2010Annual Report - Schneider Electric CZ, s.r.o.

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5 CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 188 Based on these assumptions, the amount recorded under “Selling, general and administrative expenses” for stock grant plans set up after November 7, 2002 breaks down as follows: 2010 2009 Plan 1 - 1 Plan 2 - - Plan 3 - - Plan 4 - 1 Plan 5 2 2 Plan 6 2 2 Plan 7 - - Plan 8 5 - Plan 9 6 - Plan 10 1 - Plan 11 - - 21.5.2 Worldwide Employee Stock Purchase Plan Schneider Electric gives its employees the opportunity to participate in employee share issues reserved for them. Employees in countries that meet legal and fi scal requirements have the choice between a nonleveraged and a leveraged plan. Under the nonleveraged plan, employees may purchase Schneider Electric shares at a 15% to 17% discount (depending on the country) to the price quoted for the shares on the stock market. Employees must then hold their shares for fi ve years except in certain cases provided for by law. The share-based payment expense recorded in accordance with IFRS 2 is measured by reference to the fair value of the discount on the locked-up shares. The lock-up cost is defi ned as the cost of a two-step strategy that involves fi rst selling the locked-up shares on the forward market and then purchasing the same number of shares on the spot market (i.e. shares that may be sold at any time) using a bullet loan. This strategy is designed to refl ect the cost the employee would incur during the lock-up period to avoid the risk of carrying the shares subscribed under the nonleveraged plan. The borrowing cost corresponds to the cost of borrowing for the employees concerned, as they are the sole potential buyers in this market. It is based on the average interest rate charged by banks for an ordinary, non-revolving personal loan with a maximum maturity of fi ve years granted to an individual with an average credit rating. Under the leveraged plan, employees may also purchase Schneider Electric shares at a 15% to 17% discount (depending on the country) to the price quoted on the stock market. However, these plans offers a different yield profi le as a third-party bank tops up the 2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 16 6 employee’s initial investment, essentially multiplying the amount paid by the employee. The total is invested in Schneider Electric shares at a preferential price. The bank converts the discount transferred by the employee into funds with a view to securing the yield for the employee and increasing the indexation (by a factor of 3.4 in 2010) on a leveraged number of directly subscribed shares. As with the nonleveraged plan, the IFRS 2 expense, like the sharebased payment expense, is determined by reference to the fair value of the discount on the locked-up shares (see above). In addition, it includes the value of the benefi t corresponding to the issuer’s involvement in the plan, which means that employees have access to share prices with a volatility profi le adapted to institutional investors rather than to the prices and volatility profi le they would have been offered if they had purchased the shares through their retail banks. The volatility differential is treated as a discount equivalent that refl ects the opportunity gain offered to employees under the leveraged plan. In 2010, as part of its commitment to employee share ownership, Schneider Electric gave its employees the opportunity to purchase on June 8 shares at a price of EUR65.85 or EUR67.44 per share, depending on the country. This represented a discount of 15% to 17% to the average opening price of EUR79.34 quoted for the share during the 20 days preceding the Management Board’s decision to launch the employee share issue. In all, 2.2 million shares were subscribed, increasing the Company’s capital by EUR143 million as of July 8, 2010. The issue represented a total cost of EUR3.4 million, taking into account the fi ve year lockup period.
CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The tables below summarise the main characteristics of the plans, the amounts subscribed, the valuation assumptions and the cost of the plans for 2010 and 2009. 2010 2009 Nonleveraged plans Plan characteristics % Value % Value Maturity (years) 5 5 Reference price (euros) Subscription price (euros): 79.34 53.59 between 67.44 45.55 and Discount: 65.86 44.48 between 15.0% 15.0% and 17.0% 17.0% Amount subscribed by employees 37.8 28.6 Total amount subscribed 37.8 28.6 Total number of shares subscribed (millions of shares) Valuation assumptions 0.6 0.6 Interest rate available to market participant (bullet loan) (1) 4.1% 5.0% Five year risk-free interest rate (euro zone) 2.1% 3.0% Annual interest rate (repo) (a) Value of discount: 1.0% 1.0% between 15.0% 6.2 15.0% 4.8 and (b) Value of the lock-up period for market 17.0% 0.6 17.0% 0.3 participant 15.0% 6.7 14.9% 5.0 Total expense for the Group (a – b) Sensitivity 0.01% to 2.01% 0.1 0.15% to 2.15% 0.1 • decrease in interest rate for market participant (2) (0.5%) 1.2 (0.5%) 0.9 Amounts in millions of euros, unless otherwise stated. (1) Average interest rate charged on an ordinary, non-revolving personal loan, with a fi ve-year maturity to an individual with an average credit rating. (2) A decline in the interest rate for market participants reduces the lock-up cost and increases the expense booked by the issuer. 2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 189 5
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2010 Annual Report Schneider Electr
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Registration Document Annual Report
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A signifi cant improvement in profi
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Interview with 2010 marks the retur
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Supervisory Board (as of February 1
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Sales by geographical area 18% Rest
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2010 in brief Growth and acquisitio
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On October 1, 2010 IBM and Schneide
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1 Description of the Group, and its
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1. 3 The emergence of new economies
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DESCRIPTION OF THE GROUP, AND ITS S
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Utilities and Infrastructures: ensu
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2. 3 Leadership in our five sectors
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The Buildings business Number 4 wor
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Panel builders and systems integrat
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3. Innovation and R&D: DESCRIPTION
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3. 4 Partnerships to accelerate pro
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DESCRIPTION OF THE GROUP, AND ITS S
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Rationalisation and optimisation of
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4. 4 Global, selective purchasing P
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The Group’s human resources strat
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on our increased costs to customers
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Insurance Schneider Electric’s st
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2 Sustainable development 1. Sustai
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2 SUSTAINABLE DEVELOPMENT SUSTAINAB
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2 SUSTAINABLE DEVELOPMENT 50 > Zoom
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2 SUSTAINABLE DEVELOPMENT SUSTAINAB
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2 SUSTAINABLE DEVELOPMENT RESPECT F
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2 SUSTAINABLE DEVELOPMENT SCHNEIDER
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2 SUSTAINABLE DEVELOPMENT COMMITTED
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2 SUSTAINABLE DEVELOPMENT METHODOLO
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SUSTAINABLE DEVELOPMENT 2 INDICATOR
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3 CORPORATE GOVERNANCE SUPERVISORY
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3 CORPORATE GOVERNANCE ORGANISATION
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3 CORPORATE GOVERNANCE ORGANISATION
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3 CORPORATE GOVERNANCE MANAGEMENT I
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3 CORPORATE GOVERNANCE INTERNAL CON
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Page 140 and 141: 3 CORPORATE GOVERNANCE APPLICATION
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Page 150 and 151: 4 BUSINESS REVIEW 148 2010 REGISTRA
Page 152 and 153: 5 CONSOLIDATED FINANCIAL STATEMENTS
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6 COMPANY FINANCIAL STATEMENTS STAT
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6 COMPANY FINANCIAL STATEMENTS SUBS
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6 COMPANY FINANCIAL STATEMENTS THE
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7 GENERAL PRESENTATION OF SCHNEIDER
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GENERAL PRESENTATION OF SCHNEIDER E
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GENERAL PRESENTATION OF SCHNEIDER E
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8 ANNUAL AND EXTRAORDINARY SHAREHOL
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ANNUAL AND EXTRAORDINARY SHAREHOLDE
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288 PERSONS RESPONSIBLE FOR THE REG
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Schneider Electric SA Headquarters:
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2010Annual Report - Schneider Electric CZ, s.r.o.

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