Note 7 Stockholders’ equity

 

 

Legal reserves

Free reserves

 

 

(CHF in thousands)

Share capital

from capital contribution

from retained earnings

Other reserves

from retained earnings

Net income

Own
shares

Total

Opening balance as of January 1, 2015

2,384,186

1,263,005

1,000,000

535,171

5,077,751

570,107

(1,179,157)

9,651,063

Allocation to retained earnings

 

 

 

 

570,107

(570,107)

 

Par value reduction

(393,507)

 

 

15,988

 

 

 

(377,519)

Release to other reserves

 

(1,232,575)

 

1,232,575

 

 

 

Dividend payment

 

 

 

(1,232,575)

 

 

 

(1,232,575)

Purchases of own shares

 

 

 

 

 

 

(1,441,493)

(1,441,493)

Delivery of own shares

 

 

 

 

 

 

125,202

125,202

Loss on delivery of own shares

 

 

 

(11,087)

 

 

 

(11,087)

Net income for the year

 

 

 

 

 

2,973,717

 

2,973,717

Closing balance as of December 31, 2015

1,990,679

30,430

1,000,000

540,072

5,647,858

2,973,717

(2,495,448)

9,687,308

As a result of the Swiss corporate tax reform II that became effective on January 1, 2011, qualifying contributions from the shareholders exceeding the nominal share capital can be distributed without deduction of Swiss withholding tax. Accordingly, such contributions have been recorded in a specific account (legal reserves from capital contribution) within the legal reserves in order to benefit from the favorable tax treatment.

Share capital as of December 31, 2015

Number of
registered shares

Par value
(CHF)

Total
(CHF in thousands)

Issued shares

2,314,743,264

0.86

1,990,679

Contingent shares

304,038,800

0.86

261,473

Authorized shares

200,000,000

0.86

172,000

 

 

 

 

Share capital as of December 31, 2014

Number of
registered shares

Par value
(CHF)

Total
(CHF in thousands)

Issued shares

2,314,743,264

1.03

2,384,186

Contingent shares

304,038,800

1.03

313,160

Authorized shares

200,000,000

1.03

206,000

The own shares are valued at acquisition cost. During 2015, a loss from the delivery of own shares of CHF 11,087 thousand was recorded in other reserves.

During 2015, a bank holding call options related to ABB Group’s management incentive plan (MIP) exercised a portion of these options. Such options had been issued in 2009 and 2012 by the Group company that facilitates the MIP at fair value and had a strike price of CHF 19.00 and CHF 15.75, respectively. At issuance, the Group company had entered into an intercompany option agreement with the Company, having the same terms and conditions to enable it to meet its future obligations. As a result of the exercise by the bank, the Company issued 4,569,100 and 714,450 shares at CHF 19.00 and CHF 15.75, respectively, out of own shares.

During 2014, a bank holding call options related to ABB Group’s management incentive plan (MIP) exercised a portion of these options. Such options had been issued in 2012 by the Group company that facilitates the MIP at fair value and had a strike price of CHF 15.75. At issuance, the Group company had entered into an intercompany option agreement with the Company, having the same terms and conditions to enable it to meet its future obligations. As a result of the exercise by the bank, the Company issued 1,315,400 shares at CHF 15.75 out of own shares.

The ABB Group has an annual employee share acquisition plan (ESAP) which provides share options to employees globally. To enable the Group company that facilitates the ESAP to deliver shares to employees who have exercised their stock options, the Group company entered into an agreement with the Company to acquire the required number of shares at their then market value from the Company. Consequently in November 2015 and 2014, respectively, the Company issued, out of own shares, to the Group company, 30,003 and 555,161 shares at CHF 20.76 and CHF 21.52, respectively.

In 2015 and 2014, the Company transferred 706,963 and 1,109,760 own shares at an average acquisition price per share of CHF 20.77 and CHF 20.99, respectively, to fulfill its obligations under other share-based arrangements.

On September 9, 2014, the Company announced a share buyback program of up to USD 4 billion which commenced on September 16, 2014. The Company intends to allocate approximately three-quarters of the buyback program to a reduction of share capital and the remainder to support its employee share programs globally.

The movement in the number of own shares during the year was as follows:

 

2015

2014

 

Number of shares

Average acquisition price per share CHF

Number of shares

Average acquisition price per share CHF

Opening balance as of January 1

55,843,639

21.12

14,093,960

21.03

Purchases for employee share programs

13,050,000

19.78

18,750,000

20.82

Purchases for cancellation

60,245,000

19.64

25,980,000

21.36

Delivery

(6,020,516)

20.80

(2,980,321)

20.99

Closing balance as of December 31

123,118,123

20.27

55,843,639

21.12

Thereof pledged for MIP

10,726,465

 

8,978,986