ESOP 2007+ - Extension of Telekom Austria Group's Stock Option Program
Vienna, December 16, 2006: Telekom Austria (VSE:TKA; NYSE:TKA) today published a report about exercising the authorization for a conditional increase in the company’s share capital by up to 4.5 million shares.
Vienna, December 16, 2006: Telekom Austria (VSE:TKA; NYSE:TKA) today published a report about exercising the authorization for a conditional increase in the company’s share capital by up to 4.5 million shares.
This conditional capital increase will serve employee stock options within the scope of the fourth tranche of the current employee stock option program, ESOP 2007+, which should be issued in January 2007. This step requires prior approval by the Supervisory Board, which can be granted no sooner than two weeks after publication of the report published today. The conditional capital increase will only take place to the extent that the exercise of future options is served by new stocks. If the options exercised are served by means of repurchased own stocks or cash compensation, the decided increase in share capital will not be carried out.
As in the past three tranches, ESOP 2007+ is oriented towards the Management Board and other key managers with a strong impact on the success of the company. It thus comprises roughly 320 employees within the Telekom Austria Group. In order to allocate and exercise the options of the fourth tranche, those entitled to participate are required to hold an investment in company shares throughout the entire period: for every Telekom Austria share held the Management Board of Telekom Austria AG receives 25 options and the remaining participating managers receive 30 options.
Members of the Management Board of Telekom Austria AG receive 120,000 options with a maximum individual investment of 4,800 shares. Members of the Management Board of subsidiaries receive 70,020 options with a maximum individual investment of 2,334 shares; the remaining participating managers, according to their classification group, receive a maximum of 23,490 options with a maximum individual investment of 783 shares.
EPS Target Value as an Exercise Hurdle
Like for the past three tranches, ESOP 2007+ continues to be oriented on the profitability of the company. Exercising the options that are allocated in 2007 requires that the EPS (earnings per share) target value determined by the Supervisory Board for the 2007 business year has been reached. If the EPS target value is not reached for the 2007 business year, the options can still be exercised, provided that a certain EPS target value for the 2008 or 2009 business year determined by the Supervisory Board - which must at least be in line with the EPS target value for 2007 - is met.Exercise Price, Objectives Reached and Share Performance
The exercise price is the average closing price at the Vienna Stock Exchange during a period of 20 trading days ending two trading days before the allocation of options. Thus, those eligible to participate receive options in the fourth tranche that entitle them to acquire company shares at the exercise price; however, these may only be exercised provided that the EPS target value has been reached.If options are exercised, those entitled to the options can make a profit – before income tax - from the difference between the share price on the day the options are exercised and the exercise price, multiplied by the number of allocated option notes. Thus, the future share performance of Telekom Austria stock will have an important impact on the profit gained.
Option Life, Vesting Period and Settlement
The fourth tranche of ESOP 2007+ will be allocated upon approval by the Supervisory Board and can be exercised – provided that the EPS target value has been reached – by the end of May 2011 (option life). The options are subject to a 12-month blackout period from the time they were first allocated (vesting period). After expiration of the vesting period, and after the EPS value for 2007 has been determined (after publication of the results for the year 2007), the options can be exercised until the end of the option life - provided that the EPS target value has been reached - whereby the general blackout periods for trading stocks shall be observed according to the Compliance Code of Telekom Austria AG.According to the authorization by the Annual General Meeting, the company can choose to serve options by new shares or by repurchased own shares; instead of delivering stocks the company can also provide cash compensation.
Contact:
Peter E. Zydek
Head of Investor Relations
Telekom Austria Group
Tel.: +43 (0) 590591-19001
E-mail: peter.zydek@telekom.at
