Siemens 2008 Annual Report Download - page 298

202 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
Fair value information
The Company’s determination of the fair value of grants is based on an option pricing model which was devel-
oped for use in estimating the fair values of options that have no vesting restrictions. Option valuation models
require the input of highly subjective assumptions including the expected stock price volatility.
Stock awards
In the rst quarter of scal 2005, the Company introduced stock awards and phantom stock as another means
for providing share-based compensation to members of the Managing Board and other eligible employees. Stock
awards are subject to a four year vesting period for awards granted up to scal 2007 and a three year vesting
period for awards granted thereafter. Upon expiration of the vesting period, the recipient receives Siemens
shares without payment of consideration. Stock awards are forfeited if the grantee’s employment with the Com-
pany terminates prior to the expiration of the vesting period. During the vesting period, grantees are not enti-
tled to dividends. Stock awards may not be transferred, sold, pledged or otherwise encumbered. Stock awards
may be settled in newly issued shares of common stock of Siemens AG, treasury stock or in cash. The settlement
method will be determined by the Managing Board and the Supervisory Board.
Each scal year, the Company decides whether or not to grant Siemens stock awards. Siemens stock awards may
be granted only once a year within thirty days following the date of publication of the business results for the
previous scal year. The Supervisory Board decides annually after the end of each scal year how many stock
awards to grant to the Managing Board and the Managing Board decides annually how many stock awards to
grant to members of the top management of domestic and foreign subsidiaries and eligible employees.
In scal 2008, the Company granted 737,621 stock awards to 4,357 employees and members of the Managing
Board, of which 79,133 awards were granted to the Managing Board. In scal 2007, the Company granted
1,232,893 stock awards to 5,162 employees and members of the Managing Board, of which 37,302 awards were
granted to the Managing Board. Details on stock award activity and weighted average grant-date fair value are
summarized in the table below:
Fair value was determined as the market price of Siemens shares less the present value of dividends expected
during the 4 year and 3 year vesting period, respectively, which resulted in a fair value of €97.94 and €67.70,
respectively, per stock award granted in scal 2008 and 2007. Total fair value of stock awards granted in scal
2008 and 2007 amounted to €72 and €83, respectively.
Year ended September 30,
2008 2007
Awards
Weighted
average
Grant-Date
Fair Value Awards
Weighted
average
Grant-Date
Fair Value
Nonvested, beginning of period 3,270,910 €60.58 2,154,871 €56.44
Granted 737,621 €97.94 1,232,893 €67.70
Vested (79,068) €79.03 – –
Forfeited/settled (439,695) €64.50 (116,854) €59.38
Nonvested, end of period 3,489,768 €67.56 3,270,910 €60.58