Mercedes 2001 Annual Report Download - page 103

Notes to Consolidated Balance Sheets 99
Stock Option Plans
In April 2000, the Group’s shareholders approved the
DaimlerChrysler Stock Option Plan 2000 which pro-
vides for the granting of stock options for the purchase
of DaimlerChrysler Ordinary Shares to eligible
employees. Options granted under the Stock Option
Plan 2000 are exercisable at a reference price per
DaimlerChrysler Ordinary Share determined in ad-
vance plus a 20% premium. The options become exer-
cisable in equal installments on the second and third
anniversaries from the date of grant. All unexercised
options expire ten years from the date of grant. If the
market price per DaimlerChrysler Ordinary Share on
the date of exercise is at least 20% higher than the
reference price, the holder is entitled to receive a cash
payment equal to the original exercise premium of 20%.
In May 2000, certain shareholders challenged the ap-
proval of the Stock Option Plan 2000 at the stockhold-
ers’ meeting on April 19, 2000. In October 2000, the
Stuttgart District Court (Landgericht Stuttgart) dis-
missed the case and the Stuttgart Court of Appeals
(Oberlandesgericht Stuttgart) dismissed an appeal in
June 2001. The shareholders appealed the decision of
the Stuttgart Court of Appeals (a Revision) to the Fed-
eral Supreme Court (Bundesgerichtshof) in July 2001.
Since the approval of the Stock Option Plan 2000, the
Group issued 33.9 million options during the years
2001 and 2000 at reference prices of €55.80 and
€62.30, respectively.
DaimlerChrysler established, based on share-
holder approvals, the 1998, 1997 and 1996 Stock
Option Plans (former Daimler-Benz plans), which
provide for the granting of options for the purchase of
DaimlerChrysler Ordinary Shares to certain members
of management. The options granted under the plans
are evidenced by non-transferable convertible bonds
with a principal amount of €511 per bond due ten years
after issuance. During certain specified periods each
year, each convertible bond may be converted into 201
DaimlerChrysler Ordinary Shares, if the market price
per share on the day of conversion is at least 15 %
higher than the predetermined conversion price and
the options (granted in 1998 and 1997) have been held
for a 24 month waiting period. The specific terms of
these plans are as follows:
Conver-
sion
price
1996
1997
1998
Due
Stated
interest
rate
July 2006 5.9% €42.62
July 2007 5.3% €65.90
July 2008 4.4% €92.30
Bonds granted in
Balance at beginning of year
Options granted
Bonds sold
Converted
Forfeited
Repayment
Exchanged for SARs
Outstanding at year-end
Exercisable at year-end
Average
conversion
price per
share
Number
of stock
options
2001
15.3 €74.65 0.1 €42.62 15.5 €79.63
18.7 66.96 15.2 74.76 – –
––––––
––––––
(0.4) 70.08 ––––
––– – (0.2) 79.10
––– – (15.2) 79.79
33.6 70.43 15.3 74.65 0.1 42.62
0.1 €42.62 0.1 €42.62 0.1 €42.62
Number
of stock
options
2000
Average
conversion
price per
share
Number
of stock
options
1999
Average
conversion
price per
share
In the second quarter of 1999, DaimlerChrysler
converted all options granted under the 1998 and 1997
Stock Option Plans into SARs. All terms and conditions
of the new SARs are identical to the stock options
which were replaced, except that the holder of a SAR
has the right to receive cash equal to the difference
between the exercise price of the original option and
the fair value of the Group’s stock at the exercise date
rather than receiving DaimlerChrysler Ordinary Shares.
Analysis of the stock options issued to eligible
employees is as follows (options in millions):