MINNEAPOLIS - September 19, 2006 - Ameriprise Financial (NYSE: AMP) announced today that personalized stock plan education programs, such as the company´s StockOpter ® Corporate Services, have been shown to dramatically increase the value employees attribute about their employee stock option awards. Preliminary results released in a report* from researchers at the University of Illinois at Urbana-Champaign and Michigan State University showed that employees, on average, double the perceived value of their stock option awards following participation in a personalized education program.
"In today´s competitive business environment employers want to help ensure that their equity compensation programs are well understood and valued by employees to drive their core objectives of employee engagement and retention. This is especially important considering the complexity of these plans, and in light of the shareholder demands created by the mandatory expensing of options and dilution concerns," said Rusty Field, Vice President of Ameriprise Financial Education and Planning Services. "This research confirms that providing employees with personalized financial education can produce a significant net positive for companies, shareholders and employees alike."
In the University of Illinois/Michigan State study, employees were asked to estimate the money they would forfeit from their current employee stock option holdings if they terminated their employment (the Forfeit Value). These estimates were then compared to the Black-Scholes value of those options, a standardized approximation of the cost incurred by shareholders. The study found that the median Forfeit Value estimated by employees was only 40 percent of the Black-Scholes value, meaning employees perceived the value of their awards at less than half. However, once employees participated in an educational program with a personalized analysis of their Forfeit Value and other aspects of their stock and option holdings, employee Forfeit Value estimates rose dramatically with the median becoming consistent with the Black-Scholes value.
A copy of the research is available online at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=906020
The Ameriprise Financial Education and Planning Services StockOpter Corporate Services program features highly personalized education capabilities for employees in equity compensation programs. StockOpter Corporate Services is designed for companies who have issued employee stock options and other forms of equity compensation (such as restricted stock, stock appreciation rights, etc.).
Ameriprise Financial offers StockOpter Corporate Services in conjunction with Net Worth Strategies Inc. which provides the personalized analytics that help employees to understand and embrace the value and potential of their equity compensation holdings. In the first phase of the StockOpter Corporate Services program, participants attend a one hour workshop conducted by an Ameriprise equity compensation planning specialist and receive a personalized report that quantifies five key concepts:
1. Their Forfeit Value
2. The upside leverage in their grants
3. The stock price at which their financial goal is achieved
4. Their degree of concentration in company stock and options
5. Their "Insight Ratio" which is a metric that assists in determining when to exercise their options
In the second phase of the program, employees are given the opportunity to request a complimentary initial one-on-one consultation with an Ameriprise financial advisor to discuss their personal financial situation. The initial consultation provides an overview of financial planning concepts. Employees do not receive written analysis and/or recommendations.
For employers, the service includes an executive summary of employee´s perceptions and understanding before and after the educational portion of the program. This summary helps companies design and improve compensation programs for maximum effectiveness and utilization.
About Ameriprise Financial
Ameriprise Financial is a leader in workplace financial education providing corporations and other institutions with a broad spectrum of employee financial education and financial planning programs to help improve benefits utilization and the financial lives of employees. The Ameriprise Financial Education and Planning Services unit serves more than 1,600 companies and their approximately 1.8 million employees across the United States.
Ameriprise Financial, Inc. is a leading financial planning and services company with more than 12,000 financial advisors and registered representatives that provides solutions for clients' asset accumulation, income management and insurance protection needs. The Company's financial advisors deliver tailored solutions to clients through a comprehensive and personalized financial planning approach built on a long-term relationship with a knowledgeable advisor. The Company specializes in meeting the retirement-related financial needs of the mass affluent. Financial advisory services and investments are available through Ameriprise Financial Services, Inc. Member NASD and SIPC. For more information, visit ameriprise.com.