Current Company Stock Options: ###### Sharing 2007
Checked my company stock options today, they finally closed up above the reference price of 142.41 Euros. This means I will be recieving a bonus of at least 1.94 Euros when the program ends.
Facts about ###### Sharing 2007:
A reference price was set based on the average daily close of the last two months of 2007. This reference price is 142.41 Euros. We were entitled to purchase up to four shares at a 20% discount to this price, I purchased four. These shares have to be held for five years.
At the end of the holding period, we will recieve one free share for each of the shares we purchased which will give me eight shares. In addition to the free shares, our program includes a Stock Appreciation Right (SAR) agreement and an Indemnity Agreement.
The SAR requires us to give up any dividend and capital gains distributions for a bonus. The bonus is based on the average monthly closing price over the duration of the holding period. The closing price used is the price at close on the fourth business day of the month. If the closing price is less than the reference price, the reference price will be used. The bonus will be the difference between this average and the reference price multiplied by a factor of four.
The Indemnity Agreement will pay out the difference between the closing price at the end of the five year holding period and the subscription price paid (80% of the reference price) if the stock should lose value over the holding period.
These terms sounded like excuse enough to completely blow my portfolio allocation, so if I refer to my allocation, it does not include my company stock options. As I stand, I will make a 0.86% annualized return on my investment assuming the value of the company stock goes to 0 Euros from now till the end of the holding period (which is the worst case scenario due to the matching shares). This does not include the effect of taxes or fees as these are still big questions due to the company being listed only on the Paris Exchange.
In my networth statement, the value of stocks reflects only the latest closing price going into the average along with the exchange rate of that day for only the four shares I paid for, no bonus, indemnity, or matching shares are accounted for.
