_380 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 5 FINANCIAL PERFORMANCE 2023 consolidated financial statements The liabilities or assets recognized in the consolidated statement of financial position in respect of defined benefit plans correspond to the present value of the defined benefit obligation at the reporting date, less the fair value of plan assets. They take into account any unrecognized assets not available in the form of refunds or a reduction in future contributions. The present value of the defined benefit obligation corresponds to the estimated future cash outflows, calculated using a discount rate established by reference to a market rate based on interest rates of high-quality corporate bonds that have maturities approximating the duration of the related post‑employment benefit obligation. A net asset is recognized only to the extent that it represents a future economic benefit that is actually available to the Group in the form of refunds from the plan or reductions in future contributions. When a defined benefit plan is subject to a minimum funding requirement (MFR), the Group determines whether paying these contributions may give rise to a surplus in that defined benefit plan. To the extent that the surplus in the plan exceeds the available economic benefits, the Group immediately recognizes a decrease in the defined benefit asset or an increase in the defined benefit liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in other comprehensive income in the period in which they arise. Past service costs may arise when new defined benefit plans are set up, when changes to benefits payable under an existing defined benefit plan are introduced or when curtailments occur. They are recognized immediately in the income statement. The Group's net benefit plan cost recognized in the income statement includes the current service cost for the period, curtailment and settlement gains and losses, past service cost, as well as actuarial gains and losses arising under other long‑term benefit plans. Net interest on the net defined benefit liability (asset) is recognized outside operating income. 3.24.2 Share-based payments Share grants and performance share plans The Group may adopt plans to grant free shares of the Company to certain employees or to its Managers. The grant date is the date when the Managing Chairman decides on the list of plan beneficiaries and the number of performance shares granted to them. The fair value of the performance shares granted corresponds to the Company's share price on the grant date less: ● the present value of dividends that will not be received by the grantees during the vesting period; ● the value of the stock market performance condition on the grant date, which depends on the probability of the condition being fulfilled. The number of shares that will ultimately be issued at the end of the vesting period depends on the extent to which the service conditions and any Group-related performance conditions are met. The total benefit cost is based on the fair value of the performance shares and the estimated number of shares that will ultimately be issued. This cost is recognized over the vesting period and is recognized in “Segment other income and expenses”. Employee share ownership plan The Group may offer most of its employees the opportunity to participate in a share ownership plan allowing them to purchase Company shares. These shares, which are subject to certain restrictions relating to their sale or transfer, may be purchased by the employees at a subscription price based on the Michelin share price, less a discount. The benefit granted to the employees equals the difference between the shares’ fair value and their purchase price, multiplied by the number of shares acquired. It is expensed immediately by the Group, as no vesting period applies, and is recognized under “Employee benefit costs – sharebased payments”, within “Segment other income and expenses”.
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