2011 Annual Report Financial Supplements - BDO

NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)(c)Termination BenefitsTermination benefits are payable when employment is terminated by BDO UnibankGroup before the normal retirement date, or whenever an employee accepts voluntaryredundancy in exchange for these benefits. BDO Unibank Group recognizestermination benefits when it is demonstrably committed to either: (i) terminating theemployment of current employees according to a detailed formal plan without possibilityof withdrawal; or, (ii) providing termination benefits as a result of an offer made toencourage voluntary redundancy. Benefits falling due more than 12 months after the endof reporting period are discounted to present value.(d)Bonus PlansBDO Unibank Group recognizes a liability and an expense for bonuses based on theGroup’s bonus policy. BDO Unibank Group recognizes a provision where it iscontractually obliged to pay the benefits.(e)Executive Stock Option PlanBDO Unibank Group grants stock option plan to its senior officers (fromvice-president up) for their contribution to BDO Unibank Group’s performance andattainment of team goals. The amount of stock option allocated to the qualified officersis based on the performance of the individual officers as determined by the managementand is determined based on BDO Unibank Group’s performance in the preceding yearand amortized over five years starting from the date of the approval of the BOD. Thenumber of officers qualified at the grant date is regularly evaluated during the vestingperiod (at least annually) and the amount of stock option is decreased in case there arechanges in the number of qualified employees arising from resignation ordisqualification. The annual amortization of stock option is included as part ofEmployee Benefits in profit or loss and the cumulative balance is shown as CommonStock Options in the statement of changes in equity (nil in 2011 and 2010).(f)Compensated AbsencesCompensated absences are recognized for the number of paid leave days(including holiday entitlement) remaining at the end of reporting period. These areincluded in Other Liabilities account at the undiscounted amount that BDO UnibankGroup expects to pay as a result of the unused entitlement.2.27 Income TaxesTax expense recognized in profit or loss comprise the sum of deferred tax and current tax notrecognized in other comprehensive income or directly in equity, if any.Current tax assets or liabilities comprise those claims from, or obligations to, fiscal authoritiesrelating to the current or prior reporting period, that are uncollected or unpaid at the end ofthe reporting period. They are calculated according to the tax rates and tax laws applicable tothe fiscal periods to which they relate, based on the taxable profit for the period. All changesto current tax assets or liabilities are recognized as a component of tax expense in profit orloss.