NOTE 43
The Group's related parties include its key management personnel (the Board of Directors, the Managing Director and the Corporate Management Board), subsidiaries, associates and the Kesko Pension Fund. The subsidiaries and associates are listed in a separate note (note 45).
The following transactions were carried out with related parties:
| Sales of goods and services | ||
| € million | 2009 | 2008 |
| Sales of goods | ||
| Board of Directors and management | 37.2 | 24.3 |
| Kesko Pension Fund | 0.2 | 1.3 |
| Total | 37.4 | 25.5 |
| Sales of services | ||
| Associates | 0.9 | 1.0 |
| Board of Directors and management | 4.8 | 1.9 |
| Kesko Pension Fund | 1.5 | 1.3 |
| Total | 7.1 | 4.2 |
The related party transactions disclosed include those transactions with related parties that are not eliminated in the consolidated financial statements.
Among associates consolidated using the equity method, a property owned by Valluga-Sijoitus Oy has been leased for the Group's use. Vähittäiskaupan Takaus Oy and Vähittäiskaupan Tilipalvelu Oy sell their services to Kesko's and K-retailers' retail companies. The other associates mainly include business property companies which have leased their premises and real estate to the Kesko Group. Associates that operate as mutual real estate companies have been consolidated in the financial statements in proportion to their ownership interest.
Some members of Kesko's Board of Directors act as K-retailers. The Group companies sell goods and services to enterprises controlled by them.
The Kesko Pension Fund is a separate legal entity which manages and holds in trust part of the pension assets of the Group's employees in Finland. Pension assets include Kesko Corporation shares in the amount of €104.3 million. Real estate and premises owned by the Pension Fund have been leased to the Kesko Group, which has subleased most of them to retailers. In 2009, the Kesko Group paid a total amount of €52.5 million (€62.7 million) in contributions to the Pension Fund.
Goods and services are sold to related parties on normal market terms and conditions and at market prices.
In March 2009, the Kesko Group sold four store properties to the Kesko Pension Fund. The debt-free selling price was about €50 million. The Group's €19.7 million gain on the disposal is included in the non-recurring items within the operating profit.
| Purchases of goods and services | ||
| € million | 2009 | 2008 |
| Purchases of goods | ||
| Associates | 0.0 | 0.0 |
| Board of Directors and management | 1.4 | 2.2 |
| Total | 1.4 | 2.2 |
| Purchases of services | ||
| Associates | 2.6 | 2.5 |
| Board of Directors and management | 0.1 | 0.1 |
| Pension Fund | 0.0 | 0.2 |
| Total | 2.7 | 2.8 |
In addition, the other operating expenses include rents paid by the Kesko Group to the Kesko Pension Fund in a total amount of €34.7 million (€22.4 million).
| Financial expenses | ||
| €million | 2009 | 2008 |
| Associates | 0.5 | 1.6 |
| Pension Fund | 0.0 | 0.2 |
| 0.5 | 1.8 | |
| Trade receivables | ||
| € million | ||
| Associates | 0.1 | 0.0 |
| Board of Directors and management | 2.1 | 1.7 |
| Pension Fund | 0.3 | 0.2 |
| 2.5 | 1.9 |
Members of Kesko's Board of Directors act as K-retailers. At the balance sheet date, the receivables resulting from sales by Kesko to enterprises controlled by them totalled €2.1 million (€1.7 million). The receivables are covered by the commercial credit collateral granted by Vähittäiskaupan Takaus Oy, a Kesko associate. The maximum amount of the collateral is always limited to the realisable value of the counter-guarantee granted by the K-retailer's enterprise and the K-retailer entrepreneur to Vähittäiskaupan Takaus. At the end of the financial year, the value of the counter-guarantee was €3.2 million (€3.5 million).
| Other current liabilities | ||
| € million | 2009 | 2008 |
| Associates | 38.6 | 37.4 |
| Board of Directors and management | 0.8 | 0.6 |
| Pension Fund | 3.4 | 2.6 |
| 42.8 | 40.6 |
The other current liabilities include, among other things, chain rebate liabilities payable to enterprises controlled by the three Kesko Board members acting as K-retailers. Chain rebates are paid in arrears on criteria related to the amount of actual annual sales and the quality of operations.
In addition, Kesko's non-current receivables from a real estate associate total €1.5 million.
| € thousand | 2009 | 2008 |
| Members of the Board of Directors | ||
| Heikki Takamäki, Chair | 81.5 | 67.5 |
| Seppo Paatelainen, Deputy Chair | 53.0 | 38.5 |
| Esa Kiiskinen (from 30 March 2009) | 31.8 | |
| Ilpo Kokkila | 41.8 | 35.5 |
| Mikko Kosonen (from 30 March 2009) | 33.8 | |
| Maarit Näkyvä | 45.3 | 41.0 |
| Rauno Törrönen (from 30 March 2009) | 31.8 | |
| Pentti Kalliala (until 30 March 2009) | 8.5 | 37.5 |
| Keijo Suila (until 30 March 2009) | 12.0 | 50.0 |
| Jukka Säilä (until 30 March 2009) | 8.5 | 35.5 |
| € thousand | 2009 | 2008 |
| Matti Halmesmäki, President and CEO | 744.6 | 838.6 |
| Corporate Management Board (the other members) |
1,621.4 | 1,807.6 |
Share-based payments
At 31 December 2009, the President and CEO held 150,000 stock options, 50,000 of which were 2007C options granted in 2009. Presuming that shares were subscribed for with the President and CEO's options, the options would represent 0.15% of shares and 0.04% of all voting rights. At 31 December 2009, the other Corporate Management Board members held an aggregate number of 476,000 stock options. In 2009, the other Corporate Management Board members were granted a total of 150,000 2007C options. The options held by the Corporate Management Board have equal rules and vesting periods with the other options included in the management's option plans.
Retirement benefits
The retirement age of the President and CEO is 60 years and his full retirement benefit is 66% of his pensionable salary. The retirement ages of the other Corporate Management Board members mainly vary between 60 and 62, and the full retirement benefit is 66% of the pensionable salary. The retirement benefits of the CFO are determined on the basis of the Employees' Pensions Act (TyEL).
Termination benefits
The notice period of the President and CEO is 6 months. Severance compensation paid in addition to the salaries for the notice period corresponds to 12 months' salary. The notice period of the other Corporate Management Board members is 6 months and severance compensation paid in addition to the salaries for the notice period corresponds to 6–12 months' salary.