Siemens 2007 Annual Report Download - page 306

306 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
II. Cash-settled awards
Stock appreciation rights (SAR’s)
Where local regulations restrict the grant of stock options in certain jurisdictions,
the Company grants SAR’s to employees under the same conditions as the 2001
Siemens Stock Option Plan except that SAR’s are exercisable in cash only.
Details on SAR’s activity and weighted average exercise prices are summarized
in the table below:
In fi scal 2007, the expected volatility is based on historical volatility of Sie-
mens shares, implied volatility for traded Siemens options with similar terms and
features, and certain other factors. The expected term is derived by applying the
simplifi ed method and is determined as the average of the vesting term and the
contractual term. The risk-free interest rate is based on applicable governmental
bonds. Changes in subjective assumptions can materially affect the fair value of
the SAR’s.
Phantom stock
Where local regulations restrict the grants of stock awards in certain jurisdic-
tions, the Company grants phantom stock to employees under the same condi-
tions as the Siemens stock awards, except that grantees receive the share prices’
equivalent value in cash only at the end of the four year vesting period. In fi scal
2006, 33,153 phantom stock rights were granted and 805 phantom stock rights
forfeited, resulting in a balance of 60,585 phantom stock rights as of September
30, 2006. In fi scal 2007, 36,962 phantom stock rights were granted and 9,087
phantom stock rights forfeited, resulting in a balance of 88,460 phantom stock
rights as of September 30, 2007. None of the phantom stock rights were vested as
of September 30, 2007.
Year ended September 30,
2007 2006
SAR’s
Weighted
average
exercise
price SAR’s
Weighted
average
exercise
price
Outstanding, beginning of period 349,900 €73.47 267,720 €73.05
Granted – – 97,270 €74.59
SAR’s exercised (106,280) €73.06 (2,300) €73.25
SAR’s forfeited (45,340) €73.72 (12,790) €73.20
Outstanding, end of period 198,280* €73.63 349,900 €73.47
Exercisable, end of period 123,335 €73.05 181,950 €73.25
* Thereof 35,485 SAR’s with a €72.54 exercise price and a weighted average remaining life of 2.2 years, 87,850
SAR’s with a €73.25 exercise price and a weighted average remaining life of 1.2 years and 74,945 SARs with a
€74.59 exercise price and a weighted average remaining life of 3.2 years.