Financial performance 2024 consolidated financial statements 05 Note 8 WORKFORCE, COMPENSATION AND BENEFITS Employee benefit costs are allocated by function to the appropriate expense headings in the income statement: (in € millions) 2024 2023 Wages and salaries (6,027) (5,939) Payroll taxes (1,102) (1,098) Defined benefit plan costs (103) (78) Defined contribution plan costs (288) (256) Share-based payments – current service cost (note 15) (102) (30) EMPLOYEE BENEFIT COSTS(1) (7,622) (7,401) (1) Of which €7,603 million recognized in “Segment operating income” (note 6.1) and €19 million in “Other operating income and expenses” (note 7.1). The average number of employees on payroll in 2024 was 131,528 (2023: 132,276). 8.1 Provisions for employee benefit obligations ACCOUNTING POLICIES Wages, salaries, social security contributions, payments to defined contribution plans, annual leave and sick leave payments, bonuses and non-monetary benefits are recognized in the year in which the associated services are rendered by the employees. Where employee benefits, such as certain pension plans, other post-employment benefits and other long-term benefits, are provided by the Group, a liability or an asset and the related costs are recognized. Pension and other post-employment benefits Post-employment benefits are benefits payable after employment ceases. The Group provides retirement benefits for most of its employees, either directly or by contributing to independently administered funds. The benefits provided by the Group vary according to the legal, tax and economic situation in each country and are usually based on one or more factors such as employees' compensation, age and years of service. The obligations relate both to current retirees and to the entitlements of future retirees. The Group provides post-employment benefits under defined contribution plans and defined benefit plans. In the case of defined contribution plans, the Group pays fixed contributions to fund managers or insurance companies. Once the contributions have been paid, the Group has no legal or constructive obligation to make further contributions if the fund does not hold sufficient assets to pay the benefits expected by the beneficiaries. The regular contributions are recognized as an expense for the year in which they are due and, as such, are included in cost of sales, sales and marketing expenses, research and development expenses or general and administrative expenses. Group management policies regarding post-employment benefits have led to the transformation of defined benefit plans into defined contribution benefit plans since the early 2000s. Nevertheless, a significant portion of the post-employment benefit plans provided by the Group are still defined benefit plans. They are either externally funded plans (mainly pension plans), for which the plan assets are held separately in independently administered funds, or unfunded plans such as healthcare plans and end-of-service benefit plans. Post-employment benefit obligations, and the related current service cost, are measured using the projected unit credit method. A defined benefit plan is a plan that defines an amount of benefits that the Group is committed to pay to current and former employees. All defined benefit plans are subject to actuarial valuations carried out annually for the largest plans and on a regular basis for other plans. These actuarial valuations are carried out with the help of independent actuaries. Actuarial assumptions, primarily discount rates, projected salary increase rates, inflation rates and expected growth in healthcare costs are incorporated into the actuarial valuations and reviewed annually. 378 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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