Ameriprise 2007 Annual Report Download - page 90

88 Ameriprise Financial 2007 Annual Report
paid on restricted stock, as declared by the Company’s Board of Direc-
tors, during the vesting period and are not subject to forfeiture.
Certain advisors receive a portion of their compensation in the form of
restricted stock awards which are subject to forfeiture based on future
service requirements. The Company provides a match of these restricted
stock awards equal to one half of the restricted stock awards earned.
A summary of the Company’s restricted stock award activity is
presented below (shares in millions):
Weighted
Average
Grant Date
Shares Fair Value
Non-vested shares at January 1, 2007 3.7 $36.50
Granted 1.0 58.89
Vested (1.3) 32.65
Forfeited (0.3) 41.11
Non-vested shares at December 31, 2007 3.1 $44.48
The fair value of restricted stock vested during the years ended
December 31, 2007 and 2006 was $75 million and $51 million,
respectively.
Restricted Stock Units
In 2005, the Company awarded bonuses to advisors under an advisor
and incentive bonus program called the Transition and Opportunity
Bonus (“T&O Bonus”). The bonuses were converted to 2.0 million
share-based awards under the 2005 ICP effective as of the vesting
date of January 1, 2006. These awards will be issued in three annual
installments beginning in 2006 in the form of Ameriprise Financial
common stock. Separation costs of $82 million were recognized
during the year ended December 31, 2005 for these bonuses. The
number of restricted stock units granted was based on the T&O
Bonus earned. Advisors do not have the rights of shareholders with
respect to the restricted stock units held until the shares are settled for
common stock. Quarterly dividend equivalent payments are made on
restricted stock units during the vesting period and are not subject to
forfeiture.
The 2005 ICP provides for the grant of deferred share units to non-
employee directors of the Company. The director awards are fully
vested upon issuance. The deferred share units are settled for
Ameriprise Financial common stock upon the director’s termination
of service.
There were 0.9 million restricted stock units outstanding and vested
as of December 31, 2007.
Deferred Compensation Plan
The Deferred Compensation Plan (“DCP”) gives certain employees
the choice to defer a portion of their bonus, which can be invested in
investment options as provided by the DCP, including the Ameriprise
Financial Stock Fund. The Company provides a match if the partici-
pant deferrals are invested in the Ameriprise Financial Stock Fund.
Participant deferrals vest immediately and the Company match vests
after three years. Distributions are made in cash for which the
Company has recorded a liability, or shares of the Company’s
common stock for the portion of the deferral invested in the
Ameriprise Financial Stock Fund and the related Company match,
for which the Company has recorded in equity. Compensation
expense related to the Company match is recognized on a straight-
line basis over the vesting period. For the year ended December 31, 2007,
the Company recorded expense of $1 million related to the
Company’s match under the DCP. The participant deferrals are
expensed when incurred. As of December 31, 2007 and 2006, the
liability balance related to the DCP was $55 million and $60 million,
respectively. There were 0.1 million units outstanding and vested
under the DCP as of December 31, 2007.
Deferred Equity Program for Independent
Financial Advisors
The P2 Deferral Plan, adopted as of September 30, 2005, gives
certain advisors the choice to defer a portion of their commissions in
the form of share-based awards, which are subject to forfeiture based
on future service requirements. The Company provides a match of
the share-based awards. The P2 Deferral Plan allows for the grant of
share-based awards of up to 2.5 million shares of common stock.
The number of units awarded is based on the performance measures,
deferral percentage and the market value of Ameriprise Financial
common stock on the deferral date as defined by the plan. As
independent financial advisors are not employees of the Company,
the awards are expensed based on the stock price of the Company’s
common stock up to the vesting date. The share-based awards gener-
ally vest ratably over four years, beginning on January 1 of the year
following the plan year in which the bonus was awarded. The P2
Deferral Plan allows for accelerated vesting of the share-based awards
based on age and years as an advisor. Commission expense is recog-
nized on a straight-line basis over the vesting period. For the years
ended December 31, 2007 and 2006, share-based expense related to
restricted stock units included $52 million and $31 million, respec-
tively, for share-based awards under the P2 Deferral Plan.
As of December 31, 2007, there were approximately 2.1 million units
outstanding under the P2 Deferral Plan, of which approximately
1.2 million were fully vested.
18. Shareholders’ Equity and Related
Regulatory Requirements
Restrictions on the transfer of funds exist under regulatory require-
ments applicable to certain of the Company’s subsidiaries. At
December 31, 2007, the aggregate amount of unrestricted net assets
was approximately $2.3 billion.
The National Association of Insurance Commissioners (“NAIC”)
defines Risk-Based Capital (“RBC”) requirements for insurance
companies. The RBC requirements are used by the NAIC and state
insurance regulators to identify companies that merit regulatory
actions designed to protect policyholders. These requirements apply
to both the Company’s life and property casualty insurance compa-
nies. In addition, IDS Property Casualty is subject to the statutory
surplus requirements of the State of Wisconsin. The Company has
met its minimum RBC requirements.
State insurance statutes also contain limitations as to the amount of
dividends and distributions that insurers may make without
providing prior notification to state regulators. For RiverSource
Life Insurance Company (“RiverSource Life”), the limitation is based
on the greater of the previous year’s statutory net gain from