Ameriprise 2010 Annual Report Download - page 157

The dividend yield assumption assumes the Company’s average dividend payout would continue with no changes. The
expected volatility for grants in 2010, 2009 and 2008 was based on the Company’s implied volatility and the Company’s
historical stock volatility. The expected volatility for grants in 2008 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 the Company’s past experience.
The weighted average grant date fair value for options granted during 2010, 2009 and 2008 was $15.89, $8.93 and
$14.00, respectively.
A summary of the Company’s stock option activity for 2010 is presented below (shares and intrinsic value in millions):
Weighted Average
Remaining
Weighted Average Contractual Term Aggregate
Shares Exercise Price (Years) Intrinsic Value
Outstanding at January 1 21.1 $ 34.55 6.7 $ 169
Granted 2.7 39.21
Exercised (3.8) 30.03
Forfeited (0.6) 38.04
Outstanding at December 31 19.4 35.96 6.7 423
Exercisable at December 31 10.6 41.48 5.3 172
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 $70 million, $2 million and $5 million during the
years ended December 31, 2010, 2009 and 2008, 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.
A summary of the Company’s restricted stock award activity for 2010 is presented below (shares in millions):
Weighted Average
Grant-date
Shares Fair Value
Non-vested shares at January 1 4.0 $ 33.00
Granted 0.8 39.52
Vested (1.0) 44.32
Forfeited (0.2) 34.87
Non-vested shares at December 31 3.6 31.08
The fair value of restricted stock awards vested during the years ended December 31, 2010, 2009 and 2008 was
$42 million, $27 million and $59 million, respectively.
Restricted Stock Units
The 2005 ICP provides for the grant of deferred share units to non-employee directors of the Company and restricted stock
units to employees. 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. The employee awards generally vest ratably over three
to four years. Compensation expense for deferred share units and restricted stock units is based on the market price of
Ameriprise Financial stock on the date of grant. Restricted stock units granted to employees are amortized on a
straight-line basis over the vesting period or accelerated basis due to retirement eligibility. Deferred share units granted to
non-employee directors are expensed immediately. Restricted stock units include units awarded under the DCP.
As of December 31, 2010, there were approximately 1.4 million units outstanding of restricted stock units, including
deferred share units, of which approximately 1.1 million units were fully vested.
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