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Employee benefits
 6 Months Ended
Jun. 30, 2023
Employee Benefits  
Employee benefits

 

27.Employee benefits

a) Employee post retirement obligation

 

Reconciliation of assets and liabilities recognized in the statement of financial position

 

       
  June 30, 2023 December 31, 2022
  Overfunded pension plans (i) Underfunded pension plans Other benefits Overfunded pension plans Underfunded pension plans Other benefits
Balance at beginning of the period 1,114 - - 919 - -
Interest income 53 - - 84 - -
Changes on asset ceiling 350 - - 65 - -
Translation adjustment 85 - - 46 - -
Balance at end of the period 1,602 - - 1,114 - -
             
Amount recognized in the statement of financial position            
Present value of actuarial liabilities (5,406) (643) (1,132) (5,142) (608) (1,057)
Fair value of assets 7,103 354 - 6,340 339 -
Effect of the asset ceiling (1,602) - - (1,114) - -
Assets (liabilities) 95 (289) (1,132) 84 (269) (1,057)
             
Current liabilities - (13) (55) - (10) (56)
Non-current assets (liabilities) 95 (276) (1,077) 84 (259) (1,001)
Assets (liabilities) 95 (289) (1,132) 84 (269) (1,057)

 

(i) The pension plan asset is recorded as “Other non-current assets” in the statement of financial position.

 

b) Long-term incentive programs

 

The Company has long-term reward mechanisms that include the Matching Program and the Performance Shares Units (“PSU”) for eligible executives, whose objective is to encourage the permanence of employees and stimulate performance.

The fair value of the programs is recognized on a straight-line basis over the three-year required service period, net of estimated losses.

 

On March 30, 2023, a new cycle of the Matching program started, and the fair value estimate was based on the Company's share price and ADR at the grant date, R$81.82 and US$15.94 per share. The number of shares that will be granted for the 2023 cycle was 1,330,503 (2022: 1,437,588 shares).

 

On April 28, 2023, a new cycle of the PSU program has started, and the Company will grant 1,177,755 shares (2022: 1,709,955 shares). The fair value was calculated based on the performance factor using Monte Carlo simulations for the Return to Shareholders Indicator and health and safety and sustainability indicators. The assumptions used for the Monte Carlo simulations are shown in the table below, as well as the result used to calculate the expected value of the total performance factor:

       
    2023 2022
Granted shares   1,177,755 1,709,955
Date shares were granted   04/28/2023 01/03/2022
VALE (R$)   88.88 78.00
VALE ON (US$)   16.60 13.81
Expected volatility (per year)   48.33% 39.00%
Expected term (in years)   3 3
Expected performance factor   72.42% 53.08%
       

 

The fair value of both programs will be recognized on a straight-line basis over the required three-year period of service, net of estimated losses.