55 Share-based remuneration

Share-based remuneration system for executives (2003 Stock Option Plan) 

On the basis of the 2003 Stock Option Plan (SOP) resolved by the Annual General Meeting on 5 June 2003, no further options will be granted under the previous 2000 plan. Options were granted under the 2003 SOP for the first time on 1 August 2003 (Tranche 2003). The second tranche (Tranche 2004) was granted to executives on 1 July 2004. The third – and last – tranche under this plan (Tranche 2005) was granted on 1 July 2005.

The 2003 SOP allows for a larger number of participants and a change in the percentage distributions of the stock options among the different groups of participants, in addition to an increase in the total stock options to be issued. The grant of stock options to members of the Board of Management and executives in Group management level 2 still requires participants to invest in shares of Deutsche Post AG. Participants in Group management levels 3 and 4 receive stock options without any requirement to buy shares.

The stock options can only be exercised within a two-year period following the expiration of a lock-up period of three years after the relevant grant date. The options can only be exercised if the absolute or the relative performance targets have been satisfied at the end of the lock-up period. Unexercised options lapse after the end of the exercise period.

The average price or average index performance during two periods (reference period = exercise price; performance period = final price) is compared to establish whether and to what extent the performance targets have been satisfied. The reference period is the 20 consecutive trading days prior to the grant date. The performance period is the last 60 trading days before the end of the lock-up period. The average price is calculated as the average closing price of Deutsche Post shares in Deutsche Börse AG’s Xetra trading system.

The absolute performance target depends on the performance of Deutsche Post shares during the performance period, and is deemed to have been satisfied if the increase in the price of Deutsche Post shares exceeds 10, 15, 20, or 25% or more (expressed as the final price divided by the exercise price). The relative performance target is tied to the performance of the shares versus the performance of the Dow Jones STOXX Total Return Index. The relative performance target is satisfied if the performance of Deutsche Post shares during the above-mentioned period matches the performance of the Index or outperforms it by at least 10%.

For every six options, a maximum of four may be earned on the basis of the absolute performance target, and a maximum of two on the basis of the relative performance target. The respective stock options of the tranche concerned lapse without compensation if the absolute or the relative performance targets are not satisfied by the end of the lock-up period. Each option entitles the holder either to purchase one share in the company or to receive a cash settlement in the amount of the difference between the issue price and the average price of the Deutsche Post shares during the last five trading days prior to the exercise date, at the respective Board member’s discretion.

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