Merck 2008 Annual Report Download - page 127

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As part of the stock option program for senior executives resolved by the Merck KGaA
Annual General Meeting 2000, the creation of € 5,720,000 contingent capital for issu-
ing stock rights was approved. As a result, a maximum of 2,200,000 stock options
could be issued from the approved contingent capital. A total of 2,153,500 options
were granted in two tranches. Each option entitled the bearer to acquire one share of
Merck KGaA, provided that the exercise requirements are met. The term of the pro-
gram for both tranches was six years. Both tranches had a minimum vesting period of
25 months. Stock options may only be exercised after the minimum vesting period if
the stock price on the day before exercise was at least 30% higher than the option
exercise price. The exercise price was the mean value of Merck’s shares in the Frank-
furt XETRA trading system, commencing 30 days before the date of issue of the stock
rights. In addition, the rights are subject to a lockup period that begins two calendar
weeks before the date of publication of the Q1 and Q3 reports and eight calendar weeks
before the date of publication of the H1 and Annual Reports. When granted, the first
tranche included 766,500 options. It was possible to exercise these options from 2002
to 2006. When granted, the second tranche included 1,387,000 options. These stock
options could be exercised from May 2004 to April 8, 2008 at an exercise price of
€ 32.73, provided that Merck’s share price was not below € 42.55. Upon exercising the
options, the shares carry dividend rights for the current and following fiscal years.
The development of all options on shares of Merck KGaA in the second tranche is
presented in the follow ing table:
2008 2007
Oustanding options as of January 1 20,000 40,310
Options exercised during the period 8,000 20,310
Options forfeited during the period 12,000 0
Outstanding options as of December 31 0 20,000
thereof exercisable as of December 31 0 20,000
Recognized capital increase (in € million) 0.2 0.7
The weighted average price of Merck KGaA’s shares in XETRA trading at the time of
exercise of the stock options was € 81.05 in 2008.
122 | Merck Annual Report 2008