Annual Report 2010 (PDF, 5.2MB) - Panalpina Annual Report 2012

Consolidated and Annual Financial Statements 2010
102
Expected rates of salary increases, which are used to calculate the defined benefit obligation and the current service cost included in the
income statement, are based on the latest expectation and historical behaviour within Group entities.
A five-year summary of the Group’s defined benefit plans is shown in the table below:
in thousand CHF 2010 2009 2008 2007 2006
DBO 248,015 232,899 256,441 268,675 263,151
Plan assets (217,656) (208,217) (213,520) (255,989) (266,449)
Deficit (surplus) 30,359 24,682 42,920 12,686 (3,298)
Experienced gains (losses) on plan liability 12,297 2,422 10,070 (8,325) (14,210)
Experienced gains (losses) on plan asset 950 21,330 (45,239) (9,378) (514)
8 Share and option ownership program
The Group operates several share and option ownership programs. The members of the Board of Directors, the members of the Executive
Board as well as selected preferential employees had the option of voluntarily participating in the share and option ownership program
introduced in 2005 and continued in a modified program in the following years.
Management Incentive Program II (MIP II)
In June 2006, the Group introduced the Management Incentive Program II. Participants in this program had the right to purchase shares
with a discount of 25% based on the share price corresponding to the average closing price of one share at the SIX Swiss Exchange during
the months January to May in the respective year of purchase. The difference between the discounted share price on the grant date
and the share price paid by the participants is recognized as personnel expenses on the date of the issue of the shares. The shares are
subject to a one-year lock-up period. For every purchased share under this plan, the Group granted one option free of charge to the participant.
The options have a contractual term of six years and a vesting period of one to three years. Each option entitles the participant to
obtain one share of Panalpina World Transport (Holding) Ltd. at a predetermined strike price which equals the average closing price of
one share at the SIX Swiss Exchange during the months January to May in 2006. The share options cannot be settled in cash. In May 2007,
the Board of Directors decided to divide the Management Incentive Program II into an “International Management Incentive Plan” and a
“United States Management Incentive Plan”. Beneficiaries of the “United States Management Incentive Plan” are selected preferential employees
of the subsidiary in the United States of America and members of the Board of Directors with residence in the United States of
America. The conditions of this plan do not differ from those of the “International Management Incentive Plan” except for the strike price, which
equals the closing price of one share at the SIX Swiss Exchange on the date of disbursement. Under this changed program, beneficiaries
of the “United States Management Incentive Plan” holding options to purchase shares of the Group’s capital stock were given the opportunity
to exchange their existing options for new options to purchase an equal number of shares. 3,550 options with a strike price of
CHF 111.30 were tendered pursuant to the “United States Management Incentive Plan”. In May 2007, those options were accepted and
cancelled by the Group. The Group undertook to grant new options on a one-for-one basis, in lieu of the tendered options, to the
affected employees. The new options, which totalled 5,350, were granted with a strike price of CHF 114.00.
The following table lists the parameters based on which the option valuation of both plans was performed:
in CHF
International
Management
Incentive
Plan II
United States
Management
Incentive
Plan II
Market price of share 114.00 114.00
Exercise price of option 111.30 114.00
Expected volatility (in %) 30.00 30.00
Option life (in years) 5 5
Dividend yield (in %) 1.78 1.78
Risk-free interest rate based on Swiss government bonds (in %) 2.670 2.670
Management Incentive Program III (MIP III)
The third share and option program was introduced in June 2007 which conceptually follows in its entirety the modified program of 2006.
Participants of the “International Management Incentive Plan III” subscribed 38,921 options with a strike price of CHF 201.10. Participants
in the “United States Management Incentive Plan III” subscribed 4,096 options with a strike price of CHF 251.00. The difference between
the discounted share price on the grant date and the share price paid by the participants is recognized as personnel expense on the date
of the issue of the shares.
Panalpina Annual Report 2010