2011 Annual Report - OTCIQ.com

102 Notes
(11) Personnel-Related Information
Personnel Costs
The following table provides details of personnel costs for the
periods indicated:
Personnel Costs
€ in millions 2011 2010
Wages and salaries 4,882 4,153
Social security contributions
Pension costs and other employee
648 668
benefits 417 460
Pension costs 410 453
Total 5,947 5,281
Personnel costs rose by €666 million to €5,947 million
(2010: €5.281 million); this was due especially to restructuring
expenses associated with the E.ON 2.0 project.
Share-Based Payment
The expenses for share-based payment in 2011 (the employee
stock purchase program, the E. ON Stock Appreciation Rights
plan and the E. ON Share Performance Plan) amounted to
€13.7 million (2010: €12.8 million).
Employee Stock Purchase Program
In 2011, as in 2010, employees at German E.ON Group companies
had the opportunity to purchase shares of E.ON AG at
preferential terms under a voluntary employee stock purchase
program. Employees receive a matching contribution from
the Company of at least 25 percent, but no more than €511,
on the shares they purchased by the November 17, 2011, cut-off
date. On that date, the relevant market price of E.ON stock
was €16.75. Depending on the number of shares purchased,
the preferential prices paid ranged between €7.11 and €13.18
(2010: between €9.94 and €17.95). The expense of €9.7 million
(2010: €10.2 million) arising from the granting of the preferential
prices is recognized as personnel costs and included in
the “Wages and salaries” line item.
Since the 2003 fiscal year, employees in the United Kingdom
have the opportunity to purchase E.ON shares through an
employee stock purchase program and to acquire additional
bonus shares. The cost of issuing these bonus shares amounted
to €3.3 million in 2011 (2010: €2.3 million) and is also recorded
under personnel costs as part of “Wages and salaries.”
In 2011, E.ON acquired a total of 1,210,014 shares (0.06 percent
of the capital stock of E.ON AG), mostly in the market, under
the voluntary employee stock purchase program (2010: 980,897
shares or 0.05 percent of the capital stock of E.ON AG) at an
average purchase price of €17.20 per share (2010: €22.70 per
share, purchased in the market).
Information on the changes in the number of treasury shares
held by E.ON AG can be found in Note 19.
Long-Term Variable Compensation
Members of the Board of Management of E.ON AG and certain
executives of the E.ON Group receive share-based payment
as part of their voluntary long-term variable compensation.
Share-based payment can only be granted if the qualified
executive owns a certain minimum number of shares of E.ON
stock, which must be held until maturity or full exercise. The
purpose of such compensation is to reward their contribution
to E.ON’s growth and to further the long-term success of the
Company. This variable compensation component, comprising
a long-term incentive effect along with a certain element
of risk, provides for a sensible linking of the interests of shareholders
and management.
The following discussion includes a report on the E.ON AG
Stock Appreciation Rights plan, which ended in 2005, and on
the E.ON Share Performance Plan, which was introduced in
2006 and modified in 2010 and 2011 for subsequent tranches.