Annual Report 2002 - Software AG

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(7) Equity:
Equity as of December 31, 2002, comprised the following:
EUR thousand
Subscribed capital as of Jan. 1, 2002 81,784
Options exercised 16
Capital reserves as of Jan. 1, 2002 0
Premium on capital increase due
to options exercised 132
Equity earned by the group
as of Jan. 1, 2002* 111,158
Dividend paid in 2002 -11,722
Consolidated net income 33,523
Translation differences
as of Jan. 1, 2002* 3,265
Change during fiscal 2002 -3,688
81,800
132
132,959
-423
Equity as of December 31, 2002 214,468
* Equity was reported according to DRS Standard 7 of the German
Accounting Standards Committee for the first time in 2002, i.e. all
material currency translation differences were taken into account.
In addition, contingent capital on December 31,
2002 comprised the following amounts:
1) Up to 3.357 million euros in up to 1,118,962 nopar
value shares, reserved to cover subscription
rights granted under the first share option plan
(Management Incentive Plan I, MIP I) for Executive
Board members and senior executives of
Software AG Group. In fiscal 2002, the beneficiaries
exercised a total of 5,269 subscription
rights (of which the Executive Board exercised
none). This increased subscribed capital by 16
thousand euros. As of December 31, 2002,
245,846 subscription rights had been granted under
MIP I to Executive Board members and
374,430 to senior executives. However, these
rights could not be exercised until after the balance
sheet date.
The options have a term of seven years from the
grant date. They can be exercised after a vesting
period of 24 months from the grant date, but not
earlier than 12 months after the initial public offering.
The options can only be exercised once a quarter,
following the publication of annual, half-yearly
or quarterly results.
The exercise price of an option corresponds to
the issue price minus a 20 percent discount, but not
less than 28.12 euros (DM 55.00). As the issue price
was 30 euros, the minimum price applied.
Options can only be exercised where the following
three conditions are met:
1.1) The Group’s income from operations must
have increased by 30 percent between
1997 and 1999.
1.2) The Group’s income from operations must
have amounted to at least 10 percent of
revenue in the year preceding exercise of
the option.
1.3) The share price must be higher than the
minimum option exercise price.
2) Up to 3 million euros in up to 1 million nopar
value shares, reserved to cover subscription
rights granted under the second share
option plan (Management Incentive Plan II,
MIP II) for Executive Board members and senior
executives employed by the Software AG
Group. None of the beneficiaries were permitted
to exercise subscription rights in fiscal
2002. At December 31, 2002, 100,000
subscription rights were granted to Executive
Board members, and 99,450 to senior executives,
under MIP II. These rights could not
be exercised until after the balance sheet
date.
The exercise price corresponds to the average
price in the XETRA closing auction on the