SOGEFI

 

Below is information on the stock option and phantom stock option plans outstanding in the Sogefi group:

 

Sogefi S.p.A. puts in place stock option plans for the Chief Executive Officer of the Company and for executives of the Company and its subsidiaries who hold positions of importance in the the Group, with the aim of rewarding their loyalty to the Group and living them an incentive to increase their commitment to improving the company performance and creating value in the long term.

The plans give the beneficiaries the right to exercise an option to subscribe newly issued SOGEFI shares at a determined price and within a predefined time frame. The regulations stipulate that an essential condition for the exercise of the option is the continuation of the employment relationship with the Company or with its subsidiaries at the date of exercise of the option, except in cases of retirement, permanent invalidity or death.

 

The stock option plans must first be approved by the Shareholders’ Meeting.

In 2010 the Board of Directors instituted the following stock option plan:  

• Stock Option Plan 2010 reserved for the Chief Executive Officer of the Company and executives of the Company and its subsidiaries for a maximum of 2,440,000 shares (2.10% of the share capital at December 31 2010) with a strike price of € 2.3012, exercisable between September 30 2010 and September 30 2020.

 

Except what is shown above and what is stated in the following paragraph “Phantom stock option plans”, the Group has not entered into any other transaction involving the purchase of goods or services payments based on shares or with any other instrument representing shares of capital and therefore it is not necessary to give the fair value of any such goods or services.

According to the provisions of accounting standard IFRS 2, only plans assigned after November 7 2002 should be taken into consideration (it should be noted that the Company has no plans introduced before that date) and thus the main features of the ones issued in 2004, 2005, 2006, 2007, 2008 and 2009 are given together with those issued in 2010:

• Stock Option Plan 2004 for a maximum of 1,880,000 ordinary shares (1.61% of the share capital at December 31 2010) at € 2.64 each exercisable every four months from September 30 2004 to September 30 2014;

• Stock Option 2005 reserved for executives of the Company and its subsidiaries for a maximum of 1,930,000 shares (1.66% of share capital at December 31 2010) with a strike price of € 3.87, exercisable from September 30 2005 to September 30 2015;

• Stock Option Plan 2006 reserved for executives of the Company and its subsidiaries for a maximum of 1,770,000 shares (1.52% of share capital at December 31 2010) with a strike price of € 5.87, exercisable from September 20 2006 to September 30 2016;

• Stock Option Plan 2007 reserved for executives of the foreign subsidiaries for a maximum of 715,000 shares (0.61% of share capital at December 31 2010) with an initial strike price of € 6.96, exercisable between September 30 2007 and September 30 2017. On April 22 2008, on the strength of the powers assigned by the Shareholders’ Meeting, the Board of Directors amended the strike price from € 6.96 to € 5.78 to take into account the extraordinary part of the dividend distributed by the Shareholders’ Meeting held on that same date;

• Stock Option Plan 2008 reserved for executives of the foreign subsidiaries for a maximum of 875,000 shares (0.75% of share capital at December 31 2010) with a strike price of € 2.1045, exercisable from September 30 2008 to September 30 2018;

• Stock Option Plan 2009 reserved for executives of the Company and its subsidiaries for a maximum of 2,335,000 shares (2.01% of share capital at December 31 2010) with a strike price of € 1.0371, exercisable from September 30 2009 to September 30 2019;

• Extraordinary Stock Option Plan 2009 reserved for individuals who were already beneficiaries of Phantom Stock Option Plans 2007 and 2008, who are still employees of the Company or of its subsidiaries, provided they renounce the rights resulting from the above-mentioned phantom stock option plans, for a maximum of 1,015,000 shares (equal to 0.87% of the share capital at December 31 2010), of which 475,000 (Tranche I options) with a strike price of € 5.9054, exercisable from June 30 2009 to September 30 2017 and 540,000 (Tranche II options) with a strike price of € 2.1045, exercisable from June 30 2009 and September 30 2018.

 

The fair value of the options assigned during 2010 was calculated, at the time of assignation, using the Black-Scholes method and comes to a total of € 742 thousand. The notional cost of these attributable to the year 2010 for the plans outstanding was € 540 thousand, which was recognized to the income statement in the item “Other non-operating costs (revenues)”.

 

The following chart shows the total number of options outstanding and refers to the plans of the period 2004-2010 with their average strike prices.

	2010		2009
	No. of Options	Average strike price	No. of Options	Average strike price
Not exercised/not exercisable at the start of the year	6,509,400	3.18	3,947,600	4.55
Assigned during the year	2,440,000	2.30	3,350,000	1.90
Cancelled during the year	(419,000)	3.23	(778,200)	4.58
Exercised during the year	(286,000)	1.04	--	--
Not exercised/not exercisable at the end of the year	8,244,400	3.18	6,509,400	3.18
Exercisable at the end of the year	3,964,900	4.12	2,884,300	4.48

 

The line “Not exercised/not exercisable at the end of the year” refers to the total amount of the options net of those exercised or cancelled in the year under examination or in previous years.

The line “Exercisable at the end of the year” refers to the total amount of the options which had vested at the end of the year but had not yet been exercised.

The following chart shows the breakdown of the number of options exercisable at December 31 2010:

 

	Plans 2004 - 2009
No. of options remaining and exercisable at December 31 2009	2,884,300
Options which vested in the year	1,734,800
Options exercised in the year	(368,200)
Options cancelled in the year	(286,000)
No. of options remaining and exercisable at December 31 2010	3,964,900

 

Phantom stock option plans

Phantom stock option plans, unlike traditional stock option plans, do not involve assignation of a right to subscribe or to purchase a share, but involve paying to beneficiaries an extraordinary amount in cash of a variable nature equal to the difference between the value of the Sogefi share in the vesting period of the option and the value of the Sogefi share at the moment of assignation of the option.

 

In 2009, as explained in the paragraph “Stock option plans” the parent company gave the beneficiaries of Phantom Stock Option plans 2007 and 2008 the right to give up the options of the above-mentioned plans and take part in Extraordinary Stock Option Plan 2009.

 

Below are the main features of the plans outstanding:

• Phantom Stock Option Plan 2007 reserved for the Chief Executive, executives and staff of the Parent Company, as well as executives of the Italian subsidiaries, for a maximum of 1,760,000 options with an initial award value of € 7,0854 adjusted during the year 2008 to € 5.9054, exercisable from September 30 2007 to September 30 2017. Following the reorganization of the plan as described above, 475,000 options were given up;

• Phantom Stock Option Plan 2008 reserved for the Chief Executive and executives of the Parent Company, as well as executives of the Italian subsidiaries, for a maximum of 1,700,000 options with an award value of € 2.1045, exercisable from September 30 2008 to September 30 2018. Following the reorganization of the plan as described above, 540,000 options were given up.

 

The chart below shows the breakdown of the number of phantom stock options at December 31 2010:

 

	2010
Not exercised/not exercisable at the start of the year	1,830,000
Awarded during the year	--
Cancelled during the year	--
Exercised during the year	--
Not exercised/not exercisable at the end of the year	1,830,000
Exercisable at the end of the year	1,409,400

 

 

 

KOS

 

Below is information on the Stock Option Plans outstanding in the KOS group: