Besides the possibility of acquiring treasury shares as provided for under Agenda Item 11, a limited use of derivatives as well as the acquisition of treasury shares via multilateral trading facilities („MTFs“) shall be permitted.
For the Company, it may be advantageous to sell put options or purchase call options instead of directly acquiring shares in the Company. In addition, it can be advantageous to purchase shares by means of forward purchases. In doing so, the Management Board intends to use put and call options, as well as forward purchases (hereinafter also collectively referred to as “derivative contracts” or “derivatives”) only as a supplement to conventional share buy-backs. The acquisition of treasury shares by way of derivatives has to be carried out by a credit institution or an undertaking that fulfils the requirements of § 186 (5) sentence 1 AktG.
When selling put options, the Company grants the acquirer of the put options the right to sell Allianz shares to the Company at a price laid down in the put option (exercise price). As consideration, the Company receives an option premium, which corresponds to the value of the disposal right taking into account the exercise price, the term of the option and the volatility of the Allianz share. If the put option is exercised, the option premium paid by the acquirer of the put option reduces the overall consideration rendered by the Company for the acquisition of the share. It is economically favorable to the option holder to exercise the put option if the Allianz share price at the time of exercise is lower than the exercise price, because the put option holder can then sell the shares at the higher exercise price. From the Company’s point of view, the advantage of a share buy-back using put options is that the exercise price is fixed already on the day the option contract is concluded, while the liquidity does not flow until the exercise date. Moreover, due to the option premium collected, the overall acquisition price of the shares for the Company is lower than the share price at the time the option contract is concluded. If the option holder does not exercise the option because the share price at the exercise date is higher than the exercise price, the Company will not be able to acquire treasury shares in this way, but can still keep the collected option premium.
If a call option is purchased, the Company acquires the right to purchase, against payment of an option premium a predetermined number of shares at a predetermined price (exercise price) from the seller of the option, the “option writer”. It is economically favorable to the Company to exercise the call option if the Allianz share price is higher than the exercise price, because it can then purchase the shares from the option writer at the lower exercise price. In this way, the Company hedges itself against rising share prices. Furthermore, the Company’s liquidity is not affected, since the fixed acquisition price for the shares does not need to be paid until the call options are exercised.
In the case of a forward purchase, the Company agrees with the forward seller to purchase the shares on a set future date. The purchase is made according to a forward price that is determined when the forward purchase is concluded. On the date agreed, the Company pays the forward price to the forward seller, in return the forward seller delivers the shares.
The term of the derivatives must end on May 3, 2025, at the latest, and must be chosen in such way that the acquisition of Allianz shares upon the exercise of the options and the fulfilment of forward purchases will take place no later than May 3, 2025. The total volume of treasury share acquisitions via options as well as forward purchases is limited to 5% of the current share capital. In case the share capital decreased by the time of execution of the authorization, the decreased amount shall be decisive.
The acquisition price to be paid by the Company for the shares is the exercise price fixed in the particular put or call option or the forward price agreed for the forward purchase.
The price of an Allianz share to be paid when put or call options are exercised (exercise price), or the price to be paid for an Allianz share when a forward purchase is performed (forward price) may be higher or lower than the market price of Allianz shares when the put option is sold, the call option is acquired or the forward purchase is concluded. However, the exercise or forward price (excluding any incidental costs) may not exceed by more than 10% and not fall short of by more than 10%, the price determined for Company shares in the opening auction in the Xetra-trading system (or any comparable successor system of the Frankfurt Stock Exchange) on the day of the derivative contract.
The option premium agreed on by the Company when selling the put options or acquiring the call options may, in the case of put options, not be materially lower and, in the case of call options, not be materially higher than the theoretical market value of the respective options on the date the option contract is concluded. The theoretical market value must be determined using recognized finance-mathematical methods, with the calculation of such market value taking into account, among other things, the agreed exercise price. The discount on the theoretical market value determined using recognized finance-mathematical methods in case put options are sold, or the add-on in case call options are acquired, may, however, in no event exceed 5% of the determined theoretical market value of the options.
Similarly, the forward price agreed by the Company for forward purchases may not materially exceed the theoretical forward price determined according to recognized finance-mathematical methods, the calculation of which must take into account, among other things, the current stock exchange price and the term of the forward purchase.
The terms and conditions of the derivatives shall ensure that the shares to be delivered to the Company upon exercise of the options or fulfillment of forward purchases have previously been acquired in keeping with the legal principle of equal treatment at the share price in the Xetra-trading system (or any comparable successor system of the Frankfurt Stock Exchange) effective at the time the shares were acquired.
The determination of the option premium and the exercise price or forward price in the manner described above and the obligation to settle options and forward purchases only with shares that have previously been acquired in keeping with the legal principle of equal treatment via the stock exchange, rule out economic disadvantages for shareholders as a consequence of the acquisition of treasury shares via options or forward purchases. Since the Company receives or pays a fair market value, the shareholders not involved in the derivative transactions do not suffer any loss in value. This is comparable to the position of shareholders in the case of share buy-backs via the stock exchange, where in fact not all shareholders are able to sell shares to the Company. Both the regulations governing the structure of the derivatives and the regulations governing the shares suitable for delivery ensure that full account is also taken of the principle of equal treatment of shareholders in this form of acquisition.
Therefore, it is justified that a claim by shareholders to conclude such derivative contracts with the Company is excluded, in corresponding application of § 186 (3) sentence 4 AktG. By excluding subscription rights, the Company – unlike in an offer to all shareholders to purchase options or conclude forward purchase contracts – is in a position to conclude derivative contracts at short notice and is provided with the necessary flexibility to react quickly to market situations.
If shares are acquired using derivatives, shareholders shall have a right to offer their shares only insofar as the Company is obligated vis-à-vis the respective shareholder to purchase the relevant shares under the options or forward purchases. Otherwise, the use of derivatives in acquiring shares would not be possible, and thus the Company would not be able to generate the associated benefits. Having carefully weighed the interests of the shareholders and the interests of the Company, the Management Board considers the non-granting or restriction of the shareholders’ rights to offer shares to be justified and reasonable, given the advantages resulting from the use of derivative contracts for the Company.
It may be beneficial to the Company to not only acquire treasury shares via the stock exchange, but also via a MTF. MTFs are defined in § 2 (6) BörsG. By additionally using a buy-back via MTFs, the Company can gain access to a larger trading volume. The Company shall, as a rule, acquire treasury shares via those MTFs where it is evident that prices do not materially deviate from the stock exchange prices on the regulated market. These types of MTF are not materially different from a stock exchange in the formal sense. Acquisitions made via MTFs are subject to the same upper and lower price limits that apply to buy-backs performed via the stock exchange in accordance with the authorization proposed under Agenda Item 11; an acquisition made via MTFs shall likewise be linked to the stock exchange price determined on the Frankfurt Stock Exchange through the opening auction in the electronic trading system. Treasury shares acquired via MTFs shall count towards the upper limit on the acquisition of treasury shares. The utilization of treasury shares acquired via an MTF shall be subject to the same regulations that apply to the acquisition of treasury shares performed via the stock exchange in accordance with the authorization proposed under Agenda Item 11. This particularly applies to the utilization options set out in lit. d) (1) to (5) of this authorization, and to the exclusion of the shareholders’ subscription rights in the event of such a use. Details of the reasoning behind this exclusion of the subscription rights are set out in the Management Board’s report under Agenda Item 11.
The Management Board will report on the extent to which it has made use of the authorization at the respective next Annual General Meeting following such use .