Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Information concerning stock-based compensation plans is contained in Note 13 of Notes to Consolidated Financial Statements in the 2010 Annual Reports on Form 10-K. In 2011, the Company changed its approach to awarding stock-based compensation. As a result, no stock options have been granted in 2011 and awards of restricted stock have increased.

Stock Options

The following table summarizes activity in stock option plans for the six months ended June 30, 2011:

	Shares		Weighted- Average Exercise Price		Aggregate Intrinsic Value			Weighted- Average Remaining Contract Life
Outstanding at beginning of period	3,948,262		$	18.33
Granted	—		$	—
Exercised	(199,683	)	$	11.01
Forfeited	(8,333	)	$	11.33
Expired	(47,936	)	$	24.51
Outstanding at end of period	3,692,310		$	18.66	$	9,793,593	(1)	5.36 years
Exercisable at end of period	3,152,000		$	21.86	$	6,663,441		4.85 years
Options available for future grant(2)	4,763,254

(1) At June 30, 2011, the exercise price of 1,978,010 outstanding stock options is greater than the closing price of PNMR common stock on that date; therefore, those options have no intrinsic value.

(2) Includes shares available for grants of restricted stock.

The following table provides additional information concerning stock option activity:

	Six Months Ended June 30,
Options for PNMR Common Stock	2011		2010
Weighted-average grant date fair value of options granted	$	—	$	3.05
Total fair value of options that vested (in thousands)	$	1,189	$	1,027
Total intrinsic value of options exercised (in thousands)	$	2,199	$	329

Restricted Stock and Performance Shares

The following table summarizes nonvested restricted stock activity for the six months ended June 30, 2011:

Nonvested Restricted Stock	Shares		Weighted- Average Grant-Date Fair Value
Nonvested at beginning of period	237,021		$	9.24
Granted	308,985		$	13.10
Vested	(110,757	)	$	9.69
Forfeited	—		$	—
Nonvested at end of period	435,249		$	11.91

Compensation expense for restricted stock and performance stock awards was determined based on the market price of PNMR stock on the date of grant reduced by the present value of future dividends, which will not be received during the vesting period, applied to the total number of shares that were anticipated to fully vest.

The following table provides additional information concerning restricted stock:

	Six Months Ended
	June 30,
Nonvested Restricted Stock	2011			2010
Weighted-average grant date fair value of shares
granted	$	13.10		$	9.37
Total fair value of shares that vested (in thousands)	$	1,073		$	1,308
Expected quarterly dividends per share	$	0.125		$	0.125
Risk-free interest rate	1.20		%	1.36		%

Beginning in 2009, the Company issued performance share agreements to certain executives that are based upon the Company achieving specified performance targets over periods of one to three years. The determination of the number of shares ultimately issued depends on the levels at which the performance criteria are achieved and cannot be determined until after the performance periods end. For the targets based only on 2010 performance, near optimal level was attained resulting in 88,913 shares being awarded in 2011, which will vest evenly from 2012 through 2014 and are included in the number of shares granted in the above table. Excluded from the above table is a maximum of 560,461 shares based on performance targets through 2013 that would be issued and vest upon issuance if all performance criteria are achieved and all executives remain eligible.