Analysis of Employee Benefits and Share-Based Payments at Woolworths

This report provides a comprehensive analysis of Woolworths Group's employee benefits and share-based payments, based on the 2018 annual report. It begins by examining the company's accounting policies for employee benefits, comparing them to the requirements of AASB 119. The report then delves into the assumptions used in estimating employee benefit values and identifies the types of employee benefits expenses reported from continuing operations. It quantifies the total employee benefits expense for 2018 and describes the various types of share-based payments offered to employees. Furthermore, the analysis covers the calculation of the net defined benefit obligation, comparing Woolworths' approach to AASB 2. The report also details the methods used to calculate the fair value of instruments with both market-based and non-market-based performance conditions. Finally, it examines the Woolworths Group Superannuation Plan and the remuneration benefits provided to management personnel. The report offers a detailed understanding of Woolworths' financial reporting related to employee compensation.

Running head: EMPLYEE BENEFITS AND SHARE BASED PAYMENT
EMPLYEE BENEFITS AND SHARE BASED PAYMENT
Name of the Student:
Name of the University:
Author Note

1EMPLYEE BENEFITS AND SHARE BASED PAYMENT
Answer to Question 1
Policy for Employee Benefits
In the basis of the annual report of Woolworths Ltd for the year 2018, the company
used the followings accounting policy to employee benefits: -
 Company recognises the annual leaves or long service leaves as the employee benefit
liability.
 The company settled the liability within the 12 month using the remuneration rate at
the nominal rate.
 The employee benefit liability, those are not settled within the year are calculated at
present value in the basis of the future estimated cash out flow by considering period
of service provided by the firm till the reporting date.
AASB 119
While, AASB 119 states that the following: -
 The employee benefits liabilities should be recognised as the long term liability in
balance sheet for long service leave, which are not be paid within the 12 months and
not be valued at present value
 The current service cost and actual loss and gain should be shown in profit and loss
account.
 In addition, the assets reserved for employees benefit must be recorded at fair value
and return on such asset record in P/L Account as income (Aasb, 2019).
The above comparison shows that the Woolworths Ltd is fully followed the requirement
of the AASB 119 in respect of employee benefit policy.

2EMPLYEE BENEFITS AND SHARE BASED PAYMENT
Answer to question 2: -
Assumptions for employee benefit
The Woolworths Ltd made the following assumptions for the employee benefit as per
the annual report of 2018: -
 The figure of employee benefits is consider in the estimated future salary as well
as wages level, employee experience and the period of services.
 The assumption are reviewed in periodic basis, the expected changes in the
assumption is not consider to have impact of material.
Assumption are made by the Woolworths Ltd are that the employee benefits are
calculated in the basis of future salary, experience and period of services provided by the
employee (Woolworthsgroup, 2019). The company also reviews the assumption in periodic
basis and changes in assumption are not consider as material impact.
Answer to question 3: -
Types of employee benefits
The Woolworths Ltd reported the following three expenses from the continuing
operation in the annual report of 2018: -
 Remuneration and on cost
 Superannuation expenses
 Share- based payments expense
The Woolworths Ltd reported the $ 7581 million as the employee benefits from the
continuing operation for the remuneration and on cost. Secondly, the superannuation expense
$ 575 million from the continuing operating as the employee benefits is reported in the year

3EMPLYEE BENEFITS AND SHARE BASED PAYMENT
2018. Lastly, the share based payments expenses of $ 58 is reported in 2018 as the employee
benefits from the continuing operation.
Answer to question 4: -
Amount of employee benefits
In the year 2018, as per the annual report of the Woolworths Ltd, the company spends
the following amount in terms of employee benefits from the continuing expenses: -
 $ 7581 million as Remuneration and on cost,
 $ 575 million as the superannuation and
 $ 58 million as the share based payment.
In total, the Woolworths Ltd expended $ 8214 in the financial year 2018 as the employee
benefits from the continuing operation. This is more than the $ 286 million than the 2017
cost of employee benefit from the continuing operation.
Answer to question 5: -
Type of share based payment to the employee
The Woolworths Ltd annual report for the year 2018 shows the three type of share
based payment to employee in terms of long term incentive plan: -
 Performance rights
 Performance shares
 Cash award
The above three type of share based payment shown by the Woolworths Ltd in their
annual report of 2018 as the share based payment to the employee.

4EMPLYEE BENEFITS AND SHARE BASED PAYMENT
Answer to question 6: -
Net defined benefit obligation
The Woolworths Ltd calculates the net benefit obligation in basis of the followings
policy: -
 The equity settled share- based payments is treated as an expenses over the period
of vesting in the basis of increase in equity.
 The fair value of instrument is calculated in date of issued grant using Monte
Carlo simulation models.
 The value of the instrument and retention right is calculated in basis of Black-
Scholes option pricing method.
 The calculated value for the expenses over vesting period is adjusted.
Above policy shows that the Woolworths Ltd is properly following the requirements
of AASB 2 as the requirement of the AASB 2 is same as the policy of the Woolworths Ltd
(Aasb, 2019).
Answer to question 7: -
Calculation of fair value of instruments with market- based performance
The Woolworths Ltd reported in the annual report of 2018 that fair value of the
instruments in the market based performance condition are calculated in the basis of the
Monte Carlo simulation method. The company reported that fair valuation of instruments is
calculated in day of grants, in the basis of Monte Carlo’s method. This also consider chances
of achieving market based performance condition in valuation of the fair value per share.
Answer to question 8: -
Calculation of fair value of instruments with non- based performance

5EMPLYEE BENEFITS AND SHARE BASED PAYMENT
The Woolworths Ltd. mentioned in their annual report of 2018 that fair value of the
instruments with non- based market performance are calculated in basis of Black- Scholes
option price model. The company use Black- Scholes option model to calculate fair value of
the instrument with non- based market performance.
Answer to question 9: -
Woolworths Group Superannuation Plan
The Woolworths Group reported in annual report of 2018 that company used
following policy in respect of company’s Superannuation Plan: -
 Company contributes in Woolworths Group Superannuation Plan at the rate
determined as in deed between the Woolworths and AMP superannuation Limited.
 Actual valuation is determined in the basis of average duration of defined benefits
obligation at end of reporting period of 6.3 years.
Answer to question 10: -
Remuneration benefits of management personnel
The annual report of the Woolworths Ltd. for year 2018 shows that the company
provided the following four type of remuneration benefits to management personnel for year
2018: -
 Short term employee benefits
 Post- employment benefits
 Other long- term benefits
 Share- based payments
Company shows the figure of $ 14217931 in short- term employee benefits, $ 297319
as the post- employment benefits, $ 139776 as the other long- term benefits and $

6EMPLYEE BENEFITS AND SHARE BASED PAYMENT
10500022 in the share- based payments for year 2018 in terms of the management
personnel benefits.
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7EMPLYEE BENEFITS AND SHARE BASED PAYMENT
References and Bibliography
Aasb. (2019). Retrieved from https://www.aasb.gov.au/admin/file/content105/c9/AASB2_07-
04_COMPjun14_07-14.pdf
Aasb. (2019). Retrieved from https://www.aasb.gov.au/admin/file/content105/c9/AASB119_09-
11.pdf
Woolworthsgroup. (2019). Retrieved from
https://www.woolworthsgroup.com.au/icms_docs/195396_annual-report-2018.pdf