Adidas 2002 Annual Report Download - page 143

30 /// EQUITY COMPENSATION BENEFITS
Management Stock Option Plan (MSOP) adidas-Salomon AG
On May 20, 1999 the Annual General Meeting resolved to increase the nominal capital of adidas-
Salomon AG conditionally by up to € 3,500,000 through the issuance of not more than 1,367,187
no-par-value shares (Contingent Capital I) for the granting of stock options to members of the
Executive Board of adidas-Salomon AG as well as to the Managing Directors/Senior Vice Presidents
of its affiliated companies as well as to further senior executives and executives of adidas-Salomon
AG and of its affiliated companies. On May 8, 2002, the shareholders resolved to extend the term
of the subscription rights granted under the stock option plan to up to five years.
Under the stock option plan adopted by the shareholders of adidas-Salomon AG on May 20,
1999 and amended by resolution of the Annual General Meeting on May 8, 2002, the Executive
Board has been authorized to issue non-transferable stock options for up to 1,367,187 no-par-value
bearer shares to the above-mentioned persons including the Executive Board until August 27, 2004.
The granting of stock options can take place in tranches that shall not exceed 25% of the total
volume for each fiscal year.
There is a two-year vesting period for the stock options and a term of approximately five years
upon their respective issue.
The following stock options have been issued so far:
The stock options can only be exercised subject to the attainment of at least one of the follow-
ing performance objectives.
(1) Absolute Performance:
During the period between the issue and exercise of the stock options, the stock market price for
the adidas-Salomon share – calculated upon the basis of the Total Shareholder Return Approach –
has increased by an annual average of at least 8%.
(2) Relative Performance:
During the same period, the stock market price for the adidas-Salomon share must have developed
by an annual average of 1% more favorably than the stock market prices of the major competitors
of adidas-Salomon globally and in absolute terms may not have fallen.
The stock options can only be exercised against payment of the exercise price. The exercise
price corresponds to the arithmetical mean of the closing prices of the adidas-Salomon share
over the last 20 trading days of the respective exercise period, less a discount, which is composed
of the absolute and relative performance components. In any case, the exercise price shall be at
least the lowest issue price as stated in § 9 section 1 of the German Stock Corporation Act (AktG),
currently € 2.56.
The option terms and conditions stipulate that the stock options can be used for existing
common shares in lieu of new shares from the contingent capital, or in the place of common shares
the discount is paid in cash.
Share Option Plan Salomon S.A
The share option plan of Salomon S.A. expired in July 2002. In the first half of 2002, 5,855 share
options were exercised at an average of € 60.39 per share. As a result of the acquisition of Salomon
S.A., this stock option plan was linked with a fixed rate of 0.73 to the price of the shares of adidas-
Salomon AG. These shares of Salomon S.A. were sold to adidas Salomon France S.A., which was
treated as additional acquisition costs for adidas Salomon France S.A.
Long-Term Incentive Plan (LTIP) Taylor Made Golf Co.
Effective January 1, 2000 Taylor Made Golf Co., Inc., Carlsbad (USA) implemented a long-term
incentive plan (LTIP) for key employees of the TaylorMade-adidas Golf segment. Under the adopted
plan, a total of 450,000 stock appreciation rights (SARs) were granted with the first potential exer-
cise date of December 31, 2002. As of December 31, 2002 there were 445,072 SARs outstanding.
Unexercised stock appreciation rights expire on March 31, 2003.
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NUMBER OF STOCK OPTIONS
Originally issued Outstanding as at
Dec. 31, 2002
Tranche I – 1999 263,000 182,750
Tranche II – 2000 329,700 209,450
Tranche III – 2001 341,100 324,100
Tranche IV – 2002 340,050 336,550