| Changes in other provisions | ||||||||
|---|---|---|---|---|---|---|---|---|
| Taxes | Environ- mental protection |
Restruc- turing |
Trade- related commit- ments |
Litigations | Personnel commit- ments |
Miscella-neous | Total | |
| € million | € million | € million | € million | € million | € million | € million | € million | |
| December 31, 2023 | 1 | 52 | 4 | 27 | 2 | 369 | 93 | 548 |
| Additions | 3 | 2 | 20 | 33 | 4 | 313 | 86 | 461 |
| Utilization | (4) | (1) | (14) | (32) | (2) | (280) | (39) | (372) |
| Reversal | – | (1) | (4) | (6) | – | (22) | (18) | (51) |
| Interest cost | – | – | – | – | – | 3 | 1 | 4 |
| Exchange differences | 1 | 2 | 1 | – | 1 | 7 | (1) | 11 |
| December 31, 2024 | 1 | 54 | 7 | 22 | 5 | 390 | 122 | 601 |
| of which noncurrent | – | 50 | 3 | – | – | 152 | 48 | 253 |
Provisions for taxes comprised provisions for other types of non-income taxes amounting to €1 million (previous year: €1 million).
Provisions for environmental protection mainly relate to the rehabilitation of contaminated land and recultivation of landfills as well as water protection measures at sites in the United States and Spain.
As of December 31, 2024, provisions for restructuring included €6 million (previous year: €4 million) for severance payments.
Personnel-related provisions are mainly those recorded for short-term and long-term variable compensation and other personnel-related provisions.
The Covestro Group‘s long-term incentive programs entail commitments offered collectively to different groups of employees. As a general rule, all obligations from long-term compensation programs are covered by provisions. As of the reporting date, their amount corresponds to the fair value of the entitlement earned of the respective commitments to the employee groups. All resulting valuation adjustments are recognized in profit or loss.
The Board of Management, senior executives, and other managerial employees at Covestro are entitled to participate in the Prisma long-term, share-based compensation program. A percentage of the employee’s annual base salary – based on his/her position – is defined as a target for variable payments (Prisma target opportunity). The payout is calculated by multiplying the Prisma target opportunity by the total shareholder return (total of Covestro’s closing stock price* and all of the dividends distributed in the relevant performance period divided by the opening stock price) and the performance of Covestro’s stock relative to the STOXX Europe 600 Chemicals index**. In 2021, Prisma was expanded to include a sustainability component that encompasses Covestro’s target for reducing annual greenhouse gas emissions [CO2 equivalents] at the Scope 1 emissions level. For the tranche beginning in fiscal 2023, Scope 2 emissions were added to the sustainability component. Starting in fiscal 2024, Prisma was extended by a further two metrics from the ESG “Social” aspect, the participation factor, and the RIR factor.
The payout is capped at 200% of the Prisma target opportunity. The target achievement for the 2020–2023 tranche amounted to 119.9% and was distributed in the amount of €29 million, mainly in January 2024.
The net expense for all long-term incentive programs amounted to €68 million (previous year: €57 million).
The fair value of the Prisma share-based incentive program recognized in the provision amounted to €129 million as of December 31, 2024 (previous year: €87 million). As of December 31, 2024, Covestro’s stock price and the STOXX Europe 600 Chemical Index were fixed for measuring the Prisma provision. The fair value was calculated on the basis of a Covestro share price of €62 and a STOXX Europe 600 Chemical level of 1,209.19 points.
The rise in miscellaneous provisions relates primarily to provisions for restoration obligations.