US Bank 2010 Annual Report Download - page 102

the years ended December 31, 2010, 2009 and 2008,
respectively, because they were antidilutive. Convertible
senior debentures that could potentially be converted into
shares of the Company’s common stock pursuant to
specified formulas, were not included in the computation of
diluted earnings per share because they were antidilutive.
Note 17 EMPLOYEE BENEFITS
Employee Retirement Savings Plan The Company has a
defined contribution retirement savings plan that covers
substantially all its employees. Qualified employees are
allowed to contribute up to 75 percent of their annual
compensation, subject to Internal Revenue Service limits,
through salary deductions under Section 401(k) of the
Internal Revenue Code. Employee contributions are invested,
at the employees’ direction, among a variety of investment
alternatives. Employee contributions are 100 percent
matched by the Company, up to four percent of an
employee’s eligible annual compensation. The Company’s
matching contribution vests immediately. Although the
matching contribution is initially invested in the Company’s
common stock, an employee can reinvest the matching
contribution among various investment alternatives. Total
expense was $96 million, $78 million and $76 million in
2010, 2009 and 2008, respectively.
Pension Plans The Company has qualified noncontributory
defined benefit pension plans that provide benefits to
substantially all its employees. Pension benefits are provided
to eligible employees based on years of service, multiplied by
a percentage of their final average pay. As a result of plan
mergers, pension benefits may also be provided using two
cash balance benefit formulas where only investment or
interest credits continue to be credited to participants’
accounts. Employees become vested upon completing five
years of vesting service. Effective January 1, 2010, the
Company established a new cash balance formula for certain
current and all future eligible employees. Participants receive
annual pay credits based on eligible pay multiplied by a
percentage determined by their age and years of service.
Participants also receive an annual interest credit. This new
plan formula resulted in a $35 million reduction of the 2009
projected benefit obligation.
In general, the Company’s qualified pension plans’
objectives include maintaining a funded status sufficient to
meet participant benefit obligations over time while reducing
long-term funding requirements and pension costs. The
Company has an established process for evaluating all the
plans, their performance and significant plan assumptions,
including the assumed discount rate and the long-term rate
of return (“LTROR”). Annually, the Company’s
Compensation and Human Resources Committee (the
“Committee”), assisted by outside consultants, evaluates
plan objectives, funding policies and plan investment policies
considering its long-term investment time horizon and asset
allocation strategies. The process also evaluates significant
plan assumptions. Although plan assumptions are
established annually, the Company may update its analysis
on an interim basis in order to be responsive to significant
events that occur during the year, such as plan mergers and
amendments.
The Company’s funding policy is to contribute amounts
to its plans sufficient to meet the minimum funding
requirements of the Employee Retirement Income Security
Act of 1974, as amended by the Pension Protection Act, plus
such additional amounts as the Company determines to be
appropriate. The Company made no contributions to the
qualified pension plans in 2010 or 2009, and anticipates no
contributions in 2011. Any contributions made to the
qualified plans are invested in accordance with established
investment policies and asset allocation strategies.
In addition to the funded qualified pension plans, the
Company maintains non-qualified plans that are unfunded
and provide benefits to certain employees. The assumptions
used in computing the present value of the accumulated
benefit obligation, the projected benefit obligation and net
pension expense are substantially consistent with those
assumptions used for the funded qualified plans. In 2011,
the Company expects to contribute $24 million to its non-
qualified pension plans which equals the expected benefit
payments.
Postretirement Welfare Plan In addition to providing
pension benefits, the Company provides health care and
death benefits to certain retired employees. Generally, all
active employees may become eligible for retiree health care
benefits by meeting defined age and service requirements.
The Company may also subsidize the cost of coverage for
employees meeting certain age and service requirements. The
medical plan contains other cost-sharing features such as
deductibles and coinsurance. The estimated cost of these
retiree benefit payments is accrued during the employees’
active service. In 2011, the Company expects to make no
contributions to its postretirement welfare plan.
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