Summary
Ameriprise Financial, Inc. (AMP) filed an 8-K report on November 18, 2005, detailing amendments to its executive compensation plans. The primary focus is on changes to the Senior Executive Severance Plan and the termination of the Key Executive Life Insurance Program in favor of restricted stock awards. These adjustments are intended to align executive benefits with current market practices and manage corporate liabilities. Key changes to the severance plan include extended severance periods for the CEO and other senior executives upon qualifying termination or in connection with a change in control. A new provision offers a special severance payment, contingent on a change of control before the end of 2009, to compensate for the cancellation of American Express stock options. The bonus component of severance and retirement plan contributions under specific termination scenarios were also enhanced. Concurrently, the company is phasing out its Key Executive Life Insurance Plan, offering restricted stock awards as a replacement benefit to key executives. This move effectively transfers future liability and aligns compensation with company equity.
Key Highlights
- 1Amendments to the Senior Executive Severance Plan extend severance periods for top executives.
- 2CEO severance increased to three years for qualifying termination or change in control.
- 3Executive Vice Presidents and Presidents receive two years severance for qualifying termination and three years for change in control.
- 4A special severance payment provision was added for cancellation of American Express stock options upon a change in control before December 31, 2009.
- 5The bonus component of severance pay now considers the higher of current target or the highest actual bonus over the prior three years.
- 6Ameriprise is terminating the Key Executive Life Insurance Plan for key executives, effective January 1, 2006.
- 7In lieu of the life insurance benefit, participating executives will receive restricted stock awards, valued at the discounted lump sum of the estimated single premium for their retirement benefit under the terminated plan.