24 Equity

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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 No amounts were withdrawn from the capital reserves.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

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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

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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

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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.