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, 2017

265,769

 

30,430

1,000,000

 

7,327,872

1,924,811

 

(1,519,894)

9,028,988

Allocation to retained earnings

 

 

 

 

 

1,924,811

(1,924,811)

 

 

Dividend payment CHF 0.76 per share

 

 

 

 

 

(1,287,758)

 

 

 

(1,287,758)

Cancellation of shares

(5,591)

 

 

 

 

(916,116)

 

 

921,707

Purchases of own shares

 

 

 

 

 

 

 

 

(243,746)

(243,746)

Delivery of own shares

 

 

 

 

 

 

 

 

206,644

206,644

Net income for the year

 

 

 

 

 

 

949,740

 

 

949,740

Closing balance as of December 31, 2017

260,178

 

30,430

1,000,000

 

7,048,809

949,740

 

(635,289)

8,653,868

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

Share capital as of December 31, 2016

Number of registered shares

Par value
(CHF)

(CHF in thousands)

Issued shares

2,214,743,264

0.12

265,769

Contingent shares

304,038,800

0.12

36,485

Authorized shares

200,000,000

0.12

24,000

The own shares are valued at acquisition cost. During 2017 and 2016, a loss from the delivery of own shares was recorded in the income statement under finance expenses of CHF 14,254 thousand and CHF 38,990 thousand, respectively.

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 in 2012 by the Group company that facilitates the MIP at fair value 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 2016, 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 8,892,770 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 2017 and 2016, respectively, the Company issued, out of own shares, to the Group company, 2,836,204 and 2,647,151 shares at CHF 25.16 and CHF 21.01, respectively.

In 2017 and 2016, the Company transferred 814,339 and 851,773 own shares at an average acquisition price per share of CHF 21.21 and CHF 20.36, respectively, to fulfill its obligations under other share-based arrangements.

In 2017, the Company purchased 10 million shares (for CHF 243.7 million) to support its employee share programs globally.

Between September 2014 and September 2016, the Company executed a share buyback program for the purchase of up to USD 4 billion of its own shares and on September 30, 2016, announced that it had completed this program. Over the period of the share buyback, the Company purchased a total of 146.6 million shares (for approximately CHF 2.9 billion) for cancellation and 24.7 million shares (for approximately CHF 0.5 billion) to support its employee share programs.

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.

At the AGM in April 2016, shareholders approved the proposal of the Board of Directors to reduce the share capital of the Company by cancelling 100,000,000 treasury shares which were acquired under the share buyback program. This cancellation was completed in July 2016, resulting in a decrease in Treasury stock (own shares) of CHF 1,978 million and a corresponding combined decrease in share capital, other reserves and retained earnings.

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

 

2017

2016

 

Number of shares

Average acquisition price per share
(in CHF)

Number of shares

Average acquisition price per share
(in CHF)

Opening balance as of January 1

76,036,429

19.99

123,118,123

20.27

Purchases for employee share programs

10,000,000

24.37

4,940,000

18.77

Purchases for cancellation

60,370,000

19.24

Cancellation

(46,595,000)

19.78

(100,000,000)

19.78

Delivery

(9,899,654)

20.87

(12,391,694)

20.32

Closing balance as of December 31

29,541,775

21.50

76,036,429

19.99

Thereof pledged for MIP

11,703,709

 

11,033,117