Stock Options 2006
Stock Option Plan ESOP 2006+
Upon approval by the Supervisory Board of Telekom Austria, approximately 3.89 million options were issued on January 12, 2006 within the scope of the third tranche of the Stock Option Program ESOP 2006+, with an option life of up to March 2010 and an exercise price of EUR 18.91.
As in the past two tranches, ESOP 2006+ is oriented towards the Management Board and other key managers with a strong impact on the success of the company. It thus comprises about 280 employees within the Telekom Austria Group. In order to allocate and exercise the options of the third 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 receives 24 options and the remaining participating managers receive 28 options.
Members of the Management Board of Telekom Austria AG receive 120,000 options with a maximum individual investment of 5,000 shares. Members of the Management Board of subsidiaries receive 52,780 options with a maximum specified investment of 1,885 shares; the remaining participating managers, according to their classification group, receive a maximum of 23,492 options with a maximum specified investment of 839 shares.
Under ESOP 2006+ approximately 3.89 million options were issued, whereby one option – in achieving the exercise hurdle – entitles to the purchase of a share at the exercise price of EUR 18.91.
Main Facts
| Eligible for options: | up to 280 employees including the Management Board |
| Share investment: | upfront investment of up to 5,000 shares; 24 options per share held for the Management Board, 28 options per share held for the rest of those granted options |
| Exercise price: | EUR 18.91 |
| Exercise hurdle: | achievement of an EPS target determined by the Supervisory Board (profit per share) |
| Allocation: | January 12, 2006 - roughly 3.89 million options (subscription ratio 1:1) |
| Option life: | January 12, 2006 – March 31, 2010 / 4.25 years |
| Vesting period: | 14 months from allocation |
| Settlement: | Options served through cash compensation |
EPS Target Value as an Exercise Hurdle
Like for the first and second tranche, ESOP 2006+ continues to be oriented on the profitability of the company. Exercising the options that are allocated in 2006 requires that the EPS target value (earnings per share) determined by the Supervisory Board for the 2006 business year has been reached. If the EPS target value is not achieved for the 2006 business year, the options can still be exercised, provided that a certain EPS target value for the 2007 or 2008 business years determined by the Supervisory Board - which must at least be in line with the EPS target value for 2006 - is met.
Exercise Price, Target Value Achieved and Share Performance
The exercise price of EUR 18.91 is the average quoted closing price at the Vienna Stock Exchange during a period of 20 trading days ending two days before the granting of options (January 12, 2006). The options of the third tranche entitle those eligible to participate to acquire shares of Telekom Austria at an exercise price of EUR 18.91, however, these may only be exercised provided that the EPS target value has been reached.
If options are exercised, those eligible to receive 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 third tranche ESOP 2006+ was issued on January 12, 2006 and can be exercised – provided that the EPS target value has been reached – until the end of March 2010 (option life).
Concretely, the options can only be exercised once the EPS target value for 2006 has been determined or upon publication of the annual results for 2006 up to the end of option life at the end of March 2010. Consequently, there is a vesting period of about 14 months as of issuing the options.
According to the authorization by the Annual General Meeting, the company can choose to serve options by new shares or by repurchased own shares, whereby the general blackout periods for trading stocks shall be observed according to the Compliance Code of Telekom Austria AG. Instead of delivering stocks the company can also provide cash compensation.
News Release on the Occasion of the Publication of the Report on the Conditional Capital Increase
