Ameriprise 2011 Annual Report Download - page 162

Ameriprise Financial 2008 Employment Incentive Equity Award Plan
The 2008 Plan is designed to align new employees’ interests with those of the shareholders of the Company and attract
and retain new employees. The 2008 Plan provides for the grant of equity incentive awards to new employees who
became employees in connection with a merger or acquisition, including stock options, restricted stock awards, restricted
stock units, and other equity-based awards designed to comply with the applicable federal and foreign regulations and laws
of jurisdiction. Under the 2008 Plan, a maximum of 6.0 million shares may be issued. Awards granted under the 2008
Plan may be settled in cash and/or shares of the Company’s common stock according to the award’s terms.
Stock Options
Stock options granted have an exercise price not less than 100% of the current fair market value of a share of the
Company’s common stock on the grant date and a maximum term of 10 years. Stock options granted generally vest
ratably over three to four years. Vesting of option awards may be accelerated based on age and length of service. Stock
options granted are expensed on a straight-line basis over the option vesting period based on the estimated fair value of
the awards on the date of grant using a Black-Scholes option-pricing model.
The following weighted average assumptions were used for stock option grants:
2011 2010 2009
Dividend yield 1.3% 1.5% 2.0%
Expected volatility 44% 50% 55%
Risk-free interest rate 2.3% 2.3% 1.8%
Expected life of stock option (years) 5.0 5.0 5.0
The dividend yield assumption represents the Company’s expected dividend yield based on its historical dividend payouts.
The expected volatility is based on the Company’s historical and implied volatilities. 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 and other considerations.
The weighted average grant date fair value for options granted during 2011, 2010 and 2009 was $21.38, $15.89 and
$8.93, respectively.
A summary of the Company’s stock option activity for 2011 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 19.5 $ 35.96 6.7 $ 423
Granted 1.8 58.58
Exercised (2.1) 30.63
Forfeited (0.3) 30.75
Outstanding at December 31 18.9 38.85 5.3 241
Exercisable at December 31 12.1 40.56 5.0 132
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 $58 million, $70 million and $2 million during the
years ended December 31, 2011, 2010 and 2009, respectively.
147