Note 46
Related party transactions
The Group's related parties include its key management personnel
(the Board of Directors, the Managing Director and the
Corporate Management Board), subsidiaries, associates, joint
ventures and the Kesko Pension Fund. Subsidiaries, joint ventures
and associates are listed in a separate note.
The following transactions were carried out with related
parties:
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.
Three 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 €93.5 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 2008,
the Kesko Group paid a total amount of €62.7 million (€56.4
million) in contributions to the Pension Fund.
The sales of goods and services to related parties have been
carried out on general market terms and conditions and at
market prices.
In addition, other operating expenses include rents paid by the Kesko Group to the Kesko Pension Fund in a total amount of €22.4 million (€18.4 million).
Other top management employee benefits
Share-based payments
At 31 December 2008, the Managing Director held 100,000 stock options, 50,000 of which were 2007B options granted in 2008. Presuming that shares are subscribed for with the Managing Director's options, the options represent 0.1% of the share capital and 0.03% of all voting rights. The other Corporate Management Board members held a total of 353,500 share options granted on 31 December 2008. In 2008, the other Corporate Management Board members were granted a total of 145,000 2007B options. The options held by the Corporate Management Board members 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 benefits of the other Corporate Management Board members are determined on the basis of the Employees' Pensions Act (TyEL), or based on a separate agreement, in which case the retirement age varies between 60 and 62, and the full retirement benefit is 66% of the pensionable salary.
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.
Three 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 €1.7 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 period, the value of the counter-guarantee was €3.5 million (€5.9 million).
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 realised
annual sales and the quality of operations.
In addition, Kesko's long-term receivables from a real estate
associate total €1.6 million.