business plan for 2004 - EDP

2003 - Annual Report - EDP
during the period. The preparation and management of
this plan are the responsibility of the Remuneration
Committee, which can alter, suspend or terminate it at
any time.
At the end of 2003, the total number of options awarded
within the scope of this plan amounted to 1 330 000,
each option giving the right to purchase one share. Since
the plan came into effect, 296 492 options have been
cancelled because the term of office of the respective
beneficiaries ended and no options had been exercised
by the end of 2003. The number of shares required to
cover the possible exercise of all the options granted by
the end of 2003 is 1 033 508, while the number of shares
required to cover the options that can be exercised in
2003 was 136 525 at the beginning of the period and 561
192 at the end of the period. In practice, at the current
price of the EDP shares and at the purchase option
exercise price of the options exercisable in 2003, it can be
seen that the options are out-of-the-money, and it can
therefore be expected that they will be exercised only
when the share price rises above the exercise price, as
per the information provided in the following table.
Date of Nr. Nr. options Exercise Exercise Exercise Nr. options
Attrib. benef. attributed price start date end date conceived
29-Dec-99 5 350 000 3.43 29-Dec-01 29-Dec-04 213 475
31-Dec-01 7 490 000 2.95 31-Dec-03 31-Dec-06 65 333
31-Dec-02 9 490 000 2.00 31-Dec-04 31-Dec-07 17 684
EDP Group Senior Management Stock Option Plans
The purpose of this plan is to grant options to purchase
shares representing the EDP share capital to senior
managers during a period of five years, the total number
of options to be awarded not to exceed 16 250 000 (2)
during the period in question. The preparation and
management of this plan are the responsibility of the
Board of Directors, which can alter, suspend or terminate
it at any time.
At the end of 2003 the total number of options awarded
within the scope of this plan amounted to 1 936 250, each
option giving the right to purchase one share. Since the
plan came into effect, 57 500 options have been cancelled
because the term of office of the respective beneficiaries
ended and no options had been exercised by the end of
2003. The number of shares required to cover the possible
exercise of all the options granted by the end of 2003 is
1 878 750. In practice, at the current price of the EDP
shares and at the purchase option exercise price of the
options exercisable in 2003, it can be seen that the options
are out-of-the-money, and it can therefore be expected
that they will be exercised only when the share price rises
above the exercise price, as per the information provided
(2) Following the five-for-one sptock split.
in the following table.
Date of Nr. Nr. options Exercise Exercise Exercise Nr. options
Attrib. benef. attributed price start date end date conceived
29-Dec-99 142 1 936 250 3.43 29-Dec-01 29-Dec-04 57 500
General characteristics of the EDP Stock Option Plans
During the life of the plans and in the event of alteration
of the EDP share capital, the maximum limits of the
planned award of options may be adjusted, as may the
number of options already awarded, to ensure that the
size of the plans and/or the position of the option
beneficiaries remain substantially the same as prior to
the occurrence of the changes.
The life or maturity of the plan is five years following
the date of award of the options. The EDP share
purchase options may only be exercised in full or in part
during a period of three years as from the end of a twoyear
period following their award by the people covered
by the plan. There are no special incentives for the
exercise of the options.
The exercise price of the options awarded each year is
the average of the daily closing prices of the EDP shares
during the period of one year prior to the date defined
for the award of the options, weighted by the daily
volume of shares traded on Euronext Lisbon during the
period. The exercise price is fixed by the Board of
Directors and can in no case be lower than the par value
of the EDP shares.
Additionally, the exercise price may be corrected in the
event of: (a) changes of the share capital; (b) distribution
of dividends or other reserves to shareholders with a
significant effect on the EDP share price; and (c) other
events of a similar nature that, in keeping with the free
judgement of the EDP Board of Directors, warrant
correction of the said price.
>> 1.7 Transactions between the company and
its Corporate Officers, Qualified Shareholders
and Companies in a Controlling or Group
Relationship
EDP strictly observes legal rules in the matter of
transactions between directors and the company or with
companies with which there is control at group level.
During 2003 no transactions were undertaken between
the directors and the company or its subsidiaries.
As far as provision of services, procurement or financing
contracts with qualified shareholders are concerned, the
Board of Directors has determined that all transactions
of a value equal to or greater than one million euros for
services and supplies and
ten million euros for
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