Cemex 2012 Annual Report Download - page 105

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Notes to the
consolidated
financial
statements
105
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Until 2005, CEMEX granted stock options to executives based on CEMEX’s CPO. Options outstanding under CEMEX’s programs
represent liability instruments, except for those of its “Fixed program,” which was designated as equity instruments (note 2S). The
information related to options granted in respect of CEMEX, S.A.B. de C.V. shares is as follows:
Fixed Variable Restricted Special
Options program (A) program (B) program (C) program (D)
Options at the beginning of 2011 448,743 1,358,920 15,022,272 714,618
Changes in 2011:
Options cancelled and adjustments (115,617) (815,424) – (81,826)
Options exercised (333,126) – – –
Options at the end of 2011 – 543,496 15,022,272 632,792
Changes in 2012:
Options cancelled and adjustments – (279,720) (15,022,272) (125,345)
Options exercised – – – –
Options at the end of 2012 – 263,776 – 507,447
Underlying CPOs 1 – 1,451,249 – 10,148,940
Weighted average exercise prices per CPO:
Options outstanding at the beginning of 2012 1 – US$1.55 US$2.00 US$1.36
Options exercised in the year 1 – – – –
Options outstanding at the end of 2012 1 – US$1.42 – US$1.40
Average life of options: – 0.6 years – 1.4 years
Number of options per exercise price:
– – – 135,751 – US$1.0
– 205,034 – US$1.4 – 257,291 – US$1.4
– 58,742 – US$1.6 – 114,405 – US$1.9
Percent of options fully vested: 100% – 100% –
1 Prices and the number of underlying CPOs are technically adjusted for the dilutive effect of stock dividends and recapitalization of retained earnings.
A) Fixed program
From June 1995 through June 2001, CEMEX granted stock options with a fixed exercise price in pesos, equivalent to the market
price of the CPO at the grant date and with tenure of 10 years. The employees’ option rights vested up to 25% annually during
the first 4 years after having been granted.
B) Variable program
This program started in November 2001, through an exchange of fixed program options, with exercise prices denominated in
dollars increasing annually at a 7% rate.
C) Restricted program
This program started in February 2004 through a voluntary exchange of options mainly from the variable program. These options
had an exercise price denominated in dollars which, depending on the program, increased annually at a 5.5% rate or at a 7% rate.
Executives’ gains under these options were settled in the form of CPOs, which were restricted for sale for an approximate period
of 4 years from the exercise date.
D) Special program
From June 2001 through June 2005, a CEMEX subsidiary in the United States granted to a group of its employees a stock option
program to purchase CEMEX ADSs. The options granted have a fixed exercise price denominated in dollars and tenure of 10 years.
The employees’ option rights vested up to 25% annually after having been granted. The option exercises are hedged using ADSs
currently owned by subsidiaries, which increases stockholders’ equity and the number of shares outstanding. The amounts of
these ADS programs are presented in terms of equivalent CPOs.