Mercedes 2002 Annual Report Download - page 127

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142.62
74.76
–
–
–
–
–
74.65
142.62
0.1
15.2
–
–
–
–
–
15.3
0.1
174.65
66.96
–
–
70.08
–
–
70.43
142.62
15.3
18.7
–
–
(0.4)
–
–
33.6
0.1
2002
Average
exercise
price per share
Number of
stock options
2001
Average
exercise
price per share
Number of
stock options
2000
Average
exercise
price per share
33.6
20.0
–
–
(0.5)
–
–
53.1
7.6
370.43
51.52
–
–
61.29
–
–
63.40
374.56
For the year ended December 31, 2002, the Group recognized
compensation expense on stock options of 157 million (2001:
119 million; 2000: 113 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 sub-
sequent 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
exercise price of a SAR is equal to the fair market value of
DaimlerChrysler’s Ordinary Shares on the date of grant. On
February 24, 1999, the Group issued 11.4 million SARs at an
exercise price of 189.70 each, of which 10.7 million SARs
are outstanding and exercisable at year-end 2002.
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 17.0 million SARs are
outstanding and exercisable at year-end 2002. The initial
grant of SARs replaced Chrysler fixed stock options that were
converted to DaimlerChrysler Ordinary Shares as of the con-
summation 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 anniver-
saries of the consummation date.
In the second quarter of 1999, DaimlerChrysler converted
all options granted under the 1998 and 1997 Stock Option
Plans into SARs. All terms and conditions of the new SARs are
identical to the stock options which were replaced, except
that the holder of a SAR has the right to receive cash equal to
the difference between the exercise price of the original
option and the fair value of the Group’s stock at the exercise
date rather than receiving DaimlerChrysler Ordinary Shares.
Analysis of the stock options issued is as follows (options in
millions):
Notes to Consolidated Balance Sheets |121
Number of
stock options
Balance at beginning of year
Options granted
Bonds sold
Converted
Forfeited
Repayment
Exchanged for SARs
Outstanding at year-end
Exercisable at year-end