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Note 8: Employee benefits


Salaries, wages and other employee benefits

 

 

 

 

 

In € millions

 

2010

 

2011

Salaries and wages

 

(2,204)

 

(2,298)

Pension and other post-retirement cost

 

(316)

 

(320)

Other social charges

 

(460)

 

(463)

Total

 

(2,980)

 

(3,081)

Employees

 

 

 

 

 

Average number during the year

 

2010

 

2011

Decorative Paints

 

21,800

 

22,400

Performance Coatings

 

20,600

 

21,300

Specialty Chemicals

 

11,100

 

11,300

Corporate and other

 

1,600

 

1,400

Total

 

55,100

 

56,400

At year-end 2011, we employed 57,240 staff for ongoing activities (year-end 2010: 55,590 employees). The net increase was due to:

  • A net increase of 900 due to acquisitions and divestments, mainly from the Schramm acquisition (790 employees).
  • A decrease of 1,050 employees due to ongoing restructuring.
  • An increase of 1,800 employees, mainly due to new hires in high growth markets.

The average number of employees working outside the Netherlands was 51,400 (2010: 50,100).

Salaries, wages and other employee benefits per cost category

 

 

 

 

 

In € millions

 

2010

 

2011

Cost of sales

 

(978)

 

(969)

Selling expenses

 

(1,109)

 

(1,173)

Research and development expenses

 

(206)

 

(235)

General and administrative expenses

 

(587)

 

(645)

Net financing expenses related to pensions and other post-retirement benefits

 

(100)

 

(59)

Total

 

(2,980)

 

(3,081)

Share-based compensation

Share-based compensation relates to the performance-related share plan as well as the performance-related stock option plan. Charges recognized in the 2011 statement of income for share-based compensation amounted to €34 million and are included in salaries and wages (2010: €30 million).

Performance-related share plan

Under the performance-related share plan, a number of conditional shares are granted to the members of the Board of Management and executives each year. The number of participants of the performance-related share plan at year-end 2011 was 636 (2010: 589).

The conditional grant of shares is for 50 percent linked to the ranking of our company in the Dow Jones Sustainability Index (DJSI) and the remaining 50 percent is linked to the relative TSR performance of the company compared to the peer group. As from the series 2011–2013, the grant will be linked for 50 percent to the Sustainable Asset Management (SAM) benchmark. The conditional shares vested in 2011 as follows:

  • Our TSR performance over the 2009-2011 series resulted in an 11th position within the ranking of the peer group companies. This did not result in vesting of conditional shares.
  • The average position in the DJSI benchmark resulted in an 2nd position within the ranking.

As a result, the conditional shares of the 2009-2011 series vested for 62.5 percent (series 2008-2010: zero percent), including dividend shares of 11.68 percent, the final vesting percentage amounted to 69.8 percent (series 2008-2010: zero percent).

Performance-related shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Balance per January 1, 2011

 

Granted in 2011

 

Vested in 2011

 

Forfeited in 2011

 

Dividend in 20111

 

Balance at December 31, 2011

 

Vested on January 1, 2012

1

Equivalent in shares related to accumulated dividend, which is included in the balances on balance sheet date.

2009 – 2011

 

1,175,233

 

1,942

 

 

(458,041)

 

36,350

 

755,484

 

755,484

2010 – 2012

 

755,184

 

10,694

 

 

(10,137)

 

24,659

 

780,400

 

2011 – 2013

 

 

845,967

 

 

(5,742)

 

25,879

 

866,104

 

Total

 

1,930,417

 

858,603

 

 

(473,920)

 

86,888

 

2,401,988

 

755,484

The fair value of the performance-related share plan at grant date is amortized as a charge against income over the three-year vesting period. The average fair value was calculated by external experts and amounted to €46.91 per performance-related share conditionally granted in 2011 (2010: €46.24). The 2011 charge recognized for performance-related shares aggregated €34 million (2010: €29 million).

The share price of a common AkzoNobel share at December 31, 2011, amounted to €37.36 (2010: €46.49). For further details on our performance-related share plan, refer to the Remuneration report.

Stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year of issue

 

Exercise price in €

 

Outstanding per January 1, 2011

 

Exercised in 2011

 

Expired in 2011

 

Forfeited in 2011

 

Outstanding at December 31, 2011

 

Expiry date

2001

 

46.75

 

51,322

 

(51,322)

 

 

 

 

April 30, 2011

2002

 

46.53

 

107,250

 

 

 

 

107,250

 

April 25, 2012

2004

 

31.45

 

202,200

 

(199,900)

 

(2,300)

 

 

 

April 25, 2011

2005

 

31.98

 

296,581

 

(91,896)

 

 

(1,925)

 

202,760

 

April 24, 2012

2006

 

46.46

 

451,459

 

(51,881)

 

 

(2,100)

 

397,478

 

April 26, 2013

2007

 

58.89

 

502,369

 

 

 

(6,263)

 

496,106

 

April 26, 2014

Total

 

 

 

1,611,181

 

(394,999)

 

(2,300)

 

(10,288)

 

1,203,594

 

 

Number and weighted average exercise price stock options

 

 

 

 

 

 

 

Number of options

 

Weighted average exercise price in €

Balance at January 1, 2010

 

1,897,850

 

43.14

Forfeited during the period

 

(7,237)

 

45.71

Exercised during the period

 

(279,432)

 

27.76

Balance at December 31, 2010

 

1,611,181

 

45.80

Forfeited during the period

 

(12,588)

 

47.69

Exercised during the period

 

(394,999)

 

35.53

Balance at December 31, 2011

 

1,203,594

 

49.15

Stock option plans

Prior to 2008, performance-related stock options were granted to members of the Board of Management and executives. We have not purchased own shares in connection with the stock option plan. The stock options are equity-settled and all exercisable. No options on American Depositary Receipts were outstanding at year-end (2010: 23,000).

For stock options exercised during 2011, the weighted average of the actual share price at date of exercise amounted to €49.71 (2010: €44.00). A number of 1.0 million outstanding stock options are non-dilutive but could potentially dilute basic earnings per share in the future.

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