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As described above, the calculation of the conversion price is based on the future share price and the
EPS performance value. Stating the conversion price thus requires us to predict both of these variables.
The uncertainty inherent in any forecast is further compounded in the case of the EPS performance
value by last year’s one-off charges, which have depressed the mg Group’s earnings. It is uncertain
whether the EPS performance value for tranches V and VI will exceed the base EPS value so that the
options can be exercised. For this reason, no estimate of the expected conversion price for these two
tranches has been given this year.
Employee Share Ownership Program
On April 2, 1998, the Annual Shareholders’ Meeting of mg technologies ag (still Metallgesellschaft
AG at the time) adopted a resolution to launch an employee share ownership program (ESOP)for
Group employees on the basis of an ‘authorized capital’. The Executive Board of mg was authorized,
with Supervisory Board approval, to increase mg’s capital stock by up to a7.669 million on or before
April 1, 2003 by issuing new bearer shares (‘staff shares’) on one or more occasions to employees of
mg and its affiliated companies resident in Germany as part of an employee share ownership program.
Employees can purchase no par value bearer shares of mg. Eligible participants are all mg Group
employees resident in Germany who have an unterminated employment or training contract at the
time they agree to participate in the program and at the time the two-year subscription period expires.
These employees may only participate and acquire stock-purchasing rights in their own name and
for their own account. The stock-purchasing rights may not be transferred or pledged. Once they
have agreed to participate, all eligible employees have the right to purchase either 50, 100 or 200 staff
shares two years after they agree to participate. Employees may participate once a year during a
four-week period following the Annual Shareholders’ Meeting of mg technologies ag (‘subscription
period’).
The purchase price for employees is calculated as the mean of the closing prices for mg shares in
Xetra trading on the Frankfurt Stock Exchange over the five trading days following the Annual
Shareholders’ Meeting of mg technologies ag in the year of the respective agreement to participate
in the employee share ownership program, and is fixed on the last of these five trading days, i.e.
the purchase price is fixed at the start of the respective employee share ownership program tranche,
two years prior to the exercise period.
Once the two-year waiting period has elapsed, employees participating in the employee share ownership
program may exercise their purchase rights within four weeks of the second trading day after
the second Annual Shareholders’ Meeting of mg technologies ag following the respective agreement
to participate (‘exercise period’).
During the exercise period, participants can choose to buy the shares and place them in a securities
account, to buy and then sell them immediately, or not to exercise their purchase rights at all. In order
to prevent employees from suffering losses if mg’s share price performs poorly, their agreement to
exercise their purchase rights is only valid (and is therefore merely conditional) if mg’s share price is
above the purchase price at the time the purchase right is exercised; the sell order is therefore limited.