bold spirit - ArcelorMittal South Africa

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188 ArcelorMittal South Africa Annual Report 2010 28. POST-EMPLOYMENT BENEFITS continued 28.1 Pensions continued 28.1.2 Defined benefit plans continued History of experience adjustment 2010 Rm ArcelorMittal South Africa Pension Fund 2009 Rm 2008 Rm 2007 Rm 2006 Rm As at 31 December Present value of defined benefit obligation 6 915 6 592 6 562 6 870 6 739 Fair value of plan assets (7 167) (7 295) (7 276) (8 274) (8 299) Surplus (252) (703) (714) (1 404) (1 560) Experience adjustments on plan liabilities – gains/(losses) (505) (198) 121 (328) (590) Experience adjustments on plan assets – (losses)/gains (56) 73 (1 004) (25) 1 079 2010 Rm Iscor Retirement Fund 2009 Rm 2008 Rm 2007 Rm 2006 Rm For the year ended 31 December Present value of defined benefit obligation 368 387 405 410 406 Fair value of plan assets (442) (448) (476) (513) (519) Surplus (74) (61) (71) (103) (113) Experience adjustments on plan liabilities – gains/(losses) (7) 18 6 (32) (54) Experience adjustments on plan assets – (losses)/gains 12 (37) (50) 10 68 Medical benefits The group and company contribute to medical aid schemes for the benefit of retired employees and their dependants, where those qualifying retirees accepted early retirement in 1994. At 31 December 2010 there were 49 qualifying retirees (December 2009: 52). On the basis of current practice, which is reviewed annually, the actuarially determined present value of post-retirement medical aid obligations has been provided. These obligations are unfunded. The group and company have no further post-retirement medical aid obligations for current or retired employees.
189 ArcelorMittal South Africa Annual Report 2010 29. SHARE-BASED PAYMENTS 29.1 ArcelorMittal South Africa Cash-settled Share Participation Rights In 2007 the group and company granted share participation rights to a limited number of key employees for retention purposes. The share participation rights were fully settled in 2010 for R33 million. The charge to earnings for the year equalled R1 million (2009: R19 million). 29.2 ArcelorMittal South Africa Equity-settled Share Option Plan The group and company operate the Management Share Trust, consisting of an option share plan for the benefit of the group’s and company’s senior management including executive directors. The transaction administration with participants is outsourced to service provider, Compensation Technologies (Pty) Limited. Option plan types "Legacy Option Plan" (25 October 1989 to 30 April 2002) Options were offered at the market price on the option grant date and were released in five equal annual tranches commencing on the second anniversary of the offer date and expiring after nine years. This plan was closed as from 30 April 2002 and will run out once all rights have been exercised or the exercise period expires. "30:30:40 Option Plan" (effective 7 May 2002 to 11 December 2005) Share options were offered at market prices on the grant date and were released in three annual tranches of 30%, 30% and 40% respectively, commencing on the first anniversary of the offer date and expiring after six years. This plan was closed as from 11 December 2005 and will run out once all rights have been exercised or the exercise period expires. "33 3/10: 33 3/10: 33 4/10 ArcelorMittal Group-type Option Scheme" (effective from 12 December 2005 to present) Share options are offered at market prices on the grant date and are released in three annual tranches of 33.3%, 33.3% and 33.4% respectively, commencing on the first anniversary of the offer date and expiring after 10 years. This is an open plan. The option plans are equity-settled as each share option converts into one ordinary share of ArcelorMittal South Africa Limited on exercise. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The number of options granted is calculated in accordance with employees’ role grading within the company and group as approved by the Remuneration Committee of ArcelorMittal South Africa and as incorporated within the trust deed of the Management Share Trust. Upon resignation, the share options lapse immediately. Upon death, the options lapse within six months. For the options granted during 2010, the key inputs utilised to determine the grant date valuation appear below: • Discount rate: 6.88% (2009: 7.47%) • Annual volatility rate: 56.6% (2009: 64.45%) • Early exercise multiple: 2.5 times strike price (2009: 2.7 times strike price) • Continuous dividend yield: 5.4% (2009: 3.08%) • Expected attrition rate: 9.13% (2009: 7.7%) The weighted average fair value per option granted for the reporting period ended 31 December 2010 amounted to R33.13 (2009: R55.43). Million Existing share distribution and shares available for future distribution Number of shares available for utilisation in terms of the ArcelorMittal South Africa Management Share Trust at 1 January 2010 40.3 Add: Share option releases, forfeitures and resignations 0.3 Add: Shares releasable 0.5 Number of shares available for future utilisation at 31 December 2010 41.1
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Annual Report 2010 bold spirit
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bold spirit - ArcelorMittal South Africa

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