Note 7
Stockholders’ equity

 

 

 

Legal reserves

 

Free reserves

 

 

 

(CHF in thousands)

Share capital

 

from capital contri­bution

from retained earnings

 

from retained earnings

Net income

 

Own
shares

Total

Opening balance as of January 1, 2018

260,178

 

30,430

1,000,000

 

7,048,809

949,740

 

(635,289)

8,653,868

Allocation to retained earnings

 

 

 

 

 

949,740

(949,740)

 

 

Dividend payment CHF 0.78 per share

 

 

 

 

 

(1,281,550)

 

 

 

(1,281,550)

Purchases of own shares

 

 

 

 

 

 

 

 

(232,300)

(232,300)

Delivery of own shares

 

 

 

 

 

 

 

 

73,589

73,589

Net income for the year

 

 

 

 

 

 

1,297,584

 

 

1,297,584

Closing balance as of December 31, 2018

260,178

 

30,430

1,000,000

 

6,716,999

1,297,584

 

(794,000)

8,511,191

Share capital as of December 31, 2018

Number of registered shares

Par value (CHF)

(CHF in thousands)

Issued shares

2,168,148,264

0.12

260,178

Contingent shares

304,038,800

0.12

36,485

Authorized shares

200,000,000

0.12

24,000

Share capital as of December 31, 2017

Number of registered shares

Par value (CHF)

(CHF in thousands)

Issued shares

2,168,148,264

0.12

260,178

Contingent shares

304,038,800

0.12

36,485

Authorized shares

200,000,000

0.12

24,000

Own shares are valued at acquisition cost. During 2018 and 2017, a loss from the delivery of own shares of CHF 12,701 thousand and CHF 14,254 thousand, respectively, was recorded in the income statement under finance expenses.

During 2018, 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 at fair value in 2012 by the Group company that facilitates the MIP and had a strike price of CHF 15.75 and CHF 17.50. 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 1,708,620 shares at CHF 15.75 and 416,373 shares at CHF 17.50, respectively, out of own shares.

During 2017, 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 at fair value in 2012 by the Group company that facilitates the MIP and had a strike price of CHF 15.75 and CHF 17.50. 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 3,912,080 shares at CHF 15.75 and 2,337,031 shares at CHF 17.50, respectively, out of own shares.

During 2018 and 2017, the Company delivered 308,706 and 63,542 own shares, respectively, as a result of option exercises under the MIP by employees of Group companies.

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 2017, the Company issued, out of own shares, to the Group company 2,836,204 shares at CHF 25.16. No shares were delivered in 2018 in connection with ESAP.

In 2018 and 2017, the Company transferred 922,218 and 750,797 own shares at an average acquisition price per share of CHF 21.93 and CHF 21.23, respectively, to fulfill its obligations under other share-based arrangements.

In both 2018 and 2017, the Company purchased 10 million shares, for CHF 232.3 million and CHF 243.7 million, respectively, to support its employee share programs globally.

At the AGM in April 2017, shareholders approved the proposal of the Board of Directors to reduce the share capital of the Company by cancelling 46,595,000 treasury shares which were acquired under the share buyback program. This cancellation was completed in July 2017, resulting in a decrease in Treasury stock (own shares) of CHF 922 million and a corresponding combined decrease in share capital and retained earnings.

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

 

2018

2017

 

Number of shares

Average acquisition price per share
(in CHF)

Number of shares

Average acquisition price per share
(in CHF)

Opening balance at January 1

29,541,775

21.50

76,036,429

19.99

Purchases for employee share programs

10,000,000

23.23

10,000,000

24.37

Cancellation

(46,595,000)

19.78

Delivery

(3,355,917)

21.93

(9,899,654)

20.87

Closing balance at December 31

36,185,858

21.94

29,541,775

21.50

Thereof pledged for MIP

13,336,804

 

11,703,709