sain t-gobain annu al report 2008 annual report

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The decision to grant stock options is made by the Board
based on the recommendation of the Appointments
Committee. The members of this Committee in 2008
were Jean-Martin Folz, Chairman, Sylvia Jay, Jean-Cyril Spinetta
and, from June 5, Bernard Gautier.
In November 2008, options were granted to the Chairman,
the nine members of senior management and three categories
of grantees as follows:
• Category A grantees comprise the other members
of the Group Coordination Committee (29 persons)
• Category B comprises the main staff and line executives
in the Sectors and Delegations (1,322 persons)
• Category C consists of high-potential managers
and other management and non-management employees
who have performed exceptionally well (377 persons).
In all, 1,738 grantees participated in the November 2008 plan
(2007 plan: 1,698 grantees). The number of options granted
to persons in the above three categories was determined on
a case-by-case basis, according to the individual’s level
of responsibility and performance. A total of 3,551,900
options were granted (2007 plan: 3,673,000 options),
representing 0.9% of the capital at December 31, 2008.
Options granted under the 2003-2007 plans were exercisable
for new shares, while those granted under the 1997-2002 plans
were exercisable for existing shares purchased into treasury
for this purpose.
For the November 2008 plan, the Board decided that
the origin of the shares (new shares or treasury stock)
would be determined at the latest on the day preceding
the start of the exercise period. If any options were
to be exercised before the Board made its decision,
the grantees would receive new shares.
Since 1999, the option exercise price has been based on a
benchmark average price without any discount.
For the November 2008 options, the exercise price is €28.62.
The main terms of the November 2008 options are as follows:
• Life of the options: 10 years.
• Exercise period: from the fourth to the tenth anniversary
of the grant date.
• All rights to options are forfeited if the grantee leaves
the Group, unless expressly agreed otherwise by both
the Chief Executive Officer and the Appointments
Committee of the Board of Directors.
Specific vesting conditions apply to options granted to certain
categories of grantee. For example, as was the case previously
for half of the options granted to Coordination Committee
members, all or some of the options granted in November
2008 to members of senior management are subject
to performance conditions, as follows:
• None of the options granted to the Chairman
and the Chief Executive Officer will vest if 2011 return
on capital employed (“ROCE”) is less than 11%. If ROCE
is greater than 13%, all the options will vest and if it stands
at 11%, half of the options will vest, with the proportion
increasing on a straight-line basis between these two points.
• Half of the options granted to members of senior
management, Coordination Committee members
and other senior executives (176 persons) are subject
to the same vesting conditions, but with no options
vesting if 2011 ROCE is less than 11%.
In addition, pursuant to a decision by the Board of Directors
in 1997, members of senior management and category A
grantees (i.e. all Coordination Committee members),
who have held their position since 1997, are required to hold,
on a permanent basis, at least 5,200 registered Saint-Gobain
shares at December 31, 2008 and increase their holding by at
least 400 shares in each coming year, while the main category
B grantees must hold at least 400 registered Saint-Gobain
shares on a permanent basis.
There are no other stock option plans in progress and no other
options on the shares of French or foreign listed or unlisted
Group companies.
Lastly, in application of article L.225-185 of France’s Commercial
Code, the Board has decided – pursuant to a recommendation
by the Appointments Committee – that 50% of the net capital
gain (after deducting payroll taxes and other personal taxes)
realized by the Chairman and the Chief Executive Officer
on the sale of shares acquired upon exercise of the November
2008 options must be reinvested in Saint-Gobain shares
until such time as they leave office. This obligation will cease
Saint-Gobain - 2008 Annual Report