Our people: Performance reward and recognition

Unvested Stock Awards

In 2005, we replaced the stock options granted to employees since 1996 with an allocation of ST restricted stock: the Unvested Stock Awards (USAs). Any employee with a job grade equal to 12 or above is eligible to receive USAs depending on their yearly performance and potential.

STS47

In 2005, 7,189 employees, about 41% of those eligible, received USAs. Our practice is to grant 100% of the shares if the performance criteria defined by the company are achieved. For more details of performance criteria see our website.

Employee benefits

Employee benefits vary according to the countries, local practices,and collective agreements.

STS25a; LA12

About 78% of our employees benefit from a pension plan paid at least partially by the company. This is a new indicator, but we are not yet entirely confident in its reliability. It should only be taken as an estimation. In 2005, we also attempted to introduce a new indicator on medical insurance paid entirely by ST, but the data gathered was not reliable enough to publish.

Compensation

Common practice in ST is to regularly benchmark our compensation practices with the market.

STS24: Compensation		%
	2004	2005
Exempt positions benchmarked for compensation	97	94

Recognition

We consider that recognition is a key way to motivate our employees and it has therefore been an integral part of our total quality culture for many years. We regularly recognize outstanding performance by both individuals and teams.

Recognition
	2003	2004	2005
STS26: People recognized	23,767	49,553	41,676*
STS27: Recognition ceremonies	195	171	173
STS28: Overall company recognition budget (US$m)	54	1,000	1,613**