Adidas 2003 Annual Report Download - page 153

32 /// 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 and to 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 was 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 may 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:
NUMBER OF STOCK OPTIONS
Originally issued Outstanding as at Dec. 31
2003 2002
Tranche I (1999) 263,000 175,550 182,750
Tranche II (2000) 329,700 130,950 209,450
Tranche III (2001) 341,100 270,450 324,100
Tranche IV (2002) 340,050 327,150 336,550
Tranche V (2003) 88,000 87,500 –
In 2003, 17,750 shares were issued under the stock option plan at an exercise price of € 80.84
and 13,500 shares at an exercise price of € 74.99 (see also note 21).
The stock options may 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 issuance 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 a basket of competitors
of adidas-Salomon globally and in absolute terms may not have fallen.
The stock options may 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 may 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 share 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 at adidas Salomon France S.A.
33 /// RELATED PARTIES
Herbert Hainer, CEO and Chairman of the Executive Board of adidas-Salomon AG, is also Deputy
Chairman of the Supervisory Board of FC Bayern München AG. adidas-Salomon holds 10% of the
shares of FC Bayern München AG (see also note 13) and in addition has a promotion contract with
this club. The terms of the promotion contract with this club are similar to those with other clubs.
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