At December 31, 2012 and 2011, Exelon's common stock without par value consisted of 2,000,000,000 shares authorized and 854,781,389 shares and 663,368,958, shares outstanding, respectively. At December 31, 2012 and 2011, ComEd's common stock with a $ 12.50 par value consisted of 250,000,000 shares authorized and 127,016,761 shares and 127,016,529 shares outstanding, respectively. At December 31, 2012 and 2011, PECO's common stock without par value consisted of 500,000,000 shares authorized and 170,478,507 shares outstanding. At December 31, 2012 and 2011, BGE's common stock without par value consisted of 175,000,000 shares authorized and 1,000 shares outstanding.

ComEd had 74,182 and 75,096 warrants outstanding to purchase ComEd common stock at December 31, 2012 and 2011, 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, 2012 and 2011, 24,727 and 25,032 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, 2012. During 2012, 2011 and 2010, 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, 2012, there were approximately 20 million shares authorized for issuance under the LTIP. For the years ended December 31, 2012, 2011 and 2010, 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, PECO and BGE 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.

In connection with the acquisition of Constellation in March 2012, Exelon assumed Constellation's 1995 Long-Term Incentive Plan, 2002 Senior Management Long-Term Incentive Plan, Amended and Restated 2007 Long-Term Incentive Plan, Amended and Restated Management Long-Term Incentive Plan and Executive Long-Term Incentive Plan (collectively and as amended, if applicable, the "Constellation Plans"). Stock-based awards granted under the Constellation Plans and held by Constellation employees were generally converted into outstanding Exelon stock-based compensation awards with the estimated fair value determined to be $71 million using the Black-Scholes model. Refer to Note 4 - Merger and Acquisitions for further information regarding the merger transaction. Specifically, as of the merger closing: (1) Exelon converted 12,037,093 outstanding shares that were subject to Constellation stock options into 11,194,151 Exelon stock options valued at $65 million; and (2) Exelon converted 165,219 Constellation no-sale restricted stock units into 153,654 Exelon no-sale restricted stock units valued at $6 million.

Exelon generally grants most of its stock options in the first quarter of each year. In connection with the merger with Constellation, the Compensation Committee of Exelon's Board of Directors elected to delay the annual equity award grant from January 2012 to the effective date of the merger on March 12, 2012, in order to ensure that a majority of eligible employees receive grants on the same date and at the same market price.

The following table presents the stock-based compensation expense included in Exelon's Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010:

		Year Ended
		December 31,

Components of Stock-Based Compensation Expense		2012		2011		2010

Performance share awards		$	46	$	26	$	6
Stock options			15		8		10
Restricted stock units			50		31		21
Other stock-based awards			4		4		4

Total stock-based compensation expense included in
	operating and maintenance expense		115		69		41

Income tax benefit			(44)		(27)		(16)

Total after-tax stock-based compensation expense		$	71	$	42	$	25

The following table presents stock-based compensation expense (pre-tax) for the years ended December 31, 2012, 2011 and 2010:

	Year Ended
	December 31,

Subsidiaries	2012		(a)	2011		2010

Generation	$	42		$	31	$	21
ComEd		11			5		3
PECO		5			5		3
BGE		5			6		4
BSC (b)		52			28		14

Total	$	115		$	69	$	41

(a) For BGE, reflects BGE's stock-based compensation expense for the year ended December 31, 2012. For Exelon and Generation, includes the stock-based compensation expense of Constellation and BGE from the date of the merger, March 12, 2012, through December 31, 2012.

(b) These amounts primarily represent amounts billed to Exelon's subsidiaries through intercompany allocations. These amounts are not included in the Generation, ComEd, PECO and BGE amounts above.

There were no significant stock-based compensation costs capitalized during the years ended December 31, 2012, 2011 and 2010.

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, 2012, 2011 and 2010:

			Year Ended
			December 31,

			2012		2011		2010
Realized tax benefit when exercised/distributed:

		Stock options	$	3	$	2	$	5
		Restricted stock units		11		8		9
		Performance share awards		7		7		13
		Stock deferral plan		—		1		1

Excess tax benefits included in other financing activities of Exelon’s
	Consolidated Statements of Cash Flows:
		Stock options	$	2	$	1	$	3

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 2012, 2011 and 2010 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, 2012, 2011 and 2010:

	Year Ended December 31,

	2012			2011			2010

Dividend yield		5.28	%		4.84	%		4.56	%
Expected volatility		23.20	%		24.40	%		27.10	%
Risk-free interest rate		1.30	%		2.65	%		2.96	%
Expected life (years)		6.25			6.25			6.25
Weighted average grant date fair value (per share)	$	4.18		$	6.22		$	8.08

The assumptions above relate to Exelon stock options granted during the period and therefore do not include stock options that were converted in connection with the merger with Constellation during the year ended December 31, 2012.

