Mercedes 2003 Annual Report Download - page 149
Download and view the complete annual report
Please find page 149 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Analysis of the stock options issued is as follows (options in
millions; per share amounts in €):
For the year ended December 31, 2003, the Group recognized
compensation expense on stock options (before taxes) of €95 mil-
lion (2002: €57 million; 2001: €19 million).
The fair values of the DaimlerChrysler stock options issued in
2003, 2002 and 2001 were measured at grant date (beginning of
April) based on a modified Black-Scholes option-pricing model,
which considers the specific terms of issuance. The table below
presents the underlying assumptions as well as the resulting fair
values and total values (in millions of €):
Unearned compensation expense (before taxes) of all outstanding
and unvested stock options as of December 31, 2003, totals
€122 million (2002: €104 million; 2001: €13 million).
Stock Appreciation Rights Plans. In 1999, DaimlerChrysler
established a stock appreciation rights plan (the “SAR Plan 1999”)
which provides eligible employees of the Group with the right to
receive 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 exer-
cise price of a SAR is equal to the fair market value of Daimler-
Chrysler’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 each, of which 9.7 million SARs are outstanding and exer-
cisable at year-end 2003.
As discussed above (see “Stock Option Plans”), 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, of which 15.0 million SARs are outstanding
and exercisable at year-end 2003. 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 exercisable
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 exercisable 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, 2003, 2002 and 2001 is
presented below (SARs in millions; per share amounts in €):
Number of
stock options
2001
Average
exercise price
per share
53.1
20.5
–
(1.2)
(0.8)
71.6
23.1
63.40
34.40
–
51.83
74.76
55.18
71.71
33.6
20.0
–
(0.5)
–
53.1
7.6
70.43
51.52
–
61.29
–
63.40
74.56
15.3
18.7
–
(0.4)
–
33.6
0.1
74.65
66.96
–
70.08
–
70.43
42.62
2002
Average
exercise price
per share
2003
Average
exercise price
per share
Number of
stock options
Number of
stock options
Balance at beginning of year
Options granted
Exercised
Forfeited
Expired
Outstanding at year-end
Exercisable at year-end
4.6%
33%
4.2%
3
€12.15
227.2
2001
2.0%
30%
4.2%
3
€18.70
374.0
5.6%
35%
2.9%
3
€6.00
123.0
20022003
Expected dividend yield
Expected volatility
Risk-free interest rate
Expected lives (in years)
Fair value per option
Total value by award
82.87
–
–
85.93
84.75
84.75
84.75
–
–
78.31
79.13
79.13
44.5
–
–
(2.0)
42.5
42.5
40.3
–
–
(4.0)
36.3
36.3
42.5
–
–
(2.2)
40.3
40.3
Number of
SARs
2001
Weighted
average
excercise price
2002
Weighted
average
excercise price
2003
Weighted
average
excercise price
Number of
SARs
Number of
SARs
79.13
–
–
75.00
74.24
74.24
Outstanding at beginning of year
Granted
Exercised
Forfeited
Outstanding at year-end
SARs exercisable at year-end
| 145144