Mercedes 2001 Annual Report Download - page 102

98 Notes to Consolidated Balance Sheets
22. Stock-Based Compensation
The Group currently has various stock appreciation
rights (“SARs”) plans, two stock option plans and
a performance-based stock award plan.
Stock Appreciation-Based Plans
In 1999, DaimlerChrysler established a stock apprecia-
tion rights plan (the “SAR Plan 1999”) which provides
eligible employees of the Group with the right to re-
ceive cash equal to the appreciation of DaimlerChrysler
Ordinary Shares subsequent to the date of grant. The
stock appreciation rights granted under the SAR Plan
1999 vest in equal installments on the second and third
anniversaries from the date of grant. All unexercised
SARs expire ten years from the grant date. The exercise
price of a SAR is equal to the fair market value of
DaimlerChrysler’s Ordinary Shares on the date of grant.
On February 24, 1999, the Group issued 11.4 million
SARs at an exercise price of €89.70.
As discussed below, in the second quarter of 1999
DaimlerChrysler converted all options granted under
its existing stock option plans from 1997 and 1998 into
SARs.
In conjunction with the consummation of the
merger between Daimler-Benz and Chrysler in 1998,
the Group implemented a SAR plan through which 22.3
million SARs were issued at an exercise price of $75.56
each. The initial grant of SARs replaced Chrysler fixed
stock options that were converted to DaimlerChrysler
Ordinary Shares as of the consummation of the merger.
SARs which replaced stock options that were exercis-
able at the time of the consummation of the merger
were immediately exercisable at the date of grant.
SARs related to stock options that were not exercisable
at the date of consummation of the merger became ex-
ercisable in two installments; 50% on the six-month and
one-year anniversaries of the consummation date.
A summary of the activity related to the Group’s
SAR plans as of and for the years ended December 31,
2001, 2000 and 1999 is presented below (SARs in
millions):
The Group grants performance-based stock
awards to certain eligible employees with performance
periods of three years and track the value of
DaimlerChrysler Ordinary Shares. The amount ulti-
mately earned in cash compensation at the end of a
performance period is based on the degree of achieve-
ment of corporate goals. The Group issued 0.9 million
performance-based stock awards in 2001 (2000: 0.7
million; 1999: 0.7 million).
Compensation expense or benefit (representing
the reversal of previously recognized expense) on SARs
and performance-based stock awards is recorded based
on changes in the market price of DaimlerChrysler
Ordinary Shares and, in the case of performance-based
stock awards, the attainment of certain performance
goals. For the year ended December 31, 2001, the
Group recognized compensation expense of €17 million
and for the years ended December 31, 2000 and 1999,
the Group recognized compensation benefits of €44
million and €106 million, respectively, for SARs and
performance-based stock awards.
Outstanding at beginning of year
Granted
Exchange of stock Options for SARs
Exercised
Forfeited
Outstanding at year-end
SARs exercisable at year-end
2000 19992001
Number
of SARs
Number
of SARs
Weighted-
average
exercise
price
Weighted-
average
exercise
price
Number
of SARs
Weighted-
average
exercise
price
44.5 €82.87 45.8 €80.25 22.2 €64.58
––– – 11.4 89.70
––– – 15.2 79.79
––––(2.2)64.91
(2.0) 85.93 (1.3) 78.52 (0.8) 76.07
42.5 84.75 44.5 82.87 45.8 80.25
42.5 €84.75 33.6 €80.63 26.8 €72.77