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HTC Board of Directors Ratified to Amend the 2019 Rules for the Issuance and Subscription of Employee Stock Options
1.Date of occurrence of the event:2019/05/10
2.Date of the original public announcement and reporting:2019/03/01
3.Summary of the content originally publicly announced and reported:
The Board of Directors resolved to issue the 2019 Employee Stock Options
4.Reason for, and major content of, the change:
(1) In order to meet the request of the competent authority, the 2019
    Rules for the Issuance and Subscription of Employee Stock Options
    needs to be partially amended.
(2) The revised Rules are shown in below:

1. Purpose of Issue
   To attract and retain important talent necessary for the company's
   development, and to increase employees' commitment and dedication
   to the company, so as to jointly benefit the company and its
   shareholders, the Rules for the Issuance and Subscription of
   Employee Stock Options ("Rules") are adopted in accordance with
   Article 28-3 of the Securities and Exchange Act and the Regulations
   Governing the Offering and Issuance of Securities by Securities
   Issuers.
2. Issue Period
   The options will be issued within one year from the date of receipt
   of notice of effective registration from the competent authority.
   The issue may be done in a single or multiple installments, as
   actually needed. The chairman is authorized to set the actual
   issue date.
3. Performance Method
   The method for the performance of the options is as follows:
   HTC will issue new shares in dematerialized form by book-entry
   transfer; furthermore, it will first issue the stock and then
   subsequently carry out registration of the change to its amount
   of registered capital, pursuant to the proviso of Article 161,
   paragraph 1 of the Company Act.
4. Eligibility Conditions for Stock Option Holders
   (1) Eligibility is limited to those who are full-time formal
       employees in the organizations of HTC and its domestic and
       overseas subsidiaries and branches on the share subscription
       record date ("subsidiary" means an invested company in which
       HTC directly or indirectly holds more than 50 percent of the
       voting rights, and over which it has controlling power, in
       compliance with Securities and Futures Bureau Letter No.
       Financial-Supervisory-Securities-I- 1070121068 of 27 December 2018.
   (2) The determination of employees who are actually eligible for
       stock options and the numbers of stock options for which they
       are eligible will be decided by the chairman, subject to approval
       by the board of directors, with consideration to factors such as
       work performance, overall contribution, special merit, or job level.
       However, the compensation committee must first give approval for
       an employee who is also a director or a managerial officer.
   (3) The limit on the cumulative quantity of stock options that HTC
       allocates to any single employee will be determined in accordance
       with the relevant provisions of Articles 60-9 of the Regulations
       Governing the Offering and Issuance of Securities by Securities
       Issuers (the "Offering Regulations").
5. Total Issue Quantity
   The total quantity of the current issue is 20,000 units, which may
   be issued in a single or multiple installments. Each stock option
   unit may be used to purchase 1,000 shares of common stock of HTC.
   The total number of new shares of common stock that must be issued for
   the purpose of exercise of the options is 20,000,000 shares.
6. Eligibility Conditions for Share Purchase
   (1) Share purchase price: The share purchase price shall be the closing
       price of HTC common stock on the date of issuance of the employee
       stock options.
   (2) Option rights period
       1. After 2 full years have elapsed from the time the stock option
          holder is allocated the employee stock options, the option
          holder may exercise the share purchase rights according to the
          schedule set out below. The duration of the stock options is
          10 years. The stock options and rights and interests therein
          may not be transferred, pledged, given to others, or disposed
          in any other manner, except by succession. After the expiration
          of the duration of the employee stock options, any unexercised
          options shall be deemed forfeited, and the stock option holder
          may not make any further claim to share purchase rights.
