International Paper 2014 Annual Report Download - page 118

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The components of the $26 million and $7 million
increase in the amounts recognized in OCI during 2014
for U.S. and non-U.S. plans, respectively, consisted of:
In millions
U.S.
Plans
Non-
U.S.
Plans
Current year actuarial gain $18$14
Amortization of actuarial (loss) gain (5) (1)
Current year prior service credit —(7)
Amortization of prior service credit 13 1
$26$ 7
The portion of the change in the funded status that was
recognized in either net periodic benefit cost or OCI for
the U.S. plans was $33 million, $63 million and $0 million
in 2014, 2013 and 2012, respectively. The portion of
the change in funded status for the non-U.S. plans was
$14 million, $19 million, and $2 million in 2014, 2013
and 2012, respectively.
The estimated amounts of net loss and prior service
credit that will be amortized from OCI into net U.S.
postretirement benefit cost in 2015 are expected to be
$6 million and $(10) million, respectively. The estimated
amounts for non-U.S. plans in 2015 are expected to be
$1 million and $(3) million, respectively.
At December 31, 2014, estimated total future
postretirement benefit payments, net of participant
contributions and estimated future Medicare Part D
subsidy receipts, were as follows:
In millions
Benefit
Payments
Subsidy
Receipts
Benefit
Payments
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
2015 $35$ 2$ 2
2016 31 2 2
2017 30 2 2
2018 28 2 3
2019 27 2 3
2020 – 2024 112 8 24
NOTE 18 INCENTIVE PLANS
International Paper currently has an Incentive
Compensation Plan (ICP) which, upon the approval by
the Company’s shareholders in May 2009, replaced the
Company’s Long-Term Incentive Compensation Plan
(LTICP). The ICP authorizes grants of restricted stock,
restricted or deferred stock units, performance awards
payable in cash or stock upon the attainment of
specified performance goals, dividend equivalents,
stock options, stock appreciation rights, other stock-
based awards, and cash-based awards at the discretion
of the Management Development and Compensation
Committee of the Board of Directors (the Committee)
that administers the ICP. Additionally, restricted stock,
which may be deferred into RSU’s, may be awarded
under a Restricted Stock and Deferred Compensation
Plan for Non-Employee Directors.
STOCK OPTION PROGRAM
International Paper accounts for stock options in
accordance with guidance under ASC 718,
“Compensation – Stock Compensation.”
Compensation expense is recorded over the related
service period based on the grant-date fair market
value. Since all outstanding options were vested as of
July 14, 2005, only replacement option grants are
expensed.
During each reporting period, diluted earnings per
share is calculated by assuming that “in-the-money”
options are exercised and the exercise proceeds are
used to repurchase shares in the marketplace. When
options are actually exercised, option proceeds are
credited to equity and issued shares are included in the
computation of earnings per common share, with no
effect on reported earnings. Equity is also increased by
the tax benefit that International Paper will receive in its
tax return for income reported by the employees in their
individual tax returns.
Under the program, upon exercise of an option, a
replacement option may be granted under certain
circumstances with an exercise price equal to the
market price at the time of exercise and with a term
extending to the expiration date of the original option.
The Company has discontinued the issuance of stock
options for all eligible U.S. and non-U.S. employees. In
the United States, the stock option program was
replaced with a performance-based restricted share
program to more closely tie long-term incentive
compensation to Company performance on two key
performance drivers: return on investment (ROI) and
total shareholder return (TSR).