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, 2012:

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

Balance of shares outstanding at December 31, 2011	11,553,761	$	48.49
Options granted	2,372,000		39.66
Converted Constellation options	11,194,151		41.35
Options exercised	(1,776,041)		26.41
Options forfeited	(980,986)		42.90
Options expired	(459,104)		49.45

Balance of shares outstanding at December 31, 2012	21,903,781	$	45.91	5.58	$	13

Exercisable at December 31, 2012 (a)	19,943,116	$	46.40	5.25	$	13

The following table summarizes additional information regarding stock options exercised for the years ended December 31, 2012, 2011 and 2010:

	Year Ended
	December 31,

	2012		2011		2010

Intrinsic value^(a)	$	19	$	5	$	13
Cash received for exercise price		47		13		24

(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, 2012:


		Weighted Average
		Exercise Price
	Shares	(per share)

Nonvested at December 31, 2011 (a)	877,050	$	48.66
Granted (b)	2,372,000		39.66
Converted Constellation options	11,194,151		41.35
Vested (b)(c)	(12,023,432)		41.37
Forfeited	(459,104)		49.45

Nonvested at December 31, 2012 (a)	1,960,665	$	40.56

(a) Excludes 2,647,536 and 1,348,000 of stock options issued to retirement-eligible employees as of December 31, 2012 and December 31, 2011, respectively, as they are fully vested.

(b) Includes 8,684,709 of converted Constellation options that were vested prior to the Merger on March 12, 2012.

(c) Includes 1,699,000 of stock options issued to retirement-eligible employees in 2012 that vested immediately upon the employee reaching retirement eligibility.

At December 31, 2012, $6 million of total unrecognized compensation costs related to nonvested stock options are expected to be recognized over the remaining weighted-average period of 2.4 years.

Restricted stock units are granted under the LTIP with the majority being settled in a specific number of shares of common stock after the service condition has been met. The corresponding cost of services is measured based on the grant date fair value of the restricted stock unit issued.

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, 2012:


		Weighted Average
		Grant Date Fair
	Shares	Value (per share)

Nonvested at December 31, 2011 (a)	1,074,484	$	48.08
Granted	1,332,214		39.94
Converted Constellation restricted stock	825,735		38.91
Vested	(479,805)		46.36
Forfeited	(76,484)		42.21
Undistributed vested awards (b)	(646,983)		40.75

Nonvested at December 31, 2012 (a)	2,029,161	$	42.12

(a) Excludes 686,121 and 448,827 of restricted stock units issued to retirement-eligible employees as of December 31, 2012 and December 31, 2011, respectively, as they are fully vested.

(b) Represents restricted stock units that vested but were not distributed to retirement-eligible employees during 2012.

The weighted average grant date fair value (per share) of restricted stock units granted for the years ended December 31, 2012, 2011 and 2010 was $39.94, $43.33 and $44.23, respectively. At December 31, 2012 and 2011, Exelon had obligations related to outstanding restricted stock units not yet settled of $58 million and $46 million, respectively, which are included in common stock in Exelon's Consolidated Balance Sheets. For the years ended December 31, 2012, 2011 and 2010, Exelon settled restricted stock units with fair value totaling $25 million, $19 million and $22 million, respectively. At December 31, 2012, $43 million of total unrecognized compensation costs related to nonvested restricted stock units are expected to be recognized over the remaining weighted-average period of 1.9 years.

Performance share awards are granted under the LTIP with the 2012 performance share awards being settled in 50% common stock and 50% cash over the three-year vesting term. The 2011 performance share awards are being settled entirely in common stock over the three-year vesting term. The performance shares granted prior to 2011 generally vest and settle over a three-year period with the holders receiving shares of common stock and/or cash annually during the vesting period.

These awards are recorded at fair value at the date of grant with the estimated grant date fair value based on the expected payout of the award, which may range from 75% to 125% of the payout target. The common stock portion is considered an equity award with the 75% payout floor being valued based on Exelon's stock price on the grant date. The cash portion of the award is considered a liability award with the 75% payout floor being remeasured each reporting period based on Exelon's current stock price. The expected payout in excess of the 75% floor for the equity and liability portions are remeasured each reporting period based on Exelon's current stock price and changes in the expected payout of the award; therefore these portions of the award are subject to volatility until the payout is established.

In 2010, 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 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 year ended 2010 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 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 year ended 2010 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, 2012:


		Weighted Average
		Grant Date Fair
	Shares	Value (per share)

Nonvested at December 31, 2011 (a)	346,848	$	45.37
Granted	1,429,189		39.72
Vested	(167,048)		47.46
Forfeited	(116,388)		39.78
Undistributed vested awards (b)	(179,867)		40.72

Nonvested at December 31, 2012 (a)	1,312,734	$	40.08

(a) Excludes 204,643 and 455,418 of performance share awards issued to retirement-eligible employees as of December 31, 2012 and December 31, 2011, respectively, as they are fully vested.

(b) Represents performance share awards that vested but were not distributed to retirement-eligible employees during 2012.

The weighted average grant date fair value (per share) of performance share awards granted during the years ended December 31, 2012, 2011 and 2010 was $39.71, $43.52, and $60.82, respectively. During the years ended December 31, 2012, 2011 and 2010, Exelon settled performance shares with a fair value totaling $23 million, $22 million and $32 million, respectively, of which $3 million, $10 million and $20 million was paid in cash, respectively. As of December 31, 2012, $9 million of total unrecognized compensation costs related to nonvested performance shares are expected to be recognized over the remaining weighted-average period of 2.2 years.

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


	December 31,

	2012		2011

Current liabilities^(a)	$	7	$	3
Deferred credits and other liabilities^(b)		11		—
Common stock		35		30

Total	$	53	$	33

(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.