Siemens 2009 Annual Report Download - page 288

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 Reports Supervisory Board /
Managing Board  Corporate Governance  Management’s discussion and analysis  Consolidated Financial Statements
 Consolidated Statements of Income  Consolidated Statements of Income
and Expense Recognized in Equity
 Consolidated Balance Sheets  Consolidated Statements of Cash Flow
Description of plans –  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 re-
cipients is significantly 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 five trading
days preceding the date of the stock option grant. However, an
option may only be exercised if the trading price of the Com-
pany ’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 pur-
pose, treasury stock or cash. The alternatives offered to option-
ees are determined by the Managing Board in each case as ap-
proved 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 ex-
ercising the stock options.
The issuance of stock options to members of the Managing
Board on or after October 1, 2003, has been subject to the pro-
viso 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 Mem-
ber, provide for an exercise in cash for a constricted amount
only, or suspend the exercise of the option until the extraordi-
nary effects on the share price have ceased. The fair value of
the options has not been adjusted for effects resulting from
such restrictions. Reasonable 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
Stock Option Plans
Cash received from stock option exercises and from the Com-
pany ’s employee share purchase program for the years ended
September 30, 2009 and 2008 amounts to €134 and €248, re-
spectively.
Description of plans –  Siemens Stock Option Plan
As part of a stock option plan for members of the Managing
Board, key executives and other eligible employees, the Com-
pany ’s shareholders authorized the Managing Board on Febru-
ary 18, 1999 to distribute non-transferable options exercisable
for up to an aggregate of 10 million common shares. The au-
thority to distribute options under this plan would have origi-
nally expired on February 18, 2004. With the ratification by
Siemens shareholders 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 five days preceding
the date the options were granted. The options are exercisable
within the five years following a holding period of two years if
Siemens AG stock price outperforms the Dow Jones Stoxx-In-
dex by at least two percentage points on five consecutive days.
This percentage applies to the first year of the five-year option
exercise 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 settlement of
the options in either newly issued shares of common stock of
Siemens AG from the Conditional Capital reserved for this pur-
pose, treasury stock or cash. The alternatives offered to option-
ees are determined by the Managing Board in each case as ap-
proved by the Supervisory Board. Compensation in cash is
equal to the difference between the exercise price and the av-
erage market price of the Company ’s stock on the five trading
days preceding the exercise of the stock options.