Siemens 2007 Annual Report Download - page 302

302 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
stock or cash. The alternatives offered to optionees are determined by the Manag-
ing Board in each case as approved by the Supervisory Board. Compensation in
cash shall be equal to the difference between the exercise price and the opening
market price of the Company’s stock on the day of exercising the stock options.
The amount of shares authorized to be issued to accommodate stock option exer-
cises is 52,317 thousand as of September 30, 2007. The Company is also authorized
to repurchase up to 10% of the €2,675 common stock outstanding on the date of
the Annual Shareholders’ Meeting on January 25, 2007 until July 24, 2008.
The issuance of stock options to members of the Managing Board on or after
October 1, 2003, has been subject to the proviso that the Supervisory Board may
restrict the stock option exercise in the event of extraordinary, unforeseen
changes in the market price of the Siemens share. Those restrictions may reduce
the number of options exercisable by each Board Member, provide for an exercise
in cash for a constricted amount only, or suspend the exercise of the option until
the extraordinary effects on the share price have ceased. The fair value of the
options has not been adjusted for effects resulting from such restrictions. Reason-
able estimates cannot be made until it is probable that such adverse events will
occur. Since it is not possible to reliably estimate the fair value of those options at
the grant date, compensation costs are determined based on the current intrinsic
value of the option until the date at which the number of shares to which a Board
member is entitled to and the exercise price are determinable. Upon that date, fair
value will be determined in accordance with the fair value recognition provisions
of IFRS 2, Share-Based Payment, based on an appropriate fair value option pricing
model.
The Supervisory as well as the Managing Board decided not to grant any stock
options in fi scal 2007. Since the authority to distribute options under the 2001 Sie-
mens Stock Option Plan expired on December 13, 2006, no further options will be
granted under this plan.
In November 2005, the Supervisory Board and Managing Board granted
options to 597 key executives for 3,023,830 shares with an exercise price of €74.59
of which options for 315,495 shares were granted to the Managing Board.