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Stock options plan


Prior to 2008, performance-related stock options were granted to members of the Board of Management and all executives. Options cannot be exercised during the first three years. We currently do not purchase own shares in connection with the stock option plan. No financing facilities exist for option rights or tax payable thereon. One option entitles the holder thereof to buy one Akzo Nobel N.V. common share with the nominal value of €2. The exercise price is the Euronext Amsterdam opening price on the first day that the AkzoNobel share was quoted ex-dividend. For American Depositary Receipts (ADRs) a total of 70,220 option rights, to exchange for Akzo Nobel N.V. shares, remain still outstanding at year-end (2007: 91,090).

Outstanding option rights common shares1

 

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Year of issue

Exercise price in € 

Outstanding per January 1, 2008

Exercised in 2008

Forfeited in 2008

Outstanding at December 31, 2008

Expiry date

 

 

 

 

 

 

 

Unconditional options:

 

 

 

 

 

2001

46.75

51,322

51,322

April 30, 2011

2002

46.53

225,940

20,220

2,640

203,080

April 25, 2009

2002

46.53

107,250

107,250

April 25, 2012

2003

19.51

176,991

6,940

2,640

167,411

April 22, 2010

2004

31.45

340,200

29,700

6,900

303,600

April 25, 2011

2005

31.98

570,545

113,145

5,113

452,287

April 24, 2012

 

 

1,472,248

170,005

17,293

1,284,950

 

 

 

 

 

 

 

 

Conditional options:

 

 

 

 

 

2006

46.46

470,536

6,576

463,960

April 27, 2013

2007

58.89

514,938

4,230

510,708

April 26, 2014

 

 

985,474

10,806

974,668

 

 

 

 

 

 

 

 

Total

 

2,457,722

170,005

28,099

2,259,618

 

1 Including the Board of Management.

 

 

 

 

Number and weighted average
exercise price share options

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Common shares

 

Number of options

Weighted average exercise price in €

 

 

 

Balance at January 1, 2007

4,116,510

37.07

Granted during the period

517,151

58.89

Forfeited during the period

(43,826)

38.89

Exercised during the period

(2,132,113)

36.99

Balance at December 31, 2007

2,457,722

41.70

 

 

 

Granted during the period

Forfeited during the period

(28,099)

39.49

Exercised during the period

(170,005)

33.11

Balance at December 31, 2008

2,259,618

42.37

 

 

 

Exercisable at December 31, 2008

1,284,950

34.33

The stock options are equity-settled. The employee receives the shares upon exercise of the options. The fair value is measured at grant date and amortized over the period during which the employees become unconditionally entitled to the options. The total cost in 2008 for stock options was €4 million (2007: €7 million).

For stock options, exercised during 2008, the weighted average of the actual share prices at date of exercise amounted to €51.31.

The expected value of performance-related stock options is based on the binominal option pricing model, using certain assumptions. These assumptions are used for these calculations only and do not necessarily represent an indication of management’s expectations of future developments. In addition, option valuation models require the input of highly subjective assumptions, including expected share price volatility. Our employee stock options have characteristics significantly different from those of traded options and changes in the subjective assumptions used for the calculation can materially affect the fair value estimate.

In 2008 no stock options were granted. The fair value and the assumptions used for the options granted in 2007 were as follows:

Key data of the options granted

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Common shares, in € 

 

 

2007

 

 

Fair value at measurement date

12.02

Share price

58.89

Exercise price

58.89

Expected share price volatility (in %)

20.80

Expected option life (in years)

5.00

Expected dividend yield (in %)

2.20

Risk-free interest rate (in %)

4.22

The expected volatility is based on the historic volatility (calculated based on the weighted average remaining term of the stock options), adjusted for any expected changes to future volatility. Stock options are granted under a service condition and a non-market performance condition. Such conditions are not taken into account in the grant date fair value measurement. There are no market conditions associated with the stock option grants.

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