Volvo 2001 Annual Report Download - page 79

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1999 2000 2001
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 137 60 115 55 105 53
Subsidiaries
Sweden 24,802 19 24,737 18 24,463 17
Western Europe 10,392 15 10,316 17 26,043 13
Eastern Europe 1,239 11 1,734 10 1,862 13
North America 11,860 19 11,875 33 13,450 18
South America 1,924 11 2,084 10 2,071 11
Asia 2,344 14 2,616 13 2,599 10
Other countries 450 12 787 14 1,438 10
Group total 53,148 17 54,264 20 72,031 15
provide that, when employment is terminated by the
Company, an employee is entitled to severance pay equal
to the employee’s monthly salary for a period of 12 or 24
months, depending on age at date of severance. In cer-
tain contracts, replacing contracts concluded earlier, an
employee is entitled to severance payments amounting
to the employee’s monthly salary for a period of 30 to 42
months. In agreements concluded after the spring of
1993, severance pay is reduced, in the event the em-
ployee gains employment during the severance period,
in an amount equal to 75% of income from new em-
ployment. An early-retirement pension may be received
when the employee reaches the age of 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 a maximum of 70% of the qualifying salary.
From the age of normal retirement, the retiree will receive
a maximum of 50% of the qualifying salary.
Volvo currently has two option programs for senior
executives. The option programs have no dilutive effect
on Volvo’s outstanding shares.
In October 1998, Volvo announced a call option
program with two subscriptions, one in 1999 and one
in 2000. For the first subscription in May 1999, options
were subscribed to approximately 100 senior executives.
For the second subscription in April 2000, options were
subscribed to approximately 60 senior executives.
The call options subscribed in May 1999, which can
be exercised from May 18, 1999 until May 4, 2004, give
the holder the right to acquire 1.03 Series B Volvo shares
for each option held from a third party. The exercise price
is SEK 290.70. The price of the options is based on a
market valuation and was fixed at SEK 68.70 by Trygg-
Hansa Livförsäkrings AB. The number of options corre-
sponds to a part of the executive’s bonus earned. A total
of 91,341 options were subscribed. The options are
financed 50% by the Company and 50% from the
option-holder’s bonus.
The second subscription took place in April 2000.
These options can be exercised from April 28, 2000 until
April 27, 2005, and give the holder the right to acquire
one Series B Volvo share for each option held from a
third party. The exercise price is SEK 315.35. The price
of the options is based on market valuation by UBS
Warburg and was fixed at SEK 55.75. The number of
options corresponds to a part of the executive’s bonus
earned. A total of 120,765 options 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 employee stock
options. The decision covers allotment of options for
2000 and 2001. Accordingly, during January 2000, a
total of 595,000 options were allotted to 62 senior exec-
utives, including President and CEO Leif Johansson, who
received 50,000 options. The executives has not made
any payment for the options. The employee stock options
allotted in January 2000 give the holders the right, from
March 31, 2002 through March 31, 2003, to redeem
their options or alternatively receive the difference
between the actual price at that time and the exercise
price determined at allotment. The exercise price is SEK
239.35, which is equal to 110% of the share price at
allotment. The theoretical value of the options at allot-
ment was set at SEK 35, using the Black & Scholes pric-
ing model for options. Volvo has hedged the committ-
ments (including social costs) relating to a future
increase in share price, through a Total Return Swap.
Should the share price be lower than the exercise price
at the closing date, Volvo will pay the swap-holder the
difference between the actual share price and the exer-
cise price at that time for each outstanding option.
In May, 2001, the second allotment within the em-
ployee stock option program took place. The allotment
which was based on the fulfillment of financial goals, cov-
ered a total of 163,109 options to 71 senior executives,
including President and CEO Leif Johansson, who
received 13,600 options. The executives has not made
any payment for the options. These employee stock
options give the holders the right, from May 4, 2003
through March 31, 2004, to redeem their options or
alternatively receive the difference between the actual
price at that time and the exercise price determined at
allotment. The exercise price is SEK 159, which is equal
to 110% of the share price at allotment. The theoretical
value of the options at allotment was set at SEK 22,
using the Black & Scholes pricing model for options.
Volvo has hedged the committments (including social
costs) relating to a future increase in share price, through
a Total Return Swap. Should the share price be lower
than the exercise price at the closing date, Volvo will pay
the swap-holder the difference between the actual share
price and the exercise price at that time for each out-
standing option.
Profit-sharing payments to employees for 2001, 2000
and 1999 amounted to –, – and 185.