          Percentage of share purchase rights that may be exercised
          according to the time elapsed since the allocation of the stock
          options (cumulative):
          Two full years have elapsed: 60%
          Three full years have elapsed: 100%
       2. If, after the allocation of employee stock options by the company,
          the stock option holder breaches any provision of the HTC work
          rules or employee handbook and disciplinary measures of a major
          demerit or higher penalty are determined upon, HTC shall be
          entitled to withdraw and cancel any stock options that are not
          yet exercisable and any stock options that are already exercisable
          but have not yet been exercised.
   (3) Type of shares purchasable: HTC common stock.
   (4) When a stock option holder leaves employment for any reason,
       the following measures shall be followed during the duration of
       the stock options:
       1. Voluntary departure from employment
          For stock options that are already exercisable under the
          provisions of paragraph (2) of this Article, the share purchase
          rights may be exercised within 3 months from the date of departure
           (but not beyond the duration of the stock options); if this
          happens to fall within a period during which, as specified under
          these Rules, exercise of the stock options is prohibited, the
          exercise period shall, from the date the options may be exercised,
          be extended by the number of days that they could not be exercised.
          If the share purchase rights are not exercised within the aforesaid
          period, the rights shall be deemed forfeited. For stock options
          that have not yet become exercisable, the share purchase rights
          shall be deemed forfeited from the date of departure from
          employment, and HTC shall be entitled to withdraw and cancel
          the stock options already allocated to the stock option holder.
       2. Dismissal from employment
          If a stock option holder breaches any provision of the HTC work
          rules or employee handbook and a disposition of dismissal is
          determined upon, the share purchase rights under any stock
          options already allocated to the employee, shall, from the date
          of dismissal, be deemed forfeited.
       3. Retirement
          For stock options that are already exercisable under the
          provisions of paragraph (2) of this Article, the share purchase
          rights may be exercised during the effective duration of the
          stock options. However, if there is any breach of non-competition
          restrictions, HTC shall be entitled to withdraw and cancel the
          stock options already exercisable. For stock options that have
          not yet become exercisable, the share purchase rights shall be
          deemed forfeited from the date of retirement.
       4. Death
          For stock options that have already been allocated, upon the
          death of the stock option holder, the heir may exercise all of
          the share purchase rights. The heir shall remain subject to
          the restriction that he or she may exercise the stock options
          only after two full years have elapsed from the time of
          allocation, but apart from that restriction, the heir shall be
          free from the restrictions in paragraph (2) of this article
          regarding the schedule imposed on the percentages of exercisable
          stock rights. The share purchase rights may be exercised only
          after 2 full years have elapsed from the date of death or the
          date of allocation of the stock options (whichever date is later).
          Anyone entitled by statutory succession to share purchase rights
          under the options shall, after the occurrence of the fact,
          complete the statutorily required procedures and provide relevant
          documentary evidence in accordance with the laws and regulations
          governing succession of the stock option holder's home country
          and the provisions of the Regulations Governing the
          Administration of Shareholder Services of Public Companies
          concerning transfer by inheritance. Only after these procedures
          are complete may an application be submitted for the exercise
          of the purchase rights to which the heir shall succeed. However,
          no application and purchase procedures may be done beyond the
          effective duration of the stock options.
       5. Sufferers of disability due to an occupational accident
          In the event of inability to continue in employment as a result
          of a physical disability due to an occupational accident, for
          stock options that are already exercisable under the provisions
          of paragraph (2) of this Article, the share purchase rights may
          be exercised during the effective duration of the stock options.
          For stock options that have not yet become exercisable, the
          restrictions in paragraph (2) of this article regarding the
          schedule imposed on the percentages of exercisable stock rights
          shall continue to apply, and the rights shall be exercisable only
          during the effective duration of the stock options.
