sain t-gobain annu al report 2008 annual report

The plan costs are calculated under IFRS 2 in the same way as for non-leveraged plans (see Note 1), but also take into account the
advantage accruing to employees who have access to share prices with a volatility profile adapted to institutional investors
(corresponding to the opportunity gain in the table below).
The leveraged plan cost recorded in the income statement amounted to €8.5 million in 2008 (2007: €4.2 million), net of the lockup
cost for employees and the opportunity gain of €29.9 million (2007: €14.2 million).
The following table shows the main features of the leveraged plans, the amounts invested in the plans and the valuation
assumptions applied in 2008 and 2007.
2008 2007
Plan characteristics
Grant date February 22 February 23
Plan duration (in years) 5 5
Benchmark price (in €) 51.75 72.56
Purchase price (in €) 43.99 61.68
Discount (in %)) 15.00% 15.00%
(a) Total discount on the grant date (in %) 17.18% 16.19%
Employee investments (€ millions) 18.5 8.9
Total investment in the plan (€ millions) 184.8 89.0
Total number of shares purchased 4,199,902 1,442,584
Valuation assumptions
Interest rate paid by employees (1) 7.57% 7.36%
5-year risk-free interest rate 3.61% 4.02%
Repo rate 0.25% 0.25%
Retail/institutional volatility spread (2) 5.50% 4.00%
(b) Lock-up discount (in %) (3) 15.00% 15.00%
(c) Opportunity gain (in %) 1.62% 1.65%
(d) Total cost to the Group (in %) (a-b+c) 3.80% 2.84%
(1) A 0.5-point decline in borrowing costs for the employee would have no impact on the 2008 cost as calculated in accordance with IFRS 2 because the lock-up cost
exceeds the discount.
(2) A 0.5-point increase in the retail/institutional rate spread would have an impact of €0.5 million on the 2008 cost as calculated in accordance with IFRS 2.
(3) The interest rate used to calculate the lock-up cost is capped at the discount percentage.
NOTE 13
Provisions for pensions and other employee benefits
Dec. 31, Dec. 31, Dec. 31,
(in € millions) 2008 2007 2006
154
Pensions 1,681 1,058 1,415
Length-of-service awards 207 233 236
Post-employment healthcare benefits 367 341 363
Total provisions for pensions and other post-employment benefit obligations 2,255 1,632 2,014
Healthcare benefits 50 44 51
Long-term disability benefits 38 38 45
Other long-term benefits 100 93 93
Provisions for pensions and other employee benefits 2,443 1,807 2,203
The following table shows projected benefit obligations under pension and other post-employment benefit plans and the related
plan assets:
Dec. 31, Dec. 31, Dec. 31,
(in € millions) 2008 2007 2006
Projected benefit obligations 2,255 1,632 2,014
Plan assets 206 147 120
Net projected benefit obligations 2,049 1,485 1,894
Saint-Gobain – Financial Report 2008