E_mg_GB_03_vorne-29_3_04

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120 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.
MANAGEMENT SHARE STRATEGY SPECIAL SECTION MANAGEMENT REPORT FINANCIAL STATEMENTS FURTHER INFORMATION Consolidated Balance Sheets • Statements of Income • Statements of Cash Flows • Statements of Changes in shareholders’ Equity • Fixed Assets Schedule • Notes • Independent Auditors’ Report If the right to purchase shares on this basis has not been exercised by the time the exercise period expires, the respective employees’ purchase rights expire and their initial down payment is reimbursed with interest. The employee share ownership program has run five times since 1998. Because of the performance of mg’s share price, participants have been unable to exercise any of the tranches to date. All participants have therefore been reimbursed their initial down payment with interest. The fifth and final tranche (2002 ESOP) will be exercised immediately after the 2004 Annual Shareholders’ Meeting. The purchase price for each of these options is a10.90. They will be sold with effect from and at the price quoted in the first intraday auction in XETRA trading on the Frankfurt Stock Exchange on the day on which the bank receives the exercise notice. Since the previous employee share ownership program expired in 2003, no new program has been launched. Tranches IV (2001 ESOP) and V (2002 ESOP) of the employee share ownership program have performed as follows: 2001 ESOP 2002 ESOP Number of participants registered in April 2001 and 2002 1,534 1,058 Equivalent number of shares 282,900 195,050 Balance at 9/30/2001 Participants at balance sheet date 1,526 n.a. Equivalent number of shares 281,450 n.a. Number of participants leaving mg 8 n.a. Percentage of participants leaving mg 0.5 n.a. Balance at 9/30/2002 Participants at balance sheet date 1,480 1,051 Equivalent number of shares 272,800 193,950 Number of participants leaving mg 54 7 Percentage of participants leaving mg 3.5 0.7 Balance at 12/31/2002 Participants at balance sheet date 1,430 1,051 Equivalent number of shares 263,350 193,950 Number of participants leaving mg 104 7 Percentage of participants leaving mg 6.8 0.7 Balance at 12/31/2003 Participants at balance sheet date n.a. 1,028 Equivalent number of shares n.a. 189,750 Number of participants leaving mg n.a. 30 Percentage of participants leaving mg n.a. 2.8 The fair value of these options is calculated at their grant date using a Black-Scholes model. The fair value of each option under the 2002 ESOP came to a2.78 at their grant date; the fair value of each option under the 2001 ESOP was a2.40. Total compensation expense recognized for the stock option program and the employee share ownership program amounted to a1.597 million in 2003 (three-month prior-year period: a851,000). The lower expense in relative terms compared to the short 2002 fiscal year is due to the fact that several executives left the stock option program last year. 121
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“2003 was a year of transition fo
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Consolidated Key Figures 2003 RESUL
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Creating freedom for action CONTENT
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MANAGEMENT SHARE STRATEGY SPECIAL S
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zation As the world’s population
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The pharmaceutical industry will co
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Milk Last year, over 160 million co
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The MODUL tablet press produced by
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For a technology-driven organizatio
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Key Figures for the mg Group RESULT
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E_mg_GB_03_vorne-29_3_04

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