Mercedes 2006 Annual Report Download - page 195

Consolidated Financial Statements | Notes to the Consolidated Balance Sheets | 179
Analysis of the phantom shares issued, all of which are
non-vested, is as follows:
In 2006 and 2005, the group recognized €59 million and €30
million, respectively, of compensation expenses related to the
Performance Phantom Share Plan. The corresponding tax benefit
amounts to €23 million (2005: €11 million). The Group records
the performance phantom share plan awards as accrued liabili-
ties. Because the payment per phantom share depends on the
quoted price of one DaimlerChrysler ordinary share, the quoted
price represents the fair value of each phantom share. The pro-
portionate compensation expense for 2006 and 2005 is deter-
mined based on the year-end quoted price of DaimlerChrysler
ordinary shares as well as the estimated target achievement as
of December 31, 2006 and 2005.
Stock option plans. In April 2000, the Group’s shareholders
approved the DaimlerChrysler Stock Option Plan 2000 which pro-
vides for the granting of stock options for the purchase of
DaimlerChrysler ordinary shares to eligible employees. Options
granted under the Stock Option Plan 2000 are exercisable at
a reference price per DaimlerChrysler ordinary share determined
in advance plus a 20% premium. The options become exercis-
able in equal installments on the second and third anniversaries
from the date of grant. All unexercised options expire ten years
from the date of grant. If the market price per DaimlerChrysler
ordinary share on the date of exercise is at least 20% higher than
the reference price, the holder is entitled to receive a cash pay-
ment equal to the original exercise premium of 20%.
The table below shows the basic terms of options issued
(in millions):
The fair value for fully vested but not yet exercised stock options
amounted to €261 million at December 31, 2006.
There were no options granted under the Stock Option Plan 2000
in 2006 or 2005.
DaimlerChrysler established, based on shareholder approvals, the
1998 and 1997 Stock Option Plans (former Daimler-Benz
plans), which provided for the granting of options for the purchase
of DaimlerChrysler ordinary shares to certain members of
management. The options granted under the 1997 and 1998 plans
were evidenced by non-transferable convertible bonds with a
principal amount of €511 per bond due ten years after issuance.
During certain specified periods each year, each convertible
bond could have been converted into 201 DaimlerChrysler ordi-
nary shares, if the market price per share on the day of conver-
sion was at least 15% higher than the predetermined conversion
price and the options had been held for a 24 months waiting
period.
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 identi-
cal to the stock options which were replaced, except that the
holder of a SAR has the right to receive cash equal to the differ-
ence 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.
20052006
–
3.6
.
3.6
3.6
2.6
(0.4)
5.8
(in millions of phantom shares)
Outstanding at the beginning of the year
Granted phantom shares
Forfeitures/Disposals
Outstanding at year end
€74.76
€66.96
€51.52
€34.40
€43.57
Options
exercisable
At December 31, 2006
Options
outstandingOptions
granted
Exercise
price
Reference
price
11.9
16.2
18.3
6.7
5.7
11.9
16.2
18.3
6.7
14.0
15.2
18.7
20.0
20.5
18.0
€62.30
€55.80
€42.93
€28.67
€36.31
2000
2001
2002
2003
2004
Year of grant