Financial Report and Registration Document 2010 - Groupe Seb

3 NOTES
CONSOLIDATED FINANCIAL STATEMENTS
TO THE CONSOLIDATED FINANCIAL STATEMENTS
19.2.2. Performance shares
In 2009 and 2010, the Board of Directors granted performance shares to
certain employees and corporate officers.
Shares granted under the plan are subject to a two-year vesting period
and certain performance obligations. The performance targets concern
growth in revenue and operating margin and are the same as those used
to determine senior management bonuses. Vested shares are subject to a
two-year lock-up.
Further information on the performance share plan is provided in the table below:
At 31 December 2010 Dates Number of shares
Share price at
Type of option Grant date* Vesting date End of lock-up Granted Vested Cancelled Outstanding grant date**
Performance shares 12/06/2009 12/06/2011 12/06/2013 50,472 0 451 50,021 30.08
Performance shares 18/06/2010 18/06/2012 18/06/2014 58,363 0 0 58,363 55.00
* The grant date corresponds to the date of the Board Meeting when the performance share grants were decided.
** Opening price on the day of the Board of Directors’ Meeting.
The fair value of performance shares includes a discount to reflect the impact
of the lock-up period. The measurement method used to determine this
discount is based on a strategy that consists of selling the shares under
a four-year forward contract (corresponding to the vesting/lock-up period)
and immediately purchasing an equivalent number of shares free of any
restrictions, with the purchase financed by debt repayable at the end of the
lock-up using the proceeds from the forward sale and dividends received
during the lock-up period.
The main assumptions applied to determine the fair value of performance shares are as follows:
2010 plan 2009 plan
ASSUMPTIONS
Share price on the grant date (in €) 55.00 30.80
Four-year risk-free interest rate 3.28% 2.50%
Average interest rate on a four-year general purpose loan 6.88% 6.90%
Dividend rate 2.36% 3.28%
INITIAL VALUE (IN € MILLIONS) 2.7 1.2
COST RECOGNISED IN EMPLOYEE BENEFITS EXPENSE IN 2010 (IN € MILLIONS) 0.8 0.5
19.3. RESERVES AND RETAINED EARNINGS
(BEFORE APPROPRIATION OF PROFIT)
Reserves and retained earnings include the reserves recorded in the
balance sheet of SEB S.A. (including €747 million available for distribution
at 31 December 2010, €753 million at 31 December 2009 and €742 million
at 31 December 2008), and SEB S.A.’s share of the post-acquisition retained
earnings of consolidated subsidiaries.
SEB S.A.’s share of the retained earnings of foreign subsidiaries is considered
as being permanently reinvested and withholding taxes or additional taxes on
distributed income are recognised only when distribution of these amounts
is planned or considered probable.
19.4. TREASURY STOCK
The Group’s share buyback policy is to acquire shares:
for cancellation in order to reduce the Company’s capital;
for allocation to employees, managers or senior executives of the
Company or of related companies upon exercise of stock options;
for delivery on redemption, conversion, exchange or exercise of share
equivalents.
Share buybacks are carried out based on market opportunities and only
when the Group has sufficient cash to fund the transactions.
In 2010, the Group bought back 264,329 SEB shares on the market at a
weighted average price of €56.54 and sold 1,433,074 shares on the market
at an average price of €33.76. The after-tax loss on the sales, in the amount
of €9 million, was recognised directly in equity without affecting profit for
the period.
At 31 December 2010, the Group held 1,980,698 shares in treasury, acquired
at an average price of €31.14.
92 FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010 GROUPE SEB