Ameriprise 2009 Annual Report Download - page 141

The following weighted average assumptions were used for stock option grants:
2009 2008 2007
Dividend yield 2.0% 1.0% 1.0%
Expected volatility 55% 27% 20%
Risk-free interest rate 1.8% 3.0% 4.7%
Expected life of stock option (years) 5.0 5.3 4.5
The dividend yield assumption assumes the Company’s average dividend payout would continue with no changes. The expected volatility
for grants in 2009, 2008 and 2007 was based on the Company’s implied volatility and the Company’s historical stock volatility since
Distribution. The expected volatility for grants in 2008 and 2007 also considered historical volatilities experienced by a peer group of
companies. The risk-free interest rate for periods within the expected option life is based on the U.S. Treasury yield curve at the grant
date. The expected life of the option is based on experience while the Company was a part of American Express and subsequent experience
after the Distribution.
The weighted average grant date fair value for options granted during 2009, 2008 and 2007 was $8.93, $14.00 and $13.69, respectively.
A summary of the Company’s stock option activity for 2009 is presented below (shares and intrinsic value in millions):
Weighted Average
Remaining Aggregate
Weighted Average Contractual Term Intrinsic
Shares Exercise Price (Years) Value
Outstanding at January 1 15.1 $ 40.79 7.0 $ 2
Granted 7.3 21.70 — —
Exercised (0.2) 26.32 — —
Forfeited (1.1) 37.55 — —
Outstanding at December 31 21.1 34.55 6.7 169
Exercisable at December 31 11.4 38.29 5.6 48
The intrinsic value of a stock option is the amount by which the fair value of the underlying stock exceeds the exercise price of the option.
The total intrinsic value of options exercised was $2 million, $5 million and $43 million during the years ended December 31, 2009, 2008
and 2007, respectively.
Restricted Stock Awards
Restricted stock awards generally vest ratably over three to four years or at the end of five years. Vesting of restricted stock awards may be
accelerated based on age and length of service. Compensation expense for restricted stock awards is based on the market price of
Ameriprise Financial stock on the date of grant and is amortized on a straight-line basis over the vesting period. Quarterly dividends are
paid on restricted stock, as declared by the Company’s Board of Directors, 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 quarter of the restricted stock
awards earned for 2009, 2008 and 2007.
A summary of the Company’s restricted stock award activity for 2009 is presented below (shares in millions):
Weighted Average
Grant-date
Shares Fair Value
Non-vested shares at January 1 2.9 $ 48.19
Granted 2.7 23.24
Vested (1.2) 46.21
Forfeited (0.4) 35.83
Non-vested shares at December 31 4.0 33.00
126 ANNUAL REPORT 2009