US Bank 2002 Annual Report Download - page 93

The following table sets forth the weighted-average plan assumptions and other data:
Company USBM Firstar
(Dollars in Millions) 2002 2001 2000 2001 2000
Pension plan actuarial computations
Expected long-term return on plan assets (a) ******************************* 10.9% 11.0% 9.5% 12.2% 12.2%
Discount rate in determining benefit obligations ***************************** 6.8 7.5 7.8 7.5 8.0
Rate of increase in future compensation *********************************** 3.5 3.5 5.6 3.5 4.0
Post-retirement medical plan actuarial computations
Expected long-term return on plan assets ********************************** 5.0% 5.0% 5.0% *% *%
Discount rate in determining benefit obligations ***************************** 6.8 7.5 7.8 7.5 8.0
Health care cost trend rate (b)
Prior to age 65 ******************************************************* 12.0% 10.5% 7.7% 10.5% 7.5%
After age 65 ********************************************************* 14.0 13.0 7.7 13.0 7.5
Effect of one percent increase in health care cost trend rate
Service and interest costs ************************************************ $ 1.3 $ 1.2 $ 1.0 $ .4 $ .4
Accumulated postretirement benefit obligation******************************* 19.7 13.1 13.1 6.0 5.2
Effect of one percent decrease in health care cost trend rate
Service and interest costs ************************************************ $ (1.2) $ (1.0) $ (.9) $ (.4) $ (.4)
Accumulated postretirement benefit obligation******************************* (17.5) (13.6) (11.6) (5.7) (4.6)
(a) In connection with the Firstar/USBM merger, the asset management practices and investment strategies of the plan were conformed. At December 31, 2001, the
investment asset allocation was weighted toward equities and diversified by industry and companies with varying market capitalization levels. This allocation is still in place at
December 31, 2002.
(b) The pre-65 and post-65 rates are assumed to decrease gradually to 5.5% and 6.0% respectively by 2011 and remain at these levels thereafter.
* The Firstar plan had no assets as of December 31, 2002, 2001 and 2000.
The following table provides information for pension plans with benefit obligations in excess of plan assets:
(Dollars in Millions) 2002 2001
Benefit obligation****************************************************************************************** $218.6 $227.5
Accumulated benefit obligation****************************************************************************** 210.6 220.6
Fair value of plan assets *********************************************************************************** ——
Employee Investment Plan The Company has defined including plans assumed in acquisitions. The plans provide
contribution retirement savings plans which allow qualified for grants of options to purchase shares of common stock
employees, at their option, to make contributions up to generally at the stock’s fair market value at the date of
certain percentages of pre-tax base salary through salary grant. In addition, the plans provide for grants of shares of
deductions under Section 401(k) of the Internal Revenue common stock which are subject to restriction on transfer
Code. Employee contributions are invested, at the and to forfeiture if certain vesting requirements are not met.
employees’ direction, among a variety of investment With respect to stock option and stock compensation
alternatives. Employee contributions are 100 percent plans, the Company has elected to follow APB 25 in
matched by the Company, up to the first four percent of an accounting for its employee stock incentive and purchase
employee’s compensation. The Company’s matching plans. Under APB 25, because the exercise price of the
contribution vests immediately; however, a participant must Company’s employee stock options equals the market price
be employed on December 31st to receive that year’s of the underlying stock on the date of grant, no
matching contribution. Although the matching contribution compensation expense is recognized. On the date exercised,
is initially invested in the Company’s common stock, if new shares are issued, the option proceeds equal to the
effective in 2002 an employee will be allowed to reinvest par value of the shares are credited to common stock and
the matching contributions among various investment additional proceeds are credited to capital surplus. If
alternatives. Total expense was $59.5 million, $53.7 million treasury shares are issued, the option proceeds equal to the
and $53.6 million in 2002, 2001 and 2000, respectively. average treasury share price are credited to treasury stock
and additional proceeds are credited to capital surplus.
Stock Options and Compensation Plans Option grants are generally exercisable up to ten years
from the date of grant and vest over three to five years.
As part of its employee and director compensation
Restricted shares vest over three to seven years.
programs, the Company may grant certain stock awards
Compensation expense for restricted stock is based on the
under the provisions of the existing stock option and
market price of the Company stock at the time of the grant
compensation plans. The Company has stock options
and amortized on a straight-line basis over the vesting
outstanding under various plans at December 31, 2002,
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Note 19