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Allianz Annual Report 2013

Annual Report 2013    Allianz Group228 As of 31 December 2013, the M-options outstanding have an exer- cise price of between € 6,168.58 and €  17,158.10 and a weighted average remaining contractual life of 2.93 years. The shares settled by delivery of PIMCO LLC shares are accounted for as equity-settled plans by PIMCO LLC. Therefore, PIMCO LLC meas- ures the total compensation expense to be recognized for the equity- settled shares based upon their fair value as of the grant date. The total compensation expense is recognized over the vesting period. During the year ended 31 December 2013, the ­Allianz Group recorded a compensation expense of € 74 mn (2012: € 78 mn) related to these share options. ­­Allianz France share option plan ­­Allianz France, formerly AGF, awarded options on its former Holding (AGF S.A.) quoted shares to eligible AGF Group executives, managers of subsidiaries, as well as to some of the employees, whose perfor- mance justified grants. During the year ended 31 December 2007, ­Allianz acquired all of the remaining AGF shares from non-controlling interests in the con- text of the Tender Offer and Squeeze-out. Under the terms of an agree- ment (the “Liquidity Agreement”) between ­Allianz SE, AGF and the beneficiaries of the AGF share option plans 2003 – 2006 (AGF employees), ­Allianz has the right to purchase all AGF shares issued through the exercise of these AGF share option plans after the put period (where the beneficiaries have the right to sell to ­Allianz). The price payable by ­Allianz per AGF share is a cash consideration equal to the ­Allianz 20-day average share price prior to the date the right to buy or to sell is exercised, multiplied by a ratio representing the consideration pro- posed in the Tender Offer for each AGF share (€ 126.43) divided by the ­Allianz share price on 16 January 2007 (€ 155.72). This ratio is subject toadjustmentsincaseoftransactionsimpacting­AllianzorAGFshare capital or net equity. The cash settlement is based upon the initial offer proposed for each AGF share during the Tender Offer. As of 31 December 2007, all shares issued under these plans were fully vested and exercisable. Due to the change in settlement arising from the Liquidity Agreement, the ­Allianz Group accounts for the AGF share option plans as cash settled plans, as all AGF employees will receive cash for their AGF shares. Therefore, the ­Allianz Group recognizes any change in the fair value of the unexercised plans as a compensation expense. During the year ended 31 December 2013, the ­Allianz Group rec- ognized total compensation expenses related to the modified share option plans of € 2 mn (2012: € 7  mn). As of 31 December2013, the ­Allianz Group recorded a provision for these plans of € 8 mn (2012: € 9 mn). ­­­­Employee stock purchase plans The ­Allianz Group offers ­Allianz SE shares in 19 countries to qualified employees at favorable conditions. The shares have a minimum holding period of 1 to 5 years. During the year ended 31 December 2013, the number of shares sold to employees under these plans was 565,643 (2012: 627,118). During the year ended 31 December 2013, the ­Allianz Group recognized the difference between the issue price charged to the subsidiaries of the ­Allianz Group and the discounted price of the shares purchased by employees, of € 7  mn (2012: € 6  mn) as compensation expenses. Other share option and shareholding plans The ­Allianz Group has other local share-based compensation plans, including share option and employee share purchase plans, none of which, individually or in the aggregate, are material to the consoli- dated financial statements. During the year ended 31 December2013, the total expense recorded for these plans was € 4 mn (2012: € 2 mn). 49 – Restructuring plans As of 31 December 2013, the ­Allianz Group has provisions for restruc- turing resulting from a number of restructuring programs in various segments. These provisions for restructuring primarily include per- sonnel costs, which result from severance payments for employee terminations,andcontractterminationcosts,includingthoserelating to the termination of lease contracts that will arise in connection with the implementation of the respective initiatives. The following table shows the changes in the provisions for restructuring plans. Provisions for restructuring plans € mn 2013 2012 As of 1 January 304 280 New provisions 166 242 Additions to existing provisions 19 29 Release of provisions recognized in prior years (53) (55) Utilization of provisions via payments (104) (100) Utilization of provisions via transfers (116) (90) Foreign currency translation adjustments (2) (2) As of 31 December 214 304 The development of the restructuring provisions reflects the imple- mentation status of the restructuring initiatives. Based on the specific IFRS guidance, restructuring provisions are recognized prior to when they qualify to be recognized under the guidance for other types of provisions. In order to reflect the timely implementation of the various restructuring initiatives, restructuring provisions, as far as they are already “locked in”, are transferred to the provision type, which would have been used if a restructuring initiative were not in place. This applies for each single contract. For personnel costs, at the time

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