Mercedes 2012 Annual Report Download - page 219

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Table  7.4 6 includes expenses in the consolidated statement
of income resulting from rights of current members of the
Board of Management.
The details shown in the overview do not represent any
paid or committed remuneration, but refer to expense which
has been calculated according to IFRS. Details of the
remuneration of the members of the Board of Management
in 2012 can be found in the Remuneration Report.
E Management Report from page 119
Performance Phantom Share Plans. In 2012, the Group adopted
a Performance Phantom Share Plan (PPSP), similar to that
used from 2005 to 2011, under which eligible employees are
granted phantom shares entitling them to receive cash payments
after four years. The amount of cash paid to eligible employees
is based on the number of vested phantom shares (determined
over a three-year performance period) multiplied by the quoted
price of Daimler’s ordinary shares (calculated as an average
price over a specified period at the end of the four-year plan
period). The vesting period is therefore four years. For the
plans granted as of 2009, the quoted price of Daimler’s ordinary
shares to be used for the payout is limited to 2.5 times the
Daimler share price at the date of grant. For the plans granted
as of 2012, the payout for the board members is limited to
2.5 times the allotment value, used for the preliminary number
of phantom shares.
The number of phantom shares that vest will be orientated
on the achievement of the corporate performance goals
return on net assets, derived from internal targets, and return
on sales, based on competitive and internal benchmarks.
The Group recognizes a provision for awarding the PPSP.
Since payment per vested phantom share depends on
the quoted price of one Daimler ordinary share, the quoted
price almost completely represents the fair value of each
phantom share. The proportionate remuneration expenses
for the individual years are determined on the basis of
the year-end quoted price of Daimler ordinary shares and
the estimated target achievement.
Stock Option Plans. In April 2000, the Group’s shareholders
approved the Daimler Stock Option Plan (SOP), which grants
stock options for the purchase of Daimler ordinary shares
to eligible employees. Options granted under the SOP are
exercisable at a reference price per Daimler ordinary share,
which is determined in advance, plus a 20% premium. The
options become exercisable in equal installments at the earliest
on the second and third anniversaries of the date of grant.
All unexercised options expire ten years after the date of grant.
If the market price per Daimler ordinary share on the date
of exercise is at least 20% higher than the reference price, the
holder is entitled to receive a cash payment equal to the
original exercise premium of 20%. No new stock options were
granted after 2004.
In the event of exercise, the Group has generally issued
ordinary shares so far.
Table  7.47 shows the basic terms of the SOP (in millions).
Options granted to the Board of Management in 2004 for
which – according to the recommendations of the German
Corporate Governance Code – the Presidential Committee
can impose a limit, or reserve the right to impose a limit
in the event of exceptional and unpredictable developments,
are measured at their intrinsic values as of December 31.
Table  7.4 8 shows an analysis of the stock options issued.
The weighted average share price of Daimler ordinary
shares during the exercise period was €38.27 (2011: €50.53).
As of December 31, 2012, the weighted average remaining
contractual life of outstanding stock options was 1.1 years
(2011: 1.5 years).