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Financial and accounting information 2017 Consolidated financial statements

methods prescribed in the applicable collective bargaining agreements. In addition to length-of-service awards, there are three defined benefit plans, all of which are final salary plans. These plans were closed to new entrants by the companies concerned between 1969 and 1997. Effective March 1, 2012, a defined benefit plan complying with Article L.137-11 of France’s Social Security Code (Code de la sécurité sociale) was set up by Compagnie de Saint-Gobain. In Germany, retirement plans provide pensions and death and disability benefits for employees. These plans have been closed to new entrants since 1996. Since January 1997, new employees have been offered pension plans based on contributions financed jointly by employer and employee. In the Netherlands, ceilings have been introduced for defined benefit supplementary pension plans, above which they are converted into defined contribution plans. In the United Kingdom, retirement plans provide pensions as well as death and permanent disability benefits. These defined benefit plans – which are based on employees’ average salaries over their final years of employment – have been closed to new entrants since 2001. In the United States and Canada, the Group’s defined benefit plans are final salary plans. Since January 1, 2001, new employees have been offered a defined contribution plan. In the United States and Spain, retired employees receive benefits other than pensions, mainly concerning healthcare benefits. The Group’s obligation under these plans is determined using the actuarial method and is covered by a provision recorded in the balance sheet. Provisions for other long-term employee benefits cover all other employee benefits. These benefits primarily include long-service awards in France, jubilee awards in Germany, deferred compensation, provisions for social security benefits in the United States, and termination benefits in different countries. The related defined benefit obligation is generally calculated on an actuarial basis using the same rules as for pension obligations. Actuarial gains and losses relating to these benefits are recognized immediately in income statement. Actuarial assumptions used to measure 4.3.2. defined benefit obligations and plan assets Interest rate assumptions 4.3.2.1. Assumptions related to mortality, employee turnover and future salary increases take into account the economic conditions specific to each country and Group company. The discount rates are established by region or country based on observed bond rates at December 31, 2017.

Total gross compensation and benefits paid in 2017 to Saint-Gobain management by the French and foreign companies in the Group (excluding any long-term cash settled compensation) amounted to €14.5 million (2016: €13.3 million), including €5.8 million in gross variable compensation (2016: €4.4 million) and €0.1 million in termination benefits (2016: nil). Provisions for pensions and other post-employment benefits (defined benefit obligations [DBO] in respect of length-of-service awards and pensions) accruing to Group management totaled €46.6 million at December 31, 2017 (December 31, 2016: €47.0 million). Provisions for pensions and other 4.3. employee benefits Description of defined benefit plans 4.3.1. After retirement, the Group’s former employees are eligible for pension benefits in accordance with the applicable laws and regulations in the respective countries in which the Group operates. There are also additional pension obligations in certain Group companies, both in France and in other countries. The Group’s obligation for the payment of pensions and length-of-service awards is determined at the end of the reporting period by independent actuaries using the projected unit credit method, taking into account changes in salaries until retirement and the economic conditions in each country. These obligations may be financed by pension funds, with a provision recognized in the balance sheet for the unfunded portion. When plan assets exceed the defined benefit obligation, the excess is recognized in other non-current assets under “net pension assets”. These assets are capped at the level of future economic benefits they provide. Changes in the asset ceiling are recognized in equity. Actuarial gains and losses result from changes in actuarial assumptions, experience adjustments and the difference between the funds’ actual and estimated (calculated) rates of return. They are recognized against equity as and when they arise. The interest cost of these obligations and the return on the related plan assets are measured by the Group using the discount rate applied to estimate the obligation at the beginning of the period, and are recognized as financial income or expense. The Group’s main defined benefit plans are as follows: In France, employees receive length-of-service awards on retirement based on years of service and the calculation

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