The subscribed capital of Volkswagen AG is composed of no-par value bearer shares with 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 €0.1 million as a result of the capital increase implemented in the fiscal year due to the exercise of conversion rights from the eighth tranche of the stock option plan. Following the capital increase, the subscribed capital amounted to €1,191 million.
The subscribed capital is composed of 295,089,817 no-par value ordinary shares and 170,142,778 preferred shares.
Authorized capital of up to €110 million, expiring on May 2, 2016, was approved for the issue of new ordinary bearer shares or preferred shares based on the resolution by the Annual General Meeting on May 3, 2011.
Following the capital increase implemented during the previous year, there is still authorized capital of up to €179.4 million, resolved by the Extraordinary General Meeting on December 3, 2009 and expiring on December 2, 2014, to issue up to 70,095,502 new no-par value preferred bearer shares.
The Annual General Meeting on April 22, 2010 resolved to create contingent capital in the amount of up to €102.4 million expiring on April 21, 2015 that can be used to issue up to €5 billion in bonds with warrants and/or convertible bonds.
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CHANGE IN ORDINARY AND PREFERRED SHARES AND SUBSCRIBED CAPITAL | ||||||||
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Shares |
€ | ||||||
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2011 |
2010 |
2011 |
2010 | ||||
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Balance at January 1 |
465,188,345 |
400,243,677 |
1,190,882,163 |
1,024,623,813 | ||||
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Capital increase |
– |
64,904,498 |
– |
166,155,515 | ||||
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Stock option plan |
44,250 |
40,170 |
113,280 |
102,835 | ||||
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Balance at December 31 |
465,232,595 |
465,188,345 |
1,190,995,443 |
1,190,882,163 | ||||
The capital reserves comprise the share premium totaling €9,087 million (previous year: €9,084 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 €3 million in the fiscal year (previous year: also issuance of new preferred shares, offset against deferred taxes: €3,970 million) 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.
STOCK OPTION PLAN
The Board of Management, with the consent of the Supervisory Board, exercised the authorization granted by the Annual General Meeting on April 16, 2002 to implement a stock option plan.
The stock option plan entitled 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 was convertible into ten ordinary shares.
The convertible bonds were measured at fair value at the date of grant to the employees. The convertible bonds measured at fair value were recognized in personnel expenses and in equity.
Following the expiration of the first seven tranches, the conversion prices and periods for the eighth tranche are shown in the following table. The information is presented as data for the reporting period, although this tranche has now also expired.
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CONVERSION PRICES AND PERIODS FOR THE EIGHTH TRANCHE OF THE | ||||
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€ |
8th tranche | |||
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Base conversion price per share |
58.18 | |||
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Conversion price |
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as from July 8, 2008 |
64.00 | |||
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as from publication of the interim report as of September 30, 2008 |
66.91 | |||
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as from publication of the interim report as of September 30, 2009 |
69.82 | |||
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on completion of the capital increase on April 14, 2010 |
69.15* | |||
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as from publication of the interim report as of September 30, 2010 |
72.06* | |||
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Beginning of conversion period |
08.07.2008 | |||
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End of conversion period |
30.06.2011 | |||
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 | |||
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€ |
Rights |
Shares | |||
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Balance at Jan. 1, 2010 |
21,719.04 |
8,484 |
84,840 | |||
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In fiscal year |
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exercised |
10,283.52 |
4,017 |
40,170 | |||
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returned |
94.72 |
37 |
370 | |||
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Balance at Dec. 31, 2010 |
11,340.80 |
4,430 |
44,300 | |||
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Balance at Jan. 1, 2011 |
11,340.80 |
4,430 |
44,300 | |||
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In fiscal year |
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exercised |
11,328.00 |
4,425 |
44,250 | |||
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returned |
12.80 |
5 |
50 | |||
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Balance at Dec. 31, 2011 |
– |
– |
– |
MEASUREMENT OF CONVERTIBLE BONDS IN THE EIGHTH TRANCHE
Those convertible bonds granted after publication of the draft IFRS 2 on November 7, 2002 were measured in accordance with the transitional provisions of the draft Standard.
The fair value of the convertible bonds was 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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CONVERSION PRICES AND PERIODS FOR THE EIGHTH TRANCHE OF THE | ||
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8th tranche | |
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Volatility (%) |
27.50 | |
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Risk-free rate (%) |
3.77 | |
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Dividends (%) |
3.20 | |
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Fair value per convertible bond (€) |
63.49 | |
The fair value of the convertible bonds was recognized ratably as a personnel expense over the two-year vesting period. No personnel expense was recognized in fiscal years 2010 and 2011 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 | ||||
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€ |
Quantity | ||||
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Balance at Jan. 1, 2010 |
618.53 |
8,484 | ||||
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In fiscal year |
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granted |
– |
– | ||||
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returned |
698.20 |
37 | ||||
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exercised |
533.69 |
4,017 | ||||
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Balance at Dec. 31, 2010 |
720.60 |
4,430 | ||||
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of which available for exercise |
720.60 |
4,430 | ||||
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Balance at Jan. 1, 2011 |
720.60 |
4,430 | ||||
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In fiscal year |
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granted |
– |
– | ||||
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returned |
720.60 |
5 | ||||
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exercised |
720.60 |
4,425 | ||||
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Balance at Dec. 31, 2011 |
– |
– | ||||
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of which available for exercise |
– |
– | ||||
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 €1,715 million are eligible for distribution. The Board of Management and Supervisory Board will propose to the Annual General Meeting that a total dividend of €1,406 million, i.e. €3.00 per ordinary share and €3.06 per preferred share, be paid from the net retained profits. Shareholders are not entitled to a dividend payment until it has been resolved by the Annual General Meeting.
A dividend of €2.20 per ordinary share and €2.26 per preferred share was distributed in fiscal year 2011.
NONCONTROLLING INTERESTS
The noncontrolling interests in equity are attributable primarily to shareholders of Scania AB and MAN SE.
