8-KMaterial AgreementsOther EventsExhibits & Filings

AMERIPRISE FINANCIAL INC 8-K Report, Material Agreement (Oct 31, 2005)

Filed October 31, 2005For Securities:AMP

Summary

Ameriprise Financial, Inc. filed an 8-K report on October 31, 2005, detailing material agreements and other corporate actions. A key focus of the report is the compensation and security arrangements for CEO James M. Cracchiolo. This includes a security program mandating the CEO's use of company cars and aircraft for all travel, with provisions for family members to accompany him, and tax offset payments for business-related travel. Additionally, the company disclosed completion/retention awards to the CEO, comprising immediate cash payments and a deferred cash award contingent on financial performance, alongside a restricted stock award with performance-based vesting tied to return on equity. The report also announced the declaration of a quarterly cash dividend of $0.11 per common share, payable to shareholders of record on November 4, 2005. Investors should note that these compensation packages were structured with the intent of qualifying for tax deductibility under U.S. tax laws, contingent on achieving pre-established performance goals. The company's recent spin-off from American Express is context for these arrangements, which were recommended by the former parent's compensation committee.

Key Highlights

  • 1CEO James M. Cracchiolo to receive significant completion/retention awards totaling $3.5 million in cash and $1.5 million in restricted stock.
  • 2Restricted stock award for the CEO is performance-based, with vesting tied to achieving specified return on equity thresholds.
  • 3CEO is authorized to use company cars and aircraft for all travel, with provisions for family members and tax offset payments for business travel.
  • 4Awards are structured to qualify for tax deductibility, contingent on meeting performance-based compensation requirements.
  • 5Quarterly cash dividend of $0.11 per common share declared, payable on November 18, 2005.
  • 6Awards reflect recommendations from the Compensation and Benefits Committee of former parent American Express Company.
  • 7All compensation arrangements are designed to comply with U.S. tax laws regarding performance-based compensation.

Frequently Asked Questions

The compensation package for CEO James M. Cracchiolo includes an immediate cash award of $1,750,000, a potential deferred cash award of $1,750,000 contingent on meeting financial performance targets, and a one-time stock award of 41,238 restricted shares valued at $1,500,000, with vesting tied to return on equity.

The CEO is authorized to use company-provided cars and aircraft for all travel, to the maximum extent possible. Immediate family members may accompany him on these travels, and the company will provide payments to offset any tax liability on imputed income for business-related travel.

The cash award payable after March 2006 and the restricted stock award are structured to meet the requirements for 'performance-based' compensation under U.S. tax law. This means payment and vesting are contingent upon achieving pre-established, objective performance goals, such as a specified average return on equity for the stock award.

Ameriprise Financial declared a quarterly cash dividend of $0.11 per common share. This dividend is payable on November 18, 2005, to shareholders of record as of the close of business on November 4, 2005.