3. Significant accounting policies
(m) Employee benefits
Notes to the consolidated financial statements
(v) Share-based payment plan (Long-Term Incentive Plan)
As from 1 January 2005 Heineken established a share plan for the Executive Board members and as from
1 January 2006 Heineken also established a share plan for senior management members (see note 29).
The grant date fair value of the share rights granted is recognised as personnel expenses with a corresponding
increase in equity (equity-settled), over the period that the employees become unconditionally entitled to the
share rights. The costs of the share plan for both the Executive Board and senior management members are
spread evenly over the performance period.
At each balance sheet date, Heineken revises its estimates of the number of share rights that are expected to
vest, only for the 75 per cent internal performance conditions of the share plan of the senior management
members. It recognises the impact of the revision of original estimates, if any, in the income statement, with
a corresponding adjustment to equity. The fair value is measured at grant date using the Monte Carlo model
taking into account the terms and conditions of the plan.
(vi) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided.
A liability is recognised for the amount expected to be paid under short-term benefits if the Group has a present
legal or constructive obligation to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
A provision is recognised if, as a result of a past event, Heineken has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are measured at the present value of the expenditures to be expected to be required
to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as part
of the net finance expenses.
A provision for restructuring is recognised when Heineken has approved a detailed and formal restructuring
plan, and the restructuring has either commenced or has been announced publicly. Future operating losses are
not provided for. The provision includes the benefit commitments in connection with early retirement and
Annual Report 2009 - Heineken N.V.