Mercedes 2004 Annual Report Download - page 95

The MTI is also linked to the share-price development. This is
effected by allocating phantom shares. For these phantom
shares, a dividend equivalent is paid during the period of the
plan. At the end of the three-year period, the number of phan-
tom shares is determined depending on the aforementioned
parameters. The amount to be paid out is calculated by multi-
plying the number of phantom shares by the share price at that
time.
– The DaimlerChrysler stock option plan is a component of
long-term incentive compensation. The options granted in the
context of this plan can be exercised at a pre-determined
reference price per DaimlerChrysler share, plus a 20% premium.
Half of the options can be exercised two years after being
granted and the other half one year later. Options not exercised
become void ten years after they were granted. If the market
price per DaimlerChrysler ordinary share on the date of excer-
cise is at least 20% higher, than the reference price, the holder
is entitled to receive a cash payment equal to the original exer-
cise premium of 20%. For long-term variable compensation
granted as of the year 2004, the Presidential Committee can
reserve the right to impose a possible limit in the case of extra-
ordinary, unforeseeable developments.
In connection with the allocation of stock-based compensation,
retroactive changes of performance targets or comparison para-
meters are expressly excluded. Further information on stock
based compensation can be found in the Notes to the Consoli-
dated Financial Statements under Note 24.
Guidelines for share ownership. As a supplement to these
four components of Board of Management compensation, the
Presidential Committee of the Supervisory Board of Daimler-
Chrysler AG has approved Stock Ownership Guidelines for the
Board of Management, under which the members of the Board
of Management are required to invest a portion of their private
assets in DaimlerChrysler shares within a period of several years
and to hold these shares until the end of their Board of Manage-
ment membership.
Total Board of Management compensation in 2004. The total
compensation paid by Group related companies to the members
of the Board of Management of DaimlerChrysler AG is calculated
from the amount of compensation paid in cash and from the
non-cash benefits in kind. The total remuneration in 2004 for the
members of the Board of Management of DaimlerChrysler AG
amounted to €31.6 million, of which €11.8 million is fixed and
€19.8 million is short-term and mid-term incentive compensation
components. These figures relate to the members active at the
end of the year and pro rata to the members who departed from
the Board of Management during the year.
In 2004, 1.265 million stock options from the Stock Option Plan
2000 were for the last time granted to the members of the Board
of Management as a long-term compensation component. Also
in 2004, 395,000 performance-based awards were granted to the
members of the Board of Management based on a 3 year perfor-
mance plan.
The so-called fair value of the stock options and performance-
based awards on the day they were allocated in 2004 amounts to
€7.85 per option and €36.31 per performance-based award.
Whether, when and in what amount the allocated stock options
or performance based awards are actually paid out depends on
future share price and dividend developments and on the fulfill-
ment of the set targets. Except for the stock option plan granted
in 2003 (vesting period not yet expired, however), the options’
exercise price had not been achieved by December 31, 2004, i.e.
the participants were unable to exercise their options. Further
information on Board of Management compensation can be
found in the Notes to the Consolidated Financial Statements
under Note 38.
New stock-based compensation as of the 2005 financial
year. The new component of compensation is linked to the
long-term development of corporate value. The new program is
based on the principles of performance orientation, benchmark
comparison and share ownership.
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