Tiscali 2008 Annual Report Download - page 145

Stock Options
Upon the proposal of the Board of Directors, on 3 May 2007
the shareholders’ meeting approved a stock incentive plan in
favour of the Chief Executive Officer and key employees of the
Company and its Italian subsidiaries, with the aim of aligning
management’s interests with the creation of value for the
Tiscali Group and its shareholders, encouraging the
achievement of the strategic objectives. With regards to the
Chief Executive Officer, the implementation of the plan,
besides representing a valid incentive tool in line with market
practices, represents the execution of a precise contractual
obligation undertaken by the Company at the time of the
formation of the management relationship.
The plan envisages the allocation:
•to the Chief Executive Officer, of 3,593,143 options for the
purchase of the same amount of ordinary shares in the
Company, deriving from purchases of treasury shares which
the Company will carry out on the market in compliance with
Article 2357 of the Italian Civil Code and on the basis of the
authorization of the shareholders’ meeting. The exercise of
these options is dependent on the achievement of the
performance objectives linked to the budget established by
the Board of Directors, involving 40% with reference to the
objectives established for 2006, which are understood to
have been achieved, and the remaining 60% with reference
to the objectives established for 2007.
•to the employees, of up to a maximum of 4,244,131 options
for the subscription of the same amount of newly-issued
ordinary shares in the Company, deriving from a share capital
increase reserved in accordance with Article 2441.8 of the
Italian Civil Code resolved by the shareholders’ meeting.
By way of implementing the afore-mentioned plan, the Board
of Directors:
•on 10 May 2007, assigned the Chief Executive Officer all the
options due him in a single tranche; it will be possible to
exercise the options in several tranches as well, between 4
May 2010 and 3 November 2010, at a price of EUR 2.763,
adjusted to EUR 2.477 following the share capital increase;
•on 28 June 2007, assigned 23 managers a total of
3,330,000 options; it will be possible to exercise the options,
in several tranches as well, between 29 June 2010 and 28
December 2010, at an exercise price of EUR 2.378,
adjusted to EUR 2.132 following the share capital increase
The beneficiaries of the options are obliged not to sell, for a period
of at least five years as from the exercise date, a quantity of shares
whose total value is no lower than the difference between the normal
value of the shares as of the exercise date and the amount paid by
the beneficiaries, in compliance with applicable tax legislation.
For further information, with particular reference to the effects - on
the rights assigned - of the possible termination of the employment
relationship of the beneficiaries or a change in the management of
the Company, please refer to the disclosure document drawn up
in accordance with Article 84 bis of Regulation No. 11971
approved by Consob under resolution dated 14 May 1999,
available on the Company’s website (www.tiscali.com).
The plan described above, intended for the Italian management
of the Tiscali Group, runs alongside the plan of payments based
on shares resolved last October for the UK management of the
Group. This plan envisages the allocation to 20 UK managers of
a number of options, convertible into shares of the subsidiary
Tiscali UK Ltd., not exceeding 5% of the share capital of said
company, net of dilution. The exercise price of the options has
been established on the basis of the equity value of the UK
subsidiary at the time of their allocation. Such options mature
over a three-year period from allocation, and may be exercised for
10 years, again as from the date of allocation.
The Board Meeting held on 28 February 2008 resolved to adjust
the exercise price of the options assigned to the employees by
means of applying a ratio of 0.896756, identical to that
published by the Italian Stock Exchange on 11 January 2008
and used to adjust the option contracts and the futures on Tiscali
shares as a consequence of the share capital increase for
around EUR 150 million concluded on 22 February 2008.
Consequently, the exercise price of the options assigned to the
employees was fixed at EUR 2.132 per share.
Furthermore, on the basis of the agreements between the
Company and Tommaso Pompei as a consequence of the
relinquishing of his powers, the options assigned to Tommaso
Pompei are understood to be exercisable for the full amount
resolved (including the second tranche) according to the terms
established in the regulations. As a result of the above-mentioned
adjustment mechanism, the exercise price for the options allocated
to Tommaso Pompei therefore comes to EUR 2.477 per share.
Ongoing disputes and contingent liabilities
During the normal course of its business, the Tiscali Group is
involved in a number of legal and arbitration proceedings, as
well as being subject to tax assessments.
A summary of the main proceedings to which the Group is a
party, is presented below.
Disputes
Vereniging van Effectenbezitters/ Stichting Van der Goen WOL
Claims dispute
In July 2001, the Dutch association Vereniging van Effectenbezitters
and the Stichting VEB-Actie WOL foundation, which represent a
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