Siemens 2008 Annual Report Download - page 296

200 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
34 Share-based payment
Share-based payment plans at Siemens are designed as equity-settled plans as well as cash-settled plans. Total
pre-tax expense for share-based payment recognized in net income for continuing and discontinued operations
amounted to €91 and €151 for the years ended September 30, 2008 and 2007, respectively, and refers primarily
to equity-settled awards, including the Company’s employee share purchase program. The total income tax
benet recognized in the Consolidated Statements of Income for share-based payment was €28 and €58 in scal
2008 and 2007, respectively.
I. Equity-settled awards
Cash received from stock option exercises and from the Company’s employee share purchase program for the
years ended September 30, 2008 and 2007 amounts to €248 and €903, respectively.
Stock Option Plans
Description of plans – 1999 Siemens Stock Option Plan
As part of a stock option plan for members of the Managing Board, key executives and other eligible employees,
the Company’s shareholders authorized the Managing Board on February 18, 1999 to distribute non-transfer-
able options exercisable for up to an aggregate of 10 million common shares. The authority to distribute options
under this plan would have originally expired on February 18, 2004. With the ratication by Siemens sharehold-
ers of the 2001 Siemens Stock Option Plan (for further details see below), the 1999 Siemens Stock Option Plan
(the 1999 Plan) has been replaced and no further options under this plan have been granted.
Under the 1999 Plan, the exercise price is equal to the average market price of Siemens’ stock during the ve
days preceding the date the options were granted. The options are exercisable within the ve years following a
holding period of two years if Siemens AG stock price outperforms the Dow Jones Stoxx-Index by at least two
percentage points on ve consecutive days. This percentage applies to the rst year of the ve-year option exer-
cise period, and increases by 0.5 percentage points in each subsequent year.
The terms of the plan allow the Company, at its discretion upon exercise of the option, to offer optionees settle-
ment of the options in either newly issued shares of common stock of Siemens AG from the Conditional Capital
reserved for this purpose, treasury stock or cash. The alternatives offered to optionees are determined by the
Managing Board in each case as approved by the Supervisory Board. Compensation in cash is equal to the differ-
ence between the exercise price and the average market price of the Company’s stock on the ve trading days
preceding the exercise of the stock options.
Description of plans – 2001 Siemens Stock Option Plan
At the Annual Shareholders’ Meeting on February 22, 2001, shareholders authorized Siemens AG to establish
the 2001 Siemens Stock Option Plan, making available up to 55 million options. Compared to the 1999 Plan, the
number of eligible recipients is signicantly larger. The option grants are subject to a two-year vesting period,
after which they may be exercised for a period of up to three years. The exercise price is equal to 120% of the
reference price, which corresponds to the average opening market price of Siemens AG during the ve trading
days preceding the date of the stock option grant. However, an option may only be exercised if the trading price
of the Company’s shares reaches a performance target which is equal to the exercise price at least once during
the life of the option. The terms of the plan allow the Company, at its discretion upon exercise of the option, to
offer optionees settlement of the options in either newly issued shares of common stock of Siemens AG from the
Conditional Capital reserved for this purpose, treasury stock or cash. The alternatives offered to optionees are