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Note 8 Employee benefits


Salaries, wages and other employee benefits

 

 

 

In € millions

2009

2010

 

 

 

Salaries and wages

(2,176)

(2,204)

Pension and other post-retirement cost

(320)

(316)

Other social charges

(459)

(460)

Total

(2,955)

(2,980)

Employees

 

 

 

Average number during the year

2009

2010

 

 

 

Decorative Paints

22,900

21,800

Performance Coatings

20,200

20,600

Specialty Chemicals

11,400

11,100

Corporate and other

1,800

1,600

Total

56,300

55,100

At year-end 2010, we employed 55,590 staff for ongoing activities (year-end 2009: 54,740 employees). The net increase was due to:

  • A net increase of 870 due to acquisitions and divestments, mainly from the acquired powder coatings activities (670 employees)
  • A decrease of 1,770 employees due to ongoing restructuring
  • An increase of 1,750 employees due to new hires and other changes.

The average number of employees working outside the Netherlands was 50,100 (2009: 51,200).

Salaries, wages and other employee benefits per cost category

 

 

 

In € millions

2009

2010

 

 

 

Cost of sales

(850)

(978)

Selling expenses

(1,035)

(1,109)

Research and development expenses

(201)

(206)

General and administrative expenses

(698)

(587)

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

(171)

(100)

Total

(2,955)

(2,980)

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 2010 statement of income for share-based compensation amounted to €30 million and are included in salaries and wages (2009: €23 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 2010 was 589 (2009: 579). The actual number of shares that will vest depends on our Total Shareholder Return (TSR) performance over a three-year period, compared with the TSR performance of a specified peer group. Our TSR performance over the period January 1, 2008, until December 31, 2010, resulted in an 11th position within the ranking of the peer group companies. The vesting percentage of the 2008 grant amounted to zero percent (series 2007-2009: 150,78 percent including dividend shares).

Performance-related shares

 

 

 

 

 

 

 

 

Series

Balance at January 1, 2010

Granted in 2010

Vested in 2010

Forfeited in 2010

Dividend in 20101

Balance at December 31, 2010

Vested on January 1, 2011

 

 

 

 

 

 

 

 

1

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

2007 – 2009

943,654

(943,654)

2008 – 2010

554,640

(554,640)

2009 – 2011

1,172,691

(30,728)

33,270

1,175,233

2010 – 2012

742,274

(9,441)

22,351

755,184

Total

2,670,985

742,274

(943,654)

(594,809)

55,621

1,930,417

As from 2009 the conditional grant of shares is linked for 50 percent to the ranking of the company in the Dow Jones Sustainability Indexes and the remaining 50 percent to the relative TSR performance of the company compared with the peer group.

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 specialists and amounted to €46.24 per performance-related shares conditionally granted in 2010 (2009: €26.39). The 2010 charge recognized for performance-related shares aggregated €29 million (2009: €21 million).

The shares of the series 2007 – 2009 have vested and were delivered to the participants in 2010. The share price of a common AkzoNobel share at December 31, 2010, amounted to €46.49 (2009: €46.40).

For further details on our performance-related share plan, see Remuneration Report section.

Outstanding unconditional stock options1

 

 

 

 

 

 

 

Year of issue

Exercise price in €

Outstanding per January 1, 2010

Exercised in 2010

Forfeited in 2010

Outstanding at December 31, 2010

Expiry date

 

 

 

 

 

 

 

1

Including the Board of Management.

2001

46.75

51,322

51,322

April 30, 2011

2002

46.53

107,250

107,250

April 25, 2012

2003

19.51

91,751

(91,751)

April 22, 2010

2004

31.45

279,900

(77,700)

202,200

April 25, 2011

2005

31.98

406,487

(109,531)

(375)

296,581

April 24, 2012

2006

46.46

458,771

(450)

(6,862)

451,459

April 26, 2013

2007

58.89

502,369

502,369

April 26, 2014

Total

 

1,897,850

(279,432)

(7,237)

1,611,181

 

Number and weighted average exercise price stock options

 

 

 

 

Number of options

Weighted average exercise price in €

 

 

 

Balance at January 1, 2009

2,259,618

42.37

Forfeited during the period

(29,155)

43.93

Expired

(196,040)

46.53

Exercised during the period

(136,573)

25.37

Balance at December 31, 2009

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

Stock option plans

Prior to 2008, performance-related stock options were granted to members of the Board of Management and executives. 2007 was the last year in which stock options were granted. We currently do not purchase own shares in connection with the stock option plan. No financing facilities exist for option rights or tax payable thereon. One option entitles the holder thereof to buy one Akzo Nobel N.V. common share with the nominal value of €2. The exercise price is the Euronext Amsterdam opening price on the first day that the AkzoNobel share was quoted ex-dividend in the year of conditional grant. For American Depositary Receipts (ADR’s) a total of 23,000 option rights, to exchange for Akzo Nobel N.V. shares, remain outstanding at year-end (2009: 51,540). The stock options are equity-settled and all exercisable. The employee buys the shares upon exercise of the options. The fair value is measured at grant date and amortized over the period during which the employees become unconditionally entitled to the options. The total cost in 2010 for the stock options was € 1 million (2009: €2 million).

For stock options exercised during 2010, the weighted average of the actual share price at date of exercise amounted to €44.00 (2009: €38.59). A number of 1.1 million outstanding stock options are antidilutive and could potentially dilute basic earnings per share in the future.

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