Notes to the Group Financial Statements

3. Employees and compensation

		2009 $m	2008 $m
Wages and salaries	– fixed	173	161
	– variable	180	343
Share-based payment charge		71	71
Social security costs		19	46
Pension costs		20	18
		463	639

Further compensation costs of $37m were incurred in respect of the restructuring discussed in Note 2 (b) above, comprising $22 million in wages and salaries, and $15 million in accelerated share-based payment charges.

In addition to the amounts shown above, $62 million (2008: $39 million) of sales commissions relating to employees are included in the Group income statement charge for upfront sales commissions (Note 1).

(a) Wages and salaries

Wages and salaries include the following:

(i) Bonus plans

The Group recognises a liability and an expense for cash bonuses, based on a formula that takes into consideration the profit attributable to the Company's shareholders.

(ii) Share-based payments

These are detailed in section (b) of this Note.

(iii) Phantom equity-based compensation

The Group also operates 'phantom' cash-settled, equity-based compensation plans. The equity base is typically some of the fund products of which the Group is the investment manager. The fair value of the employee services received in exchange for the phantom equity awards is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the awards, remeasured at each reporting date until the settlement date is reached. The fair value of the awards equates to the fair value of the underlying fund products at the settlement date.

Average number of employees in continuing operations comprise:

	2009 Number	2008 Number
UK	720	743
Switzerland	643	597
Other countries	413	391
Average number of employees – continuing operations	1,776	1,731

(b) Share-based payments

The Group operates equity-settled, share-based compensation schemes. The fair value of the employee services received in exchange for the share awards and options granted is recognised as an expense, with the corresponding credit being recognised in equity. The total amount to be expensed over the vesting period is determined by reference to the fair value of the shares and options awarded/granted, excluding the impact of any non-market vesting conditions (for example, earnings per share and return on equity targets). Non-market vesting conditions are included in assumptions made on the number of options that are expected to become exercisable. At each balance sheet date, the Group revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

All of the employee share awards and share option awards were made within the Group's share-based remuneration schemes. Details of these schemes may be found in the Remuneration Report.

During the year, $86 million was charged to the income statement for equity-settled, share-based payment transactions (2008: $71 million) in respect of continuing operations.