Expiration of stock-based awards

[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements  
  
  
  
Stock Options  
Stock options are granted at exercise prices that equal the closing market price of Entergy Corporation common stock on the date of grant.  Generally, stock options granted will become exercisable in equal amounts on each of the first three anniversaries of the date of grant.  Unless they are forfeited previously under the terms of the grant, options expire 10 years after the date of the grant if they are not exercised.  
The following table includes financial information for stock options for each of the years presented:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | 2021 |  | 2020 |  | 2019 |
|   | (In Millions) |
| Compensation expense included in Entergy’s consolidated net income | $4.2 |  | $3.9 |  | $3.8 |
| Tax benefit recognized in Entergy’s consolidated net income | $1.1 |  | $1.0 |  | $1.0 |
| Compensation cost capitalized as part of fixed assets and inventory | $1.5 |  | $1.5 |  | $1.4 |

  
Entergy determines the fair value of the stock option grants by considering factors such as lack of marketability, stock retention requirements, and regulatory restrictions on exercisability in accordance with accounting standards.  The stock option weighted-average assumptions used in determining the fair values are as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | 2021 |  | 2020 |  | 2019 |
| Stock price volatility | 23.93% |  | 17.16% |  | 17.23% |
| Expected term in years | 6.93 |  | 7.04 |  | 7.32 |
| Risk-free interest rate | 0.74% |  | 1.49% |  | 2.50% |
| Dividend yield | 4.00% |  | 4.00% |  | 4.50% |
| Dividend payment per share | $3.86 |  | $3.74 |  | $3.66 |

  
Stock price volatility is calculated based upon the daily public stock price volatility of Entergy Corporation common stock over a period equal to the expected term of the award.  The expected term of the options is based upon historical option exercises and the weighted average life of options when exercised and the estimated weighted average life of all vested but unexercised options.  In 2008, Entergy implemented stock ownership guidelines for its senior executive officers.  These guidelines require an executive officer to own shares of Entergy Corporation common stock equal to a specified multiple of his or her salary.  Until an executive officer achieves this ownership position the executive officer is required to retain 75% of the net-of-tax net profit upon exercise of the option to be held in Entergy Corporation common stock.  The reduction in fair value of the stock options due to this restriction is based upon an estimate of the call option value of the reinvested gain discounted to present value over the applicable reinvestment period. 190
