Mercedes 2006 Annual Report Download - page 198

24. Accrued Liabilities
Accrued liabilities are comprised of the following:
a) Pension plans and similar obligations
Pension plans and similar obligations are comprised of the
following components:
As of December 31, 2006, DaimlerChrysler adopted the recog-
nition provisions of SFAS 158, “Employers’ Accounting for
Defined
Benefit Pension and Other Postretirement Plans – an amendment
of FASB Statements No. 87, 88, 106, and 132(R).” SFAS 158
requires recognition of the funded status of defined benefit pension
and other postretirement benefit obligations on the balance
sheet.
Pension plans
The Group provides pension benefits to almost all of its hourly
and salaried employees. Plan benefits are principally based
upon years of service. Certain pension plans are based on salary
earned in the last year or last five years of employment while
others are fixed plans depending on ranking (both wage level and
position).
182
18,556
3,824
23,881
46,261
18,439
2,733
9,715
30,887
At December 31, 2005
Due after
one year
Total
At December 31, 2006
Due after
one yearTotal
12,845
1,166
11,839
25,850
15,482
3,396
27,804
46,682
Pension plans and
similar obligations
(see Note 24a)
Income and other
taxes
Other accrued
liabilities
(see Note 24b)
(in millions of €)
At December 31,
2005
2006
4,079
14,102
375
18,556
5,275
9,825
382
15,482
Pension liabilities (pension plans)
Other postretirement benefits
Other benefit liabilities
(in millions of €)
Prior to the adoption of SFAS 123R, the accrued liability for SARs
was based on the intrinsic value. Upon adoption of SFAS 123R
the basis for the accrual was changed to fair value. In 2005 and
2004, the Group did not recognize compensation expense for
SARs, because the options underlying exercise prices were greater
than the market price for shares of DaimlerChrysler ordinary
shares at the balance sheet dates.
Medium-term incentive awards. The Group granted medium-
term incentives to certain eligible employees with three-year per-
formance periods. The amount ultimately earned in cash at the
end of a performance period is primarily based on the degree of
achievement of corporate goals derived from competitive and
internal planning benchmarks and the value of DaimlerChrysler
ordinary shares at the end of three-year performance periods.
The benchmarks are return on net assets and return on sales.
In 2006 and 2005 no medium-term incentive awards (2004: 0.7
million awards) were issued.
The Group considers the medium-term incentive awards with
their fair value in the accrued liabilities. In 2006, no impact was
recognized on the Group’s profit and loss statement and
therefore no tax effect (2005: €25 million gains, tax expense €10
million; 2004: €12 million expenses, tax benefit €5 million).
Cash flows from stock-based compensation. The following
cash effect resulted from the plans for stock-based compen-
sation:
370
60
23
–
12
5
2006
MTI
PSPSOP
–
9
3
Cash inflow due to exercises
Cash outflow due to exercises/
pay-out dividend equivalent
Realized tax benefit
(in millions of €)