24 Equity


The subscribed capital of Volkswagen AG is denominated in euros. The shares are no-par value bearer shares. Each share has a notional value of €2.56. As well as ordinary shares, there are preferred shares that entitle the bearer to a €0.06 higher dividend than ordinary shares, but do not carry voting rights.

The subscribed capital increased by a total of €0.2 million to €1,025 million due to the capital increase implemented in fiscal year 2009 by the exercise of conversion rights under the sixth, seventh and eighth tranche of the stock option plan.

The subscribed capital is composed of 295,005,397 no-par value ordinary shares and 105,238,280 preferred shares.

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CHANGE IN ORDINARY AND PREFERRED SHARES AND SUBSCRIBED CAPITAL

 

 

 

 

Shares

 

 

 

2009

 

2008

 

2009

 

2008

Balance at January 1

 

400,158,487

 

396,575,547

 

1,024,405,726

 

1,015,233,400

Issued shares
(stock option plan)

 

85,190

 

3,582,940

 

218,086

 

9,172,326

Balance at December 31

 

400,243,677

 

400,158,487

 

1,024,623,813

 

1,024,405,726

Based on the resolution by the Annual General Meeting on May 3, 2006, authorized capital of up to €90 million, expiring on May 2, 2011, was approved for the issue of new ordinary bearer shares.

There is also contingent capital of €7 million (originally €40 million) resulting from the resolution by the Annual General Meeting on April 16, 2002. This contingent capital increase will be implemented only to the extent that the holders of convertible bonds issued before April 15, 2007 exercise their conversion rights.

The capital reserves comprise the share premium of a total of €5,030 million from the capital increases, the share premium of €219 million from the issue of bonds with warrants and an amount of €107 million appropriated on the basis of the capital reduction implemented in 2006. Capital reserves rose by €4 million in fiscal year 2009 as a result of the share premium from the capital increase due to the exercise of convertible bonds under the stock option plan. No amounts were withdrawn from the capital reserves.

Based on the resolution by the Extraordinary General Meeting on December 3, 2009, authorized capital of up to €345.6 million, expiring on December 2, 2014, was approved for the issue of new preferred bearer shares. This resolution will only become effective on entry in the commercial register, which had not taken place as of the reporting date.

STOCK OPTION PLAN

The stock option plan entitles the optionees – the Board of Management, Group senior executives and management, as well as employees of Volkswagen AG covered by collective pay agreements – to purchase options on shares of Volkswagen AG by subscribing for convertible bonds at a price of €2.56 each. Each bond is convertible into ten ordinary shares.

The convertible bonds are measured at fair value at the date of grant to the employees. The convertible bonds measured at fair value are recognized in personnel expenses and in equity.

The conversion prices and periods following the expiration of the first five tranches are shown in the following table. The information on the sixth tranche is presented as data for the reporting period, although this tranche has now also expired.

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CONVERSION PRICES AND PERIODS FOR EACH TRANCHE OF THE STOCK OPTION PLAN

 

6th tranche

 

7th tranche

 

8th tranche

Base conversion price per share

 

38.68

 

37.99

 

58.18

Conversion price

 

 

 

 

 

 

as from July 10, 2006

 

42.55

 

 

 

 

as from publication of interim report
for Jan. – Sept. 2006

 

44.48

 

 

 

 

as from July 9, 2007

 

 

 

41.79

 

 

as from publication of interim report
for Jan. – Sept. 2007

 

46.42

 

43.69

 

 

as from July 8, 2008

 

 

 

 

 

64.00

as from publication of interim report
for Jan. – Sept. 2008

 

48.35

 

45.59

 

66.91

as from publication of interim report
for Jan. – Sept. 2009

 

 

 

47.49

 

69.82

as from publication of interim report
for Jan. – Sept. 2010

 

 

 

 

 

72.73

Beginning of conversion period

 

July 10, 2006

 

July 9, 2007

 

July 8, 2008

End of conversion period

 

July 2, 2009

 

July 1, 2010

 

June 30, 2011

Changes in the rights to stock options granted are shown in the following table:

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Nominal value
of convertible bonds

 

Number of conversion
rights

 

Number of potential ordinary shares

 

 

 

Rights

 

