For the years ended December 31, 2011, 2010 and 2009, Exelon settled restricted stock units with fair value totaling $19 million, $22 million and $17 million, respectively. At December 31, 2011, $26 million of total unrecognized compensation costs related to nonvested restricted stock units are expected to be recognized over the remaining weighted-average period of 2.12 years.

Exelon grants performance share awards under the LTIP. In 2011, the number of performance shares granted was determined based on the measurement of Exelon's operating performance against a set of pre-defined strategic goals through the end of the year of grant. The 2011 performance share awards will be settled entirely in stock over the three year vesting term. These performance share awards are recorded as common stock within the Consolidated Balance Sheets and are recorded at fair value at the date of grant. The grant date fair value of these equity classified performance share awards was estimated based on the expected payout of the award, which may range from 75% to 125% of the payout target. The portion of the award pertaining to the 75% payout floor is valued based on Exelon's stock price on the grant date. The expected payout in excess of the 75% floor is remeasured each reporting period based on Exelon's current stock price and changes in the expected payout of the award; therefore this portion of the award is subject to volatility until the payout is established.

In 2010 and 2009, the number of performance shares granted was determined based on the performance of Exelon's common stock relative to certain stock market indices during the three-year period through the end of the year of grant. These performance share awards generally vest and settle over a three-year period. The holders of these performance share awards receive shares of common stock and/or cash annually during the vesting period. Participants are eligible for partial or full distributions in cash if they meet certain stock ownership requirements.

The 2010 and 2009 performance share awards that were settled in stock were recorded as common stock within the Consolidated Balance Sheets and recorded at fair value at the date of grant. The grant date fair value of equity classified performance share awards granted during the years ended December 31, 2010 and 2009 was estimated using historical data for the previous two plan years and a Monte Carlo simulation model for the current plan year. This model requires assumptions regarding Exelon's total shareholder return relative to certain stock market indices and the stock beta and volatility of Exelon's common stock and all stocks represented in these indices. Volatility for Exelon and all comparable companies is based on historical volatility over one year using daily stock price observation. The 2010 and 2009 performance share awards that were settled in cash were recorded as liabilities within the Consolidated Balance Sheets. The grant date fair value of liability classified performance share awards granted during the years ended December 31, 2010 and 2009 was based on historical data for the previous two plan years and actual results for the current plan year. The liabilities were remeasured each reporting period throughout the requisite service period and as a result, the compensation costs for cash-settled awards were subject to volatility.

For non retirement-eligible employees, stock-based compensation costs are recognized over the vesting period of three years using the graded-vesting method, a method in which the compensation cost is recognized over the requisite service period for each separately vesting tranche of the award as though the award were multiple awards. For performance shares granted to retirement-eligible employees, the value of the performance shares is recognized ratably over the vesting period which is the year of grant.

The following table summarizes Exelon's nonvested performance share awards activity for the year ended December 31, 2011:


		Weighted Average
		Grant Date Fair
	Shares	Value (per share)

Nonvested at December 31, 2010 (a)	214,823	$	63.51
Granted	689,997		43.52
Vested	(155,132)		66.47
Forfeited	(14,914)		46.01
Undistributed vested awards (b)	(387,926)		43.66

Nonvested at December 31, 2011 (a)	346,848	$	45.37

(a) Excludes 455,418 and 234,419 of performance share awards issued to retirement-eligible employees as of December 31, 2011 and December 31, 2010, respectively, as they are fully vested.

(b) Represents performance share awards that vested but were not distributed to retirement-eligible employees during 2011.

The weighted average grant date fair value (per share) of performance share awards granted during the years ended December 31, 2011, 2010 and 2009 was $43.52, $60.82 and $57.34, respectively. During the years ended December 31, 2011, 2010 and 2009, Exelon settled performance shares with a fair value totaling $22 million, $32 million and $47 million, respectively, of which $10 million, $20 million and $30 million was paid in cash, respectively. As of December 31, 2011, $5 million of total unrecognized compensation costs related to nonvested performance shares are expected to be recognized over the remaining weighted-average period of 2 years.

The following table presents the balance sheet classification of obligations related to outstanding performance share awards not yet settled:


	December 31,

	2011		2010

Current liabilities (a)	$	3	$	9
Deferred credits and other liabilities (b)		—		4
Common stock		30		16

Total	$	33	$	29

(a) Represents the current liability related to performance share awards expected to be settled in cash.

(b) Represents the long-term liability related to performance share awards expected to be settled in cash.