Union Pacific 2009 Annual Report Download - page 68

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68
Changes in our performance retention awards during 2009 were as follows:
Shares
(thous.) Weighted-Average
Grant-Date Fair Value
Nonvested at January 1, 2009 873 $ 50.70
Granted 449 47.28
Vested (240) 43.23
Forfeited (22) 53.86
Nonvested at December 31, 2009 1,060 $ 50.88
At December 31, 2009, there was $22 million of total unrecognized compensation expense related to
nonvested performance retention awards, which is expected to be recognized over a weighted-average
period of 1.3 years. A portion of this expense is subject to achievement of the ROIC levels established for
the performance stock unit grants.
5. Retirement Plans
Pension and Other Postretirement Benefits
Pension Plans – We provide defined benefit retirement income to eligible non-union employees through
qualified and non-qualified (supplemental) pension plans. Qualified and non-qualified pension benefits
are based on years of service and the highest compensation during the latest years of employment, with
specific reductions made for early retirements.
Other Postretirement Benefits (OPEB) – We provide defined contribution medical and life insurance
benefits for eligible retirees. These benefits are funded as medical claims and life insurance premiums are
paid.
Plan Amendment
Effective January 1, 2010, Medicare-eligible retirees who are enrolled in the Union Pacific Retiree
Medical Program will receive a contribution to a Health Reimbursement Account, which can be used to
pay eligible out-of-pocket medical expenses. The impact of the plan amendment is reflected in the
projected benefit obligation (PBO) at December 31, 2009.
Funded Status
We are required by GAAP to separately recognize the overfunded or underfunded status of our pension
and OPEB plans as an asset or liability. The funded status represents the difference between the PBO and
the fair value of the plan assets. The PBO is the present value of benefits earned to date by plan
participants, including the effect of assumed future salary increases. The PBO of the OPEB plan is equal
to the accumulated benefit obligation, as the present value of the OPEB liabilities is not affected by salary
increases. Plan assets are measured at fair value. We use a December 31 measurement date for plan assets
and obligations for all our retirement plans.