Shares

Balance at Jan. 1, 2008

 

964,648.96

 

376,816

 

3,768,160

In fiscal year

 

 

 

 

 

 

exercised

 

917,232.64

 

358,294

 

3,582,940

returned

 

3,875.84

 

1,514

 

15,140

Balance at Dec. 31, 2008

 

43,540.48

 

17,008

 

170,080

 

 

 

 

 

 

 

Balance at Jan. 1, 2009

 

43,540.48

 

17,008

 

170,080

In fiscal year

 

 

 

 

 

 

exercised

 

21,808.64

 

8,519

 

85,190

returned

 

12.80

 

5

 

50

Balance at Dec. 31, 2009

 

21,719.04

 

8,484

 

84,840

MEASUREMENT OF CONVERTIBLE BONDS IN THE SIXTH TO EIGHTH TRANCHES

Those convertible bonds granted after publication of the draft IFRS 2 on November 7, 2002 were measured in accordance with the transitional provisions of IFRS 2.

The fair value of the convertible bonds is estimated using a binomial option pricing model based on the issuance and conversion conditions described above. In terms of the optionees’ conversion behavior, it was assumed that they will convert when the share price is 50% higher than the conversion price. Historical and implied volatilities based on the expected remaining term of the conversion rights were used to estimate the fair value of the convertible bonds. The assumptions used and the fair value estimated are presented in the following table:

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6th tranche

 

7th tranche

 

8th tranche

Volatility (%)

 

27.50

 

27.50

 

27.50

Risk-free rate (%)

 

3.49

 

2.57

 

3.77

Dividends (%)

 

3.20

 

3.20

 

3.20

Fair value per convertible bond (€)

 

39.66

 

48.71

 

63.49

The fair value of the convertible bonds is recognized ratably as a personnel expense over the two-year vesting period. No personnel expense was recognized in fiscal year 2009 (previous year: €5 million) as the vesting period for the eighth tranche expired in 2008.

Changes in the number of convertible bonds in issue and their exercise prices are shown in the following table:

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Average
exercise price per convertible bond*

 

Convertible
bonds

 

 

 

Quantity

*

Conversion price per ten shares.

Balance at Jan. 1, 2008

 

603.70

 

376,816

In fiscal year

 

 

 

 

granted

 

 

returned

 

629.58

 

1,514

exercised

 

609.24

 

358,294

Balance at Dec. 31, 2008

 

556.27

 

17,008

of which available for exercise

 

556.27

 

17,008

 

 

 

 

 

Balance at Jan. 1, 2009

 

556.27

 

17,008

In fiscal year

 

 

 

 

granted

 

 

returned

 

669.10

 

5

exercised

 

521.41

 

8,519

Balance at Dec. 31, 2009

 

618.53

 

8,484

of which available for exercise

 

618.53

 

8,484

For 9,050 convertible bonds, the average conversion price increased by €256.10 in 2009.

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Exercise price per convertible bond*

 

Convertible
bonds

2009

 

 

Quantity

*

Conversion price per ten shares.

6th tranche

 

483.50

 

7th tranche

 

474.90

 

3,027

8th tranche

 

698.20

 

5,457

 

 

 

 

8,484

DIVIDEND PROPOSAL

In accordance with section 58(2) of the Aktiengesetz (AktG – German Stock Corporation Act), the dividend payment by Volkswagen AG is based on the net retained profits reported in the annual financial statements of Volkswagen AG. Based on the annual financial statements of Volkswagen AG, net retained profits of €884 million are eligible for distribution. The Board of Management and Supervisory Board will propose to the Annual General Meeting that a total dividend of €647 million, i.e. €1.60 per ordinary share and €1.66 per preferred share, be paid from the net retained profits. In the event that the number of no-par value shares carrying dividend rights for fiscal year 2009 changes in the period up to the Annual General Meeting, a proposed resolution that has been appropriately adapted will be presented to the Annual General Meeting and an unchanged €1.60 per ordinary share carrying dividend rights and €1.66 per preferred share carrying dividend rights will be distributed.

A dividend of €1.93 per ordinary share and €1.99 per preferred share were distributed in fiscal year 2009.

MINORITY INTERESTS

The minority interests in equity are attributable primarily to shareholders of Scania AB.

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