Volvo 2007 Annual Report Download - page 125
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Please find page 125 of the 2007 Volvo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report. Financial information 2007 121
2003/2008 employee
Financial instruments and shares stock options, number Shares
1
CEO 50,000 40,000
Other members of GEC 50,000 310,833
Other senior executives 37,195 2,104,167
Total 137,195 2,455,000
1 The table shows payments in cash with the corresponding value in shares. Of the total 2,455,000 shares, 1,345,000 shares and a cash-settlement corresponding
to 1,110,000 shares will be granted.
Total number of
outstanding options
Summary of Allotment Dec 31, Dec 31, Excercise Excercise Value/ Vesting,
options program date 2006 2007 price period options years
May 2, 2006–
2002, employee stock options1 May 2, 2003 264,750 137,195 30 May 1, 2008 32.00 3
1 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, 2001 and
2002. The executives have not made any payment for the options. The
employee stock options gives the holders the right to exercise their options or
alternatively receive the difference between the actual price at that time and
the exercise price determined at allotment. The theoretical value of the options
at allotment was set using the Black & Scholes pricing model for options. For
the options allotted in 2003, the Annual General Meeting has decided that
Volvo’s own shares may be used for the program. Recalculation has taken
place of the exercise price and the number of shares each option entitles the
option holder to acquire. The exercise price was previously SEK 163 per share
and each option entitled the option holder to acquire one share. According to
the terms and conditions of the option program, recalculation shall take place
under certain circumstances such as extra dividends, issues of new shares and
dividend of shares. At the AB Volvo Annual General Meeting in 2004, a deci-
sion was taken to distribute shares in Ainax AB to Volvo’s shareholders. As a
consequence hereof, a recalculation of the exercise price and the number of
shares each option entitles the option holder to acquire has taken place. On
April 26, Volvo’s share split 6:1 with automatic redemption, in which the sixth
share was redeemed by AB Volvo for SEK 25 per share took effect, which
meant that the number of shares were fi vefold. The exercise price after that is
SEK 30 per share and each option entitles the option holder to acquire
5.43041 Volvo B shares.
Cost for incentive programs
Change in obligations related to the employee stock option programs
is recorded in the income statement. The cost 2007 for the employee
stock option program amounted to 37. The cost 2007 for the share-
based incentive program 2006/2007 was 110 and for the share-
based incentive program 2007/2008 249. Total cost for the three
programs was 396 for 2007 (245). The cost for the incentive program
includes both cash payments and costs for remuneration in shares,
including social costs. At December 31, 2007, provisions related to
the employee stock option program and share-based incentive
program amounted to 216 (219).
Change in number of options per program Program
Number of options 2002
Dec 31, 2006 264,750
Allotted –
Cancelled –
Exercised (127,555)
Dec 31, 2007 137,195
pany’s fulfi lment of certain improvement and fi nancial goals. These
goals are decided by the Board of AB Volvo and may be related, for
example, to operating income or cash fl ow.
In addition to fi xed and variable salary, normally other customary
benefi ts, such as company car and company healthcare are provided.
In addition to pension benefi ts provided by law and collective bar-
gain agreements, the members of the Group Executive Committee
domiciled in Sweden are offered a defi ned-contribution pension plan
whereby the amount of the individual’s pensions comprises the pre-
mium paid and any return. Members of the Group Executive Commit-
tee domiciled outside Sweden are offered pension solutions that are
competitive in the country in which the person is domiciled.
With regard to notice of termination of employment for members of
the Group Executive Committee domiciled in Sweden, the notifi cation
period is 12 months if the company terminates the employment and
six months if the individual terminates the employment. In addition, the
employee is entitled to a severance pay of 12 months’ salary if Volvo
terminates the employment. Those members who are domiciled out-
side Sweden are offered terms in this respect that are competitive in
the country in which the person is domiciled.