233 06 HIGHLIGHTS 08 LETTER FROM THE MANAGEMENT BOARD 12 THE COMPANY 38 SOFTWARE AG SHARE 46 CORPORATE GOVERNANCE 58 REPORT OF THE SUPERVISORY BOARD 68 GROUP MANAGEMENT REPORT 155 CONSOLIDATED FINANCIAL STATEMENTS 245 FURTHER INFORMATION CONSOLIDATED INCOME STATEMENT 156 STATEMENT OF COMPREHENSIVE INCOME 157 CONSOLIDATED BALANCE SHEET 158 CONSOLIDATED STATEMENT OF CASH FLOWS 160 CONSOLIDATED STATEMENT OF CHANGES 162 IN EQUITY NOTES TO THE CONSOLIDATED FINANCIAL 164 STATEMENTS RESPONSIBILITY STATEMENT 243 AUDITORS‘ REPORT 245 All rights outstanding under MIP III as of December 31, 2012 were exercisable. Because there is no obliga- tion to settle in cash, these rights are accounted for as an equity-settled stock option program pursuant to IFRS 2. Expenses of €0 thousand (2011: €5,268 thousand) were incurred under this plan during fiscal year 2012. Because all subscription rights were 100 percent vested as of December 31, 2012 and there is no obligation to settle in cash, no further expenses will be incurred under MIP III. Performance Phantom Share Plan A portion of the variable management remuneration is paid out as a medium-term component on the basis of a phantom share plan. As in the previous year, the portion accruing for fiscal year 2012 will be converted into virtual (phantom) shares on the basis of the average share price of Software AG stock in February 2013, less 10 percent. The resulting number of shares will become due in three identical tranches with terms of one, two and three years. On the due dates in March 2014 to 2016, the number of phantom shares will be multiplied by the then-applicable share price for February. This amount will be adjusted to reflect the amount (measured in percent) by which the shares outperform or underperform the TecDAX index and then paid to the members of the Management Board and officers. The beneficiaries will receive an amount per phantom share equal to the dividends paid to Software AG shareholders prior to payment of a phantom share tranche. Company officers may elect to let the Company dispose of the compensation that has become due after the waiting period for an unlimited period of time and thus continue to participate in the success of the Company. At the time of payment, the number of shares is multiplied by the average price of Software AG stock on the sixth to tenth trading days after publication of the financial results. The beneficiaries receive an amount per phantom share equal to the dividends paid to Software AG shareholders prior to payment of the phan- tom shares. This plan led to personnel expenses of €3,482 thousand (2011: €324 thousand) in fiscal year 2012. The provision for the rights outstanding under the phantom share plan amounted to €17,113 thousand (2011: €11,564 thousand) as of December 31, 2012.