APC 2006 Annual Report Download - page 122

Consolidated financial statements at December 31, 2006
Rules governing the stock option plans are as follows:
To exercise the option, the grantee must be an employee or corporate officer of the Group. Exercise is also con-
ditional on the achievement of performance criteria (note 14.5.2);
The options expire after 8 to 10 years;
The vesting period is 3 or 4 years in the United States and 4 years in the Rest of the World.
Outstanding options as of December 31, 2006
Plan Number of options Options Options Number of options
no. outstanding at exercised and or cancelled outstanding at
Dec. 31, 2005 created in 2006 in 2006 (1) Dec. 31, 2006
16 478,720 (311,170) - 167,550
17 622,052 (421,909) - 200,143
18 583,981 (225,353) - 358,628
19 1,426,375 (374,917) (3,000) 1,048,458
20 970,850 (362,904) (5,600) 602,346
21 1,861,100 (280,900) (140,300) 1,439,900
22 69,950 (10,900) - 59,050
23 74,000 (21,400) - 52,600
24 2,024,900 - (25,000) 1,999,900
25 89,150 (28,100) (1,000) 60,050
26 1,994,800 - (5,600) 1,989,200
27 1,614,900 - (1,200) 1,613,700
28 0 1,257,120 - 1,257,120
Total 11,810,778 (780,433) (181,700) 10,848,645
(1) After potential cancellations due to targets being only partially met or options being allowed to lapse without being exercised.
On December 21, 2006, the Management Board set
up stock option plan no. 28, granting 1,257,120 options
to subscribe new shares or purchase existing shares
of Company stock at a price of 84.12 in principle
exercisable between December 21, 2010 and Novem-
ber 20, 2016. For US employees, the plan awards
328,000 Stock Appreciation Rights (SARs) at a price
of 83.80, with the same vesting period and expiration
date as the options in plan 28.
To exercise the options granted under plans 26, 27 and
28 and the SARs, the grantee must be an employee or
corporate officer of the Group. In addition, exercise of
half the options is conditional on the achievement of
annual objectives based on revenue and operating
margin rate.
In 2006, 1,079,121 new Schneider Electric SA shares
were issued on the exercise of currently vested stock
options.
Shares granted without consideration
Acting on the authorization granted by shareholders at
the Annual Meeting of May 3, 2006, the Management
Board decided at its meeting of December 21, 2006 to
grant 52,006 shares without consideration. These
shares have a vesting period of three years (from
December 21, 2006 to December 20, 2009), followed
by a lock-up period of two years (from December 21,
2009 to December 20, 2011).
To acquire the shares without consideration the
grantee must be an employee or corporate officer of
the Group. In addition, acquisition of half the shares is
conditional on the achievement of annual objectives
based on revenue and operating margin rate.
Valuation of share-based payment
In accordance with the accounting principles
described in note 1.18, the stock option plans have
been valued on the basis of an average estimated life
of between seven and ten years using the following
assumptions:
Expected volatility of between 20% and 25%, corre-
sponding to implicit volatility;
A payout rate between 3% and 3.7%;
A discount rate of between 3.1% and 4.1%, corre-
sponding to a risk-free rate over the life of the plans.
Based on these assumptions, the amount recorded
under "Selling, general and administrative expenses"
for plans set up after November 7, 2002 breaks down
as follows:
2006 2005
Plan 21 2.5 5.8
Plan 24 5.6 5.9
Plan 25 0.0 1.5
Plan 26 6.1 3.1
Plan 27 6.6 0.5
Plan 28 0.0 -
20.8 16.7
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