sain t-gobain annu al report 2008 annual report

Grant stock options exercisable for shares representing up
to 3% of capital stock on the Meeting date, i.e. 11,214,726
options exercisable for the same number of shares (seventeenth
resolution). In the eighteenth resolution, the Board was
authorized to make stock grants representing up to 1% of the
capital stock on the Meeting date, i.e. grants of 3,738,242
shares. If this authorization were to be used, the stock grants
would be deducted from the shares available for the stock
option plan.
If these authorizations and earlier authorizations to grant
stock options (see Note 11) were used in full, this would potentially
have the effect of increasing the number of shares
outstanding to 565,551,958.
The Board of Directors used these authorizations to grant
3,673,000 stock options on November 22, 2007 (subsequently
reduced to 3,623,000 options) and 3,551,900 options on
November 20, 2008.
In addition, at the Shareholders’ Meeting of June 5, 2008, the
Board of Directors was authorized to issue equity warrants in
the event of a public tender offer for the Company’s shares, in
accordance with the French Act of March 31, 2006 on takeover
bids (fourteenth resolution). Under this authorization, the
Group may issue up to €375 million worth of stock (excluding
premiums), representing 93,750,000 shares.
Treasury stock
Saint-Gobain shares held by Compagnie de Saint-Gobain are
shown as a deduction from shareholders’ equity under “Treasury
stock” at historical cost. At December 31, 2008, 4,545,149
shares were held in treasury (December 31, 2007: 4,375,969;
December 31, 2006: 6,739,668).
No shares were directly purchased on the market in 2008 or
2007 (2006: 1,976,708 shares). A total of 115,490 shares were
sold upon exercise of stock options (2007: 2,460,265; 2006:
3,620,201). No shares were cancelled in 2008, 2007 or 2006.
The liquidity contract set up with Exane BNP Paribas on
November 16, 2007 was rolled over in 2008. This contract
complies with the Code of Ethics adopted by the Association
Française des Entreprises d’Investissement (AFEI) recognized by
the Autorité des Marchés Financiers (AMF). During 2008,
2,829,382 shares were purchased and 2,614,235 shares were
sold under the contract (2007: 243,277 shares purchased and
146,711 shares sold).
In view of their highly liquid nature, funds allocated to the
liquidity contract but not invested in Saint-Gobain stock are
classified as cash and cash equivalents.
NOTE 11
Stock option plans
Compagnie de Saint-Gobain has stock option plans available
to certain employees, and an employee stock purchase plan
referred to as the Group Savings Plan (“PEG”).
Stock options are exercisable for Saint-Gobain shares at a
price based on the average share price for the 20 trading days
preceding the grant date. Since 1999, no stock options have
been granted at a discount to the average price. Some plans
are performance stock option plans.
Since the November 2007 plan, all stock options are subject
to a four-year vesting period. Under earlier plans, the vesting
period was three years for non-residents and four years for
residents. Options must be exercised within ten years of the
date of grant. All rights to options are forfeited if the holder
leaves the Group, unless expressly agreed otherwise by both
the Chairman of Compagnie de Saint-Gobain and the
Appointments Committee of the Board of Directors.
All options granted between 1999 and 2002 were exercisable
for existing shares, while those granted between 2003 and
2007 were exercisable for new shares. For the November 20,
2008 plan, the origin of the shares will be determined at the
latest at the end of the four-year vesting period. If an option
holder were to die or any of the events provided for in the
General Tax Code were to occur during the four-year vesting
period, only options exercisable for new shares would vest.
151 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Saint-Gobain – Financial Report 2008