Note 8 Stockholders’ equity

The below table shows the changes to the opening balance of equity as of January 1, 2014, applying the new Swiss Code of Obligations:

 

 

Legal reserves

Free reserves

 

 

(CHF in thousands)

Share capital

Ordinary reserves

from capital contribution

from retained earnings

Reserve for own shares

Other reserves

from retained earnings

Net income

Own
shares

Total

Closing balance as of December 31, 2013, Swiss Code of Obligations

2,384,186

1,000,000

2,641,522

 

296,423

236,973

4,470,698

607,053

 

11,636,855

Reclassification

 

(1,000,000)

 

1,000,000

 

 

 

 

 

Transfer

 

 

 

 

(296,423)

296,423

 

 

 

Reclassification of own shares

 

 

 

 

 

 

 

 

(296,423)

(296,423)

Opening balance as of January 1, 2014, Article 957 of new Swiss Code of Obligations

2,384,186

2,641,522

1,000,000

533,396

4,470,698

607,053

(296,423)

11,340,432




Opening balance as of January 1, 2014

2,384,186

 

2,641,522

1,000,000

 

533,396

4,470,698

607,053

(296,423)

11,340,432

Allocation to retained earnings

 

 

 

 

 

 

607,053

(607,053)

 

Release to other reserves

 

 

(1,378,517)

 

 

1,378,517

 

 

 

Dividend payment

 

 

 

 

 

(1,378,517)

 

 

 

(1,378,517)

Purchases of own shares

 

 

 

 

 

 

 

 

(945,303)

(945,303)

Delivery of own shares

 

 

 

 

 

 

 

 

62,569

62,569

Gain on transfer of own shares

 

 

 

 

 

1,775

 

 

 

1,775

Net income for the year

 

 

 

 

 

 

 

570,107

 

570,107

Closing balance as of December 31, 2014

2,384,186

 

1,263,005

1,000,000

 

535,171

5,077,751

570,107

(1,179,157)

9,651,063

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 (Capital contribution reserve) within the legal reserves in order to benefit from the favorable tax treatment.

Share capital as of December 31, 2014 and 2013

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 balance for own shares of CHF 296,423 thousand has been reclassified from assets to equity. In addition, the related reserve for own shares has been transferred to, and is included in, the opening balance of other reserves. The own shares are valued at acquisition cost and gains from the delivery of own shares of CHF 1,775 thousand are recorded in other reserves.

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. During 2013, no call options related to ABB Group’s MIP, were exercised.

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 2014 and 2013, the Company issued, out of own shares, to the group company, 555,161 and 3,734,428 shares at CHF 21.52 and CHF 23.10, respectively.

In 2014 and 2013, the Company transferred 1,109,760 and 965,601 own shares at an average acquisitions price per share of CHF 20.99 and CHF 21.03 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:

 

2014

2013

 

number of shares

average acquisition price per share CHF

number of shares

average acquisition price per share CHF

Opening balance as of January 1

14,093,960

21.03

18,793,989

21.03

Purchases for employee share programs

18,750,000

20.82

 

Purchases for cancellation

25,980,000

21.36

 

Delivery

(2,980,321)

20.99

(4,700,029)

21.03

Closing balance as of December 31

55,843,639

21.12

14,093,960

21.03

Thereof pledged

8,978,986

 

7,173,989