Siemens 2011 Annual Report Download - page 340

6 A. To our shareholders 51 C. Combined management’s discussion and analysis 23 B. Corporate Governance

JUBILEE SHARE PROGRAM
Under the Jubilee Share Program, eligible employees of
Siemens AG and participating domestic Siemens companies
receive jubilee shares after having been continuously em-
ployed by the Company for  and  years (vesting period),
respectively. Generally, settlement of jubilee grants is in
shares. Jubilee shares are measured at fair value considering
biometrical factors. The fair value is determined as the market
price of Siemens shares at grant date less the present value of
dividends expected to be paid during the vesting period for
which the employees are not entitled to. The weighted aver-
age fair value of each jubilee share granted in fiscal  for
the th and the th anniversary is €. and €., respec-
tively, based on the number of shares granted. The weighted
average fair value of each jubilee share granted adjusted by
biometrical factors (considering fluctuation) is €. and
€., respectively, in fiscal . The weighted average fair
value of each jubilee share granted in fiscal  for the th
and the th anniversary is €. and €., respectively,
based on the number of shares granted. The weighted aver-
age fair value of each jubilee share granted adjusted by bio-
metrical factors (considering fluctuation) is €. and
€., respectively, in fiscal .
In fiscal  and , . million and . million jubilee
shares were granted; . million and . million were trans-
ferred, . million and . million forfeited, resulting in an
outstanding balance of . million and . million jubilee
shares as of September ,  and . Considering bio-
metrical factors, . million and . million jubilee shares
are expected to vest as of September ,  and .
STOCK OPTION PLAN
 Siemens Stock Option Plan
At the Annual Shareholders’ Meeting on February , ,
shareholders authorized Siemens AG to establish the 
Siemens Stock Option Plan, making available up to  million
options. The option grants were subject to a two-year vesting
period, after which they could be exercised for a period of up
to three years. The exercise price was equal to % of the ref-
erence price, which corresponded to the average opening
market price of Siemens AG during the five trading days pre-
ceding the date of the stock option grant. However, an option
could only be exercised if the trading price of the Company ’s
shares had reached a performance target which was equal to
the exercise price at least once during the life of the option.
The terms of the plan allowed 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 had been determined by the Managing Board in
each case as approved by the Supervisory Board. Compensa-
tion in cash was 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 issuance of stock options to members of the Managing
Board on or after October , , has been subject to the pro-
viso that the Supervisory Board could restrict the stock option
exercise in the event of extraordinary, unforeseen changes in
the market price of the Siemens share. Those restrictions
could 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 had not been adjusted for effects result-
ing from such restrictions. Reasonable estimates could not be
made until it had been probable that such adverse events oc-
cured. Since it had been not possible to reliably estimate the
fair value of those options at the grant date, compensation
costs had been determined based on the current intrinsic val-
ue of the option until the date at which the number of shares
to which a Board member was entitled to and the exercise
price was determinable. Upon that date, fair value had been
determined in accordance with the fair value recognition pro-
visions of IFRS , Share-Based Payment, based on an appropri-
ate fair value option pricing model.
The authority to distribute options under the  Siemens
Stock Option Plan expired on December , . Accordingly,
no further options were granted under this plan.
The exercise period for the outstanding options expired in fis-
cal . Hence, there were no options outstanding and exer-
cisable as of September , . Details on option exercise
activity and weighted average exercise prices for the years
ended September ,  and  are as follows: