APC 2006 Annual Report Download - page 62

4. Employee profit sharing,
stock ownership, stock option
and stock grant plans
Profit-sharing plans
Profit-sharing and other profit-based incentive plans
have been in effect at Schneider Electric Industries
SAS since 1994. The amounts allocated over the past
five years were as follows:
2.2 million in 2002 (profit-based incentive plan and
profit sharing).
13 million in 2003 (profit-based incentive plan).
35.2 million in 2004 (profit-based incentive plan).
19.5 million in 2005 (profit-based incentive plan).
18.9 million in 2006 (profit-based incentive plan
and profit sharing).
The "Schneider Electric"
corporate mutual fund
Schneider Electric has long been committed to devel-
oping worldwide employee stock ownership. Employ-
ees who are members of the Employee Stock Pur-
chase Plan have an opportunity to purchase new or
existing Schneider Electric SA shares through corpo-
rate mutual funds.
The last employee share issue was carried out in
2004. At its meeting on December 21, 2006, the
Supervisory Board authorized the Management Board
to carry out a new worldwide employee share issue
during 2007, within a limit of 1% of the Company’s
issued capital at December 31, 2006.
As of December 31, 2006, employees held a total of
7,029,981 Schneider Electric SA shares through the
corporate mutual funds or directly, representing 3.09%
of the capital and 5.22% of the voting rights, taking into
account double voting rights.
Stock option and stock grant plans
Grant policy
Stock option and stock grant plans are decided by the
Management Board with the authorization of the
Supervisory Board, following a review of the plans by
the Remunerations and Appointments & Corporate
Governance Committee.
Grantees include members of Senior Management,
top managers in all countries, high-potential managers
and employees who performed exceptionally during
the year.
Grants to members of Senior Management, including
the Chairman and CEO and members of the Manage-
ment Board, represent between 20% and 25% of the
total, depending on the plan.
In 2005, the decision was made to set up annual plans
at the end of the fiscal year so that grantees will be
informed of stock option grants and stock grants at the
same time that their bonus targets are determined.
For the annual plan set up in December 2006, a cer-
tain proportion of stock options were replaced by stock
General presentation of Schneider Electric SA
grants for grantees who are resident in France for tax
purposes, on the basis of one stock grant for four stock
options according to the following rule:
Members of the Management Board and Executive
Committee: 20% of the number of options
Other grantees: 30% of the number of options.
The following plans were set up:
Stock option plan 28, covering 489 grantees
Stock grant plan 1, covering 221 grantees.
Description of the stock option plan
The option exercise price is equal to the average share
price of the twenty trading days prior to the date of
grant by the Management Board. No discount is
applied.
Since 2006, options have a ten year life. Options grant-
ed under plans 16 through 19 are exercisable as from
the fourth year following the grant date, except for
options granted under plans 16 and 19 which are exer-
cisable as from the fifth and third year respectively.
Under all four plans, the shares (to be held in regis-
tered form) are subject to a five-year lock-up. Options
granted under plans 20, 21, 24 and 26 through 28 vest
automatically and are exercisable as from the fourth
year or, in certain cases, as from the third year.
Options granted under plans 24, 26 and 28 may also
be exercised in the case of a public offer for the Com-
pany’s shares. Exceptionally, options granted under
plans 22, 23 and 25 may be exercised as from the first
year.
Options may only be exercised by Group employees.
In addition, the exercise of options granted under plans
16 through 18, 20, 21, 24 and 26 through 28 is fully or
partially dependent on specific targets being met con-
cerning profit, value creation, revenue or operating
margin, as described in the table below.
Because these targets were only partially achieved,
2,319,800 options granted under plans 16 through 21
were cancelled.
Description of the stock grant plan
The vesting and lock-up periods for stock grants made
under plan 1 dated December 2006 are 3 years and
2 years respectively.
Grantees must be Group employees for their stock
grants to vest. Half of each grant is subject to perform-
ance targets, based on revenue and operating margin.
Options and stock grants received and
exercised by corporate officers and the top
grantees during the year
The following were granted to members of the Man-
agement Board:
Jean-Pascal Tricoire: 80,000 performance options
under plan 28 (exercise price 82.14, expiry date 2016)
and 5,000 performance stock grants under plan 1.
Pierre Bouchut: 32,000 performance options under
plan 28 (exercise price 82.14, expiry date 2016) and
2,000 performance stock grants under plan 1.
Henri Lachmann, who was granted options under
plans 16 through 21, 24, 26 and 27, exercised 46,700
plan 16 options at a price of 50.73 and 71,600 plan
17 options at a price of 50.73 during the year.
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