Annual Report 2009 - Husqvarna Group
Annual Report 2009 - Husqvarna Group
Annual Report 2009 - Husqvarna Group
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Notes <strong>Husqvarna</strong> <strong>Annual</strong> <strong>Report</strong> <strong>2009</strong> 79<br />
Amounts in SEKm unless otherwise stated.<br />
Specification of the net provision for pensions<br />
recognized in the balance sheet<br />
<strong>2009</strong> 2008<br />
Present value of the funded<br />
pension obligations 320 293<br />
Fair value of plan assets –337 –311<br />
Surplus of the pension fund –17 –18<br />
Present value of unfunded<br />
pension obligations 35 34<br />
Surplus of the pension fund,<br />
not recognized 17 18<br />
Net provision recognized<br />
in the balance sheet 35 34<br />
Specification of the change in the net provision for<br />
pensions recognized in the balance sheet<br />
<strong>2009</strong> 2008<br />
Opening balance 1 Jan 34 32<br />
Costs for pensions recognized<br />
in the income statement 10 5<br />
Benefits paid –6 –3<br />
Other –3 0<br />
Closing balance 31 Dec 35 34<br />
Of total net provisions SEK 35m (34) is within the scope of the<br />
Swedish Safe-guarding of Pension Commitments Act.<br />
Pension costs recognized in the Income statement<br />
<strong>2009</strong> 2008<br />
Own pensions<br />
Current service costs 3 0<br />
Interest expenses 1 2<br />
Benefits paid 6 3<br />
Pension costs 10 5<br />
Insured pensions<br />
Insurance premiums 50 53<br />
Total net expenses for pensions 60 58<br />
Of total net expenses of SEK 60m (58), SEK 1m (2) is<br />
recognized in the financial net and the remaining portion is<br />
rec ognized in the operating results. The expected pension<br />
payments for 2010 total SEK 24m.<br />
Principal actuarial assumptions at balance sheet date<br />
% 31 Dec <strong>2009</strong> 31 Dec 2008<br />
Discount rate 4.0 3.7<br />
The major categories of plan assets as a percentage of<br />
total plan assets and the return on these categories<br />
%<br />
31 Dec<br />
<strong>2009</strong> Return<br />
31 Dec<br />
2008 Return<br />
Equity 48 17 35 –25<br />
Debt 49 –1 64 19<br />
Other 3 0 1 —<br />
Total 100 7 100 –1<br />
Long-term incentive programs (LTI)<br />
The purpose of the long-term incentive programs is to attract<br />
and retain competent employees to the <strong>Group</strong>, provide competitive<br />
remuneration and align shareholder’s and management’s<br />
interests.<br />
Long term incentive programs that entitle rights for the<br />
employees to purchase shares are subject to approval by the<br />
General Meeting of shareholders. At present there are three<br />
programs in force – LTI 2007, LTI 2008 and LTI <strong>2009</strong>. All programs<br />
consist of restricted share awards and perform ance<br />
stock options.<br />
The programs were authorized by the <strong>Annual</strong> General<br />
Meeting 2007, 2008 and <strong>2009</strong> respectively. Each program<br />
includes approximately 40 senior managers.<br />
In order to participate in the programs, the employees<br />
were required to purchase <strong>Husqvarna</strong> Class B-shares corresponding<br />
to a value of a minimum of 5% (SEK 20,000 for LTI<br />
<strong>2009</strong>) and a maximum of 10% (6% for LTI <strong>2009</strong>) of their annual<br />
target income (fixed salary plus variable salary on target<br />
level). The participants have invested in <strong>Husqvarna</strong> Class<br />
B-shares, at market price, which will be matched (1:1.8 in LTI<br />
2007, 1:2 in LTI 2008 and 1:1 in LTI <strong>2009</strong>),at a later date by the<br />
company free of charge through allocation of shares. The<br />
conditions for share match are that the employee holds the<br />
purchased shares and maintains his or her employment within<br />
the <strong>Group</strong> three years after the date of grant. The LTI <strong>2009</strong><br />
conditions require also that the performance level “Entry” has<br />
been fulfilled, which is a level in respect of increase of the<br />
Company’s earnings per share during <strong>2009</strong>–2011, as determined<br />
by the Board of Directors.<br />
The employee may also receive performance stock options.<br />
The options are granted free of charge and each stock option<br />
entitles the holder to purchase one <strong>Husqvarna</strong> Class B-share.<br />
The purchase price for shares when exercising a stock option<br />
amounts to SEK 90 per share (SEK 112 before recalculation<br />
due to the rights issue in <strong>2009</strong>) in the LTI 2007 SEK 58 per<br />
share (SEK 72 before recalculation due to the rights issue in<br />
<strong>2009</strong>) in LTI 2008 and SEK 48 per share in LTI <strong>2009</strong>. The exercise<br />
price corresponds to 110% of the average volume<br />
weighted closing price of <strong>Husqvarna</strong> Class B-share at the<br />
OMX Nordic Exchange Stockholm, during a period of 10 trading<br />
days prior to the date on which the options were granted.<br />
The options may be exercised at the earliest four years, three<br />
years for the LTI <strong>2009</strong>, and, at the latest, eight years from the<br />
date of grant. The right to exercise the options requires that<br />
the holder continues to be employed by the <strong>Husqvarna</strong><br />
<strong>Group</strong> and has maintained the personal investment for three<br />
years from the date of grant. The options carry no right to<br />
compensation for dividends on the underlying shares.<br />
The number of stock options that may be exercised<br />
depends on the number of Class B-shares that the employee<br />
has purchased within the framework of the LTI 2007, LTI 2008<br />
and LTI <strong>2009</strong> as well as the company’s earnings per share,<br />
during 2007–<strong>2009</strong> (LTI 2007) / 2008–2010 (LTI 2008) and<br />
<strong>2009</strong>–2011 (LTI 2090), reaching specific levels determined by<br />
the Board of Directors. These determined levels are; “Entry”,<br />
“Target” and “Stretch”, with a linear progression between<br />
each performance level. Entry constitutes a minimum level<br />
which must be exceeded in order to enable to exercise the<br />
stock options. The three levels correspond to the following<br />
numbers of stock options: