D _ Consolidated Financial Statements part by considering the average historical and implied volatility of a shares. From 2018 onwards, the employees receive one bonus share selected group of peers. The expected life of one granted option was for three shares bought. For the year ended 31 December 2021, these calculated based on treating the three vesting tranches (one third in bonus shares had an equivalent value of € 33 mn (2020: € 28 mn). years 3, 4, and 5) as three separate awards. The following table provides the assumptions used in calculating the fair value of the M-unit options at grant date: The Allianz Group has other local share-based compensation plans, including share option and employee share purchase plans, none of Assumptions of Class M-Unit plan which, individually or in the aggregate, are material to the consolidated financial statements. 2021 2020 Weighted-average fair value of options granted € - 719.44 Assumptions: 41 _ Earnings per share Expected return (in years) - 3.84 Expected volatility % - 25.1 Expected dividend yield % - 11.1 Earnings per share are generally calculated by dividing net income Risk-free rate of return % - 0.6 attributable to shareholders by the weighted-average number of shares outstanding. According to IFRS, the net income attributable to shareholders was adjusted for net financial charges related to undated subordinated bonds classified as shareholders’ equity. For The number and weighted-average exercise price of the M-unit 2021, the Allianz Group recognized net financial charges of € 50 mn. options outstanding and exercisable are as follows: For the calculation of diluted earnings per share, the nominator and denominator are adjusted for the effects of potentially dilutive Reconciliation of outstanding M-unit options shares. These effects arise from various share-based compensation plans of the Allianz Group. 2021 2020 Weighted- Weighted- Earnings per share Number of average Number of average options exercise price options exercise price € mn € € 2021 2020 Outstanding as of 1 Net income attributable to shareholders – basic 6,560 6,807 January 148,726 11,993.37 153,400 12,019.69 Effect of potentially dilutive shares (42) (44) Granted - - 29,802 14,552.74 Net income attributable to shareholders – Exercised (41,017) 11,402.94 (27,775) 9,453.45 diluted 6,518 6,762 Forfeited (5,478) 13,382.08 (6,701) 11,781.75 Outstanding as of 31 Weighted-average number of shares outstanding – basic 410,924,074 412,927,486 December 102,231 13,480.70 148,726 11,993.37 Potentially dilutive shares 764,967 1,536,909 Exercisable as of 31 Weighted-average number of shares December - - - - outstanding – diluted 411,689,041 414,464,395 Basic earnings per share (€) 15.96 16.48 As of 31 December 2021, the aggregate intrinsic value of share Diluted earnings per share (€) 15.83 16.32 options outstanding was € 681 mn (2020: € 600 mn). As of 31 December 2021, the M-unit options outstanding have an exercise price between € 10,379.88 and € 15,657.76, and a weighted- 42 _ Other information average remaining contractual life of 1.93 years. The share options settled by delivery of PIMCO LLC shares are accounted for as equity-settled plans. Therefore, PIMCO LLC measures the total compensation expense to be recognized for the equity- As of 31 December 2021, the Allianz Group employed 155,411 (2020: settled shares based on their fair value as of the grant date. The total 150,269) people, thereof 39,720 (2020: 39,768) in Germany. The compensation expense is recognized over the vesting period. average total number of employees for the year ended During the year ended 31 December 2021, the Allianz Group 31 December 2021 was 152,840. recorded compensation expenses of € 10 mn (2020: € 14 mn) related to these share options. The Allianz Group offers Allianz SE shares in 41 countries to entitled employees at favorable conditions. The shares have a minimum holding period of three to five years. During the year ended 31 December 2021, the number of shares sold to employees under these plans was 676,669 (2020: 748,482). During the year ended 31 December 2021, employees were granted - (2020: 74,873) free Annual Report 2021 − Allianz Group 181