Philips 2015 Annual Report Download - page 157

27 28 Group nancial statements 12.9
Annual Report 2015 157
ownership and control in some legal entities or divisions
thereof, while retaining (partial) legal ownership.
Considering the current challenging business
environment, the Company might face employee and
operational liabilities in case of certain adverse events.
Given the uncertain nature of the relevant events and
liabilities, it is not practicable to provide information on
the estimate of the nancial eect, if any, or timing. The
outcome of the uncertain events could have a material
impact on the Company’s consolidated nancial
position, results of operations and cash ows.
27 Related-party transactions
In the normal course of business, Philips purchases and
sells goods and services from/to various related parties
in which Philips typically holds a 50% or less equity
interest and has signicant inuence. These
transactions are generally conducted with terms
comparable to transactions with third parties.
Philips Group
Related-party transactions in millions of EUR
2013 - 2015
2013 2014 2015
Sales of goods and services 305 215 222
Purchases of goods and services 143 85 87
Receivables from related parties 39 14 16
Payables to related parties 4 4 4
Non-recourse nancing of third-party receivables
provided by an associate amounted to EUR 135 million
in 2015 (2014: EUR 103 million; 2013: EUR 84 million).
In light of the composition of the Executive Committee,
the Company considers the members of the Executive
Committee and the Supervisory Board to be the key
management personnel as dened in IAS 24 ‘Related
parties’.
For remuneration details of the Executive Committee,
the Board of Management and the Supervisory Board
see note 29, Information on remuneration.
For employee benet plans see note 20, Post-
employment benets.
28 Share-based compensation
The purpose of the share-based compensation plans is
to align the interests of management with those of
shareholders by providing incentives to improve the
Company’s performance on a long-term basis, thereby
increasing shareholder value.
The Company has the following plans:
•performance shares: rights to receive common shares
in the future based on performance and service
conditions;
•restricted shares: rights to receive common shares in
the future based on a service condition;
• Options on its common shares, including the 2012
and 2013 Accelerate! grant.
Since 2013 the Board of Management and other
members of the Executive Committee, executives and
certain selected employees are granted performance
shares. Restricted shares are granted only to new
employees or certain selected employees. Prior to 2013,
restricted shares and options were granted to members
of the Board of Management and other members of the
Executive Committee, executives and certain selected
employees.
Furthermore, as part of the Accelerate! program, the
Company has granted options (Accelerate! options) to
a group of approximately 500 key employees below
the level of Board of Management in January 2012 and
to the Board of Management in January 2013.
Under the terms of employee stock purchase plans
established by the Company in various countries,
employees are eligible to purchase a limited number of
Philips shares at discounted prices through payroll
withholdings.
Share-based compensation costs were EUR 99 million
(2014: EUR 85 million, 2013: EUR 104 million). This
includes the employee stock purchase plan of 4 million,
which is not a share-based compensation that aects
equity. The share-based compensation costs excludes
the cost for discontinued operations of EUR 6 million.
In the consolidated statements of changes in equity
EUR 101 million is recognized in 2015 related to the
share-based compensation plans. The amount
recognized as an expense is adjusted for forfeiture.
USD-denominated performance shares, restricted
shares and options are granted to employees in the
United States only.
Performance shares
The performance is measured over a three-year
performance period. The performance shares have two
performance conditions, relative Total Shareholders’
Return compared to a peer group of 21 companies and
adjusted Earnings Per Share growth. The performance
shares vest three years after the grant date. The number
of performance shares that will vest is dependent on
achieving the two performance conditions, which are
equally weighted, and provided that the grantee is still
employed with the Company.
The amount recognized as an expense is adjusted for
actual performance of adjusted Earnings Per Share
growth since this is a non-market performance
condition. It is not adjusted for non-vesting or extra
vesting of performance shares due to a relative Total
Shareholders’ Return performance that diers from the
performance anticipated at the grant date, since this is
a market-based performance condition.