Carrefour - 2017 Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Notes to the Consolidated Financial Statements 2017 REGISTRATION DOCUMENT | CARREFOUR 5. 260 Actuarial assumptions and sensitivity analysis 10.1.6 The assumptions used to measure defined benefit obligations for length-of-service awards are as follows: 2017 2016 Retirement age 62-67 62-67 Rate of future salary increases 1.9% to 2.5% 1.8% to 2.7% Inflation rate 1.9% 1.9% Discount rate 1.4% 1.2% At December 31, 2017, a discount rate of 1.44% was used for France, Belgium and Italy (December 31, 2016: 1.2%). The discount rate is based on an index of AA-rated corporate bonds with maturities similar to the estimated duration of the defined benefit obligation. In 2017, the average duration of the defined benefit obligation under French, Belgian and Italian plans was 11.3 years, 9 years and 9.2 years respectively (2016: 11.7 years, 9.6 years and 9.4 years respectively). Sensitivity tests show that: a 25-bps increase in the discount rate would reduce the defined ● benefit obligation under the French, Belgian and Italian plans by around 37 million euros; a 25-bps increase in the inflation rate would increase the defined ● benefit obligation under the French, Belgian and Italian plans by around 26 million euros. Share-based payments 10.2 Accounting principles Two types of share-based payment plans have been set up for members of management and selected employees – stock option plans and performance share plans. pricing model for stock options and the share price on the grant date for performance shares. Performance conditions that are not based on market conditions are not taken into account to estimate the fair value of stock options and performance shares at the As the plans are equity-settled, the benefit represented by the measurement date. However, they are taken into account in share-based payment is recorded in employee benefits expense estimates of the number of shares that are expected to vest, as with a corresponding increase in shareholders’ equity in updated at each period-end based on the expected achievement accordance with IFRS 2 – Share-based Payment. The cost rate for the non-market performance conditions. recorded in employee benefits expense corresponds to the fair value of the equity instruments on the grant date (i.e., the date on which grantees are informed of the plan’s characteristics and terms). Fair value is determined using the Black & Scholes option The cost calculated as described above is recognised on a straight-line basis over the vesting period. The cost of share-based payment plans for 2017 recorded under “Employee benefits expense” in recurring operating income was 13.1 million euros, with a corresponding increase in equity (2016: 3.2 million euros). Details of the stock option and performance share plans set up for Executive Management and selected employees are presented below.