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Employment Benefit Plans | 12 Months Ended
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Dec. 31, 2012
Employment Benefit Plans |
14. | EMPLOYMENT BENEFIT PLANS
Postretirement Health Care and Other Benefits: Ambac provides postretirement and postemployment benefits, including health and life benefits covering certain employees who meet certain age and service requirements. Effective August 1, 2005, new employees were not eligible for postretirement benefits. None of the plans are currently funded. Postretirement and postemployment benefits expense was $2,099 and $4,037 in 2012 and 2011, respectively. The unfunded accumulated postretirement benefit obligation was $17,485 as of December 31, 2012. The assumed health care cost trend rates range from 8.5% in 2012, decreasing ratably to 5% in 2020. Increasing the assumed health care cost trend rate by one percentage point in each future year would increase the accumulated postretirement benefit obligation at December 31, 2012, by $3,476 and the 2012 benefit expense by $454. Decreasing the assumed health care cost trend rate by one percentage point in each future year would decrease the accumulated postretirement benefit obligation at December 31, 2012 by $2,713 and the 2012 benefit expense by $345. The following table sets forth projected benefit payments from Ambac’s postretirement plan:
|  | Amount |
2013 |  | $ | 495,000 |
2014 |  |  | 492,000 |
2015 |  |  | 565,000 |
2016 |  |  | 618,000 |
2017 |  |  | 637,000 |
All later years |  |  | 3,591,000 |
|  | $ | 6,398,000 |
The discount rate used in determining the projected benefit obligations for the postretirement plan is selected by reference to the year-end Moody’s corporate AA rate, as well as other high-quality indices with similar duration to that of the benefit plans. The rate used for the projected plan benefit obligations at the measurement date for 2012 and 2011 (December 31) was 4.00% and 4.50%, respectively. Savings Incentive Plan: Substantially all employees of Ambac are covered by a defined contribution plan (the “Savings Incentive Plan”). Ambac makes employer matching contributions equal 100% of the employees’ contributions, up to 3% of such participants’ base compensation plus 50% of contributions to an additional 2% of base compensation, subject to limits set by the Internal Revenue Code. The total cost of the Savings Incentive Plan was $1,058 and $610 in 2012 and 2011, respectively. Stock Compensation: Employees of Ambac participated in Ambac Financial Group Inc.’s 1997 Equity Plan, which provides for the granting of stock options, stock appreciation rights, restricted stock units, performance units and other awards that are valued or determined by reference to its common stock. No stock grants were made in 2012 or 2011. Stock Options: Stock options awarded to eligible employees are exercisable and expire as specified at the time of grant. Such options are awarded based on the fair market value of Ambac’s Common Stock on the grant date and have a term of seven years from the date of the grant. All employee stock option agreements provide that vesting is accelerated in certain circumstances, such as upon retirement, permanent disability or death. A summary of option activity for the period ending December 31, 2012 is as follows:
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |  |  | Weighted Average Remaining Contractual Life |
Outstanding at beginning of year |  |  | 1,139,429 |  |  | $ | 45.15 |  |  |  |  |  |  |  |  |
Granted |  |  | — |  |  |  | na. |  |  |  |  |  |  |  |  |
Exercised |  |  | — |  |  |  | na. |  |  |  |  |  |  |  |  |
Forfeited or expired |  |  | (536,654 | ) |  | $ | 49.63 |  |  |  |  |  |  |  |  |
Outstanding at end of year |  |  | 602,775 |  |  | $ | 41.17 |  |  | $ | 0 |  |  |  | 1.46 |
Exercisable |  |  | 602,775 |  |  | $ | 41.17 |  |  | $ | 0 |  |  |  | 1.46 |
As of December 31, 2012, there was $0 of total unrecognized compensation costs related to unvested stock options granted. Gross stock option expense for 2012 and 2011 was $0 and ($12,576), respectively. The net income effect from stock options for 2012 and 2011 was $0 and ($11,297), respectively. RSUs and Restricted Stock: RSUs were granted to all eligible employees and directors based upon the performance of Ambac, the performance of the employee’s department and the performance of the employee. RSUs do not have a vesting period in excess of four years. Typically, RSU agreements provide that vesting is accelerated in certain circumstances, such as retirement, permanent disability or death. As of December 31, 2012, 104,389 RSUs remained outstanding, of which (i) 70,530 units required future service as a condition to the delivery of the underlying shares of common stock and (ii) 33,859 units did not require future service. Gross RSU expense for 2012 and 2011 was $0 and ($2,988), respectively. The net income effect from RSUs for 2012 and 2011 was $0 and ($1,163), respectively. A summary of RSU activity for 2012 is as follows:
|  | 2012 |
|  | Shares |  |  | Weighted Average Grant Date Fair Value |
Outstanding at beginning of year |  |  | 113,739 |  |  | $ | 23.96 |
Granted |  |  | 0 |  |  | $ | 0 |
Delivered |  |  | (9,350 | ) |  | $ | 52.16 |
Forfeited |  |  | 0 |  |  | $ | 0 |
Outstanding at end of year |  |  | 104,389 |  |  | $ | 21.43 |
As of December 31, 2012, there was $0 of total unrecognized compensation costs related to unvested RSUs granted. The fair value for RSUs vested during 2012 and 2011 was $0 and $93, respectively.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References No definition available. + Details
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