NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 169 PIMCO LLC Class B Unit Purchase Plan AGF Group stock option plan Stock options have been offered as follows: Stock option and shareholding plans of subsidiaries When acquiring PIMCO Advisors L.P. (subsequently renamed ADAM LP) in 2000, Allianz caused ADAM LP to enter into a Class B Purchase Plan for the benefit of members of the management of Pacific Invest- ment Management Company LLC (the “Plan”). Under such Plan the plan participants acquire Class B equity units annually through 2004 up to a total of 150,000 units. The holders of the Class B units have rights to a 15 % priority claim on the adjusted operating profits of PIMCO LLC. Units issued under the Plan vest over 3 to 5 years and are sub- ject to repurchase by ADAM LP upon death, disability or termination of the participant. In addition, beginning in 2005, ADAM LP will have the right to repurchase, and the participants will have the right to cause ADAM LP to repurchase, a portion of the vested Class B unites each year. The repurchase price will be based upon the then deter- mined value of the Class B units being repurchased. In 2003, plan participants acquired 35,375 (2002: 30,000; 2001: 30,000) Class B units (5,375 of which were units being re-sold after having been forfeited in 2002 by a participant upon termination of employment). In accordance with the provisions of FAS 123, the va- lue of the units issued in 2003 as of the grant date was determined by the Group to be  ¤ 235 (2002: 178; 2001: 137) mn. The total num- ber of Class B units held by plan participants as of year end 2003 is 120,000. A compensation expense of  ¤ 172 mn was recognized in 2003 (2002:  ¤ 95 mn; 2001:  ¤ 59 mn) related to the Plan. AGF Group has awarded stock purchase options on AGF shares to eligible AGF Group executives and managers of subsidiaries, as well as to certain employees, whose performance justified grants. The pri- mary objective of the stock option plan is to encourage the retention of key personnel of AGF Group and link their compensation to the performance of AGF Group. These options are independent of the remuneration plans of the Allianz Group. AGF Group stock option activity during the periods indicated was as follows: All of the options granted have an exercise price of at least 85 % of the market price on the day of grant. The maximum term for these options is 8 years. The following table provides the weighted average fair value of options granted as of the grant date and the assump- tions used in calculating their fair value by application of the Black- Scholes option pricing model. Grant Vesting Options Options Options date period granted exercised expired/ years forfeited December 1994 and  February 1996 2  1,218,855 1,069,729 127,594 December 1996 2  798,993 537,318 115,146 September 1997,  October 1998 and  October 1999 5  2,748,213 699,279 178,973 October 2000 2  1,020,240 3,000 83,132 October 2001 2  1,043,317 – 64,288 September 2002 2  850,000 1,220 – September 2003 1  1,118,250 – – 2003 2002 2001 Weighted average fair value  of options granted ¤ 12.04 4.93 13.90 Weighted average assumptions: Risk free interest rate % 4.0 4.4 4.8 Expected volatility % 30.0 30.0 20.0 Dividend yield % 2.5 4.0 3.7 Number of  Weighted-average AGF shares exercise price ¤ Balance as of 12/31/2001 5,137,468 45.07 Granted 850,000 33.66 Exercised – 775,818 31.34 Forfeited/expired – 321,996 46.85 Balance as of 12/31/2002 4,889,654 45.15 Granted 1,118,250 42.64 Exercised – 81,028 23.34 Forfeited/expired – 8,687 23.39 Balance as of 12/31/2003 5,918,189 44.31