Volvo 1999 Annual Report Download - page 76

The Volvo Group
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employee gains employment during the severance period,
in an amount equal to 75% of income from new employ-
ment. An early-retirement pension may be received when
the employee reaches age 60. A pension is earned
gradually over the years up to the employee’s retirement
age and is fully earned at age 60. From that date until
reaching the normal retirement age, the retiree will receive
70% of the qualifying salary. Volvo currently has three
options programs to senior executives. The options pro-
grams have no dilutive effect on Volvo’s outstanding shares.
In February 1996, Skandia and Trygg-Hansa (insurance
companies) provided approximately 100 senior executives
in the Volvo Group an opportunity to acquire call options
on AB Volvo’s Series B shares. At the close of the sub-
scription period approximately 90% of the executives had
accepted the offer. The call options, which can be exer-
cised from March 4, 1996 until March 3, 2001, entitle the
holder to acquire 1.01 Volvo Series B share for each
option held. The exercise price is 177.70. The option price,
based on a market valuation, was fixed at the time of ac-
quisition at SEK 21.15. Members of the Group Executive
Committee were offered an opportunity to acquire 6,000
or 10,000 options each. Other senior executives could
acquire 4,000 or 6,000 options each. A total of 514,000
options were subscribed.
In October 1998, Volvo announced a new options
program, to be effective in April 1999. Approximately
100 senior executives were offered an opportunity to
participate in the options program, which includes
options on AB Volvo Series B shares. 95% of the ex-
ecutives accepted the offer.
The call options, which can be exercised from May 4,
1999 until April 2004, give a holder the right to acquire
one Series B Volvo share for each option held and the
exercise price is SEK 300. The price of the options is
based on a market valuation and was fixed at 68.70. The
number of options will equal part of the executive’s
bonus earned. A total of 91,341 shares were subscribed.
The options are financed 50% by the Company and
50% from the option holder’s bonus.
In January 2000, a decision was made to implement
a new incentive program for senior executives within the
Volvo Group in the form of so-called personnel options.
The decision covers allotment of options for 2000 and
2001, with the intention of establishing the conditions
for a rolling program with continuation also in subse-
quent years. Accordingly, during January 2000, a total of
595,000 options were allotted to about 62 senior ex-
ecutives, including President and CEO Leif Johansson
who received 50,000 options. The personnel options
allotted in January 2000 give the holder the right from
March 31, 2002 through March 31, 2003 to redeem
their options or alternatively receive shares at the value
representing the difference between the actual price at
that time and the exercise price determined at allotment.
The exercise price is SEK 244, which corresponds to
110% of the fixed allotment price. The value of the
option at allotment was set at SEK 35, which corre-
sponds to the market value.
The final allotment for 2001 will depend on the
degree of fulfillment of financial goals. The options are
financed by the company.
Profit sharing to employees for 1999, 1998 and
1997 amounted to 185, 160 and 231, respectively.
1997 1998 1999
Number of of whom, Number of of whom, Number of of whom,
Average number of employees employees women, % employees women, % employees women, %
AB Volvo
Sweden 318 56 167 57 137 60
Subsidiaries
Sweden 43,688 17 41,497 19 24,802 19
Western Europe 14,664 17 16,570 15 10,392 15
Eastern Europe 524 13 806 12 1,239 11
North America 7,870 19 12,396 17 11,860 19
South America 2,030 11 1,984 11 1,924 11
Asia 2,065 12 2,581 12 2,344 14
Other countries 679 15 627 17 450 12
Group total 71,838 18 76,628 17 53,148 17