       6. Leave without pay
          In the case of any option holder who has received approval from
          HTC to take leave without pay, when calculating whether that
          option holder has satisfied the time period specified in
          paragraph (2), subparagraph 1 of this Article, (i.e. whether
          2 full years or 3 full years have elapsed since the date of
          allocation of the employee stock options), the period of the
          leave without pay may not be counted. The period specified in
          paragraph (2), subparagraph 1 of this Article shall be extended
          by the period of the leave without pay. Additionally, the
          effective duration of the options (10 years from the date of
          issue by HTC) shall not be extended on grounds of leave without
          pay. If the stock option holder, as a result of taking leave
          without pay, fails or is unable to exercise the option rights
          within the effective duration of the options, the option holder
          is deemed to have forfeited the option rights.
       7. Severance
          For stock options that are already exercisable under the
          provisions of paragraph (2) of this Article, the share
          purchase rights may be exercised within 3 months from the
          effective date of severance (but not beyond the duration of
          the stock options); if this happens to fall within a period
          during which, as specified under these Rules, exercise of the
          stock options is prohibited, the exercise period shall, from the
          date the options may be exercised, be extended by the number
          of days that they could not be exercised. If the share purchase
          rights are not exercised within the aforesaid period, the rights
          shall be deemed forfeited. For stock options that have not yet
          become exercisable, the share purchase rights shall be deemed
          forfeited from the effective date of severance.
       8. Job position transfer to an affiliate
          If due to HTC's operational needs, HTC decides that it is
          necessary to transfer a holder of HTC stock options to a
          position at an HTC affiliate, the transfer shall have no
          effect on the rights and obligations in connection with the
          stock options already allocated.
       9. When a stock option holder leaves employment for a reason other
          than those listed above or when some adjustment must be made
          pursuant to laws or regulations in the course of actual
          execution of the measures above, the chairman is authorized
          to adopt or adjust relevant measures on an ad hoc basis according
          to the actual circumstances.
       10. If the stock option holder or heir is unable to exercise the
           option rights within the time period set out above, the holder
           or heir is deemed to have forfeited the share purchase rights.
   (5) Method for handling of stock options of which the share purchase
       rights have been forfeited.
       When the share purchase rights of a stock option are forfeited,
       HTC shall cancel the option and shall not reissue it.
7. Adjustment of the share purchase price
   (1) If, after the stock options are issued, except for the Company
       issuing new common shares due to the exercise of conversion
       rights or subscription rights of equity-linked instruments, or
       employee bonuses, after issuing employee stock options, the
       subscription price per share will be adjusted when then number
       of the Company's outstanding common shares is changed under certain
       situations, (including private placement), including: the increase
       in common shares and the decrease in common shares due to
       non-deposits due to the cancellation of treasury shares (including
       capital reduction to cover losses and cash reduction), the purchase
       price may be adjusted by the formula set out below (calculated to
       the 10th of a New Taiwan Dollar, with sums below that rounded off).
       However, if the adjustment of the purchase price might have an
       adverse effect on the tax burden of the stock option holder,
       HTC does not bear any liability to the stock option holder in
       connection with the decision to adjust the purchase price.
       Adjusted purchase price = purchase price before adjustment ×
       ﹝number of shares already issued + (amount paid per share × number
       of new shares issued) / market price per share ﹞/ (number of
       shares already issued + number of new shares issued)
       1."Number of shares already issued" means the total number of common
          shares already issued, minus treasury shares that HTC has bought
          back but has not yet canceled or transferred.
       2.In the case of bonus shares or a stock split, the "amount paid per
         share" is zero.
       3.In the event that the adjusted purchase price is higher than the
         purchase price before adjustment, the adjustment will not be made.
       4.When new shares are issued in connection with a merger,
         consolidation, or transfer of shares from another company,
         the "amount paid per share" for the new capital increase shares
         shall be the average closing price of HTC common shares over the
         sequential 30 business days commencing from the day that is the
         45 business day prior to the record date of such merger.
       5.The determination of the market price per share shall be done
         by calculating the simple arithmetic mean of the closing price
         of the common stock for either the 1, 3, or 5 business days prior
         to the ex-rights record date, the price determination record date,
         or the stock split record date.
   (2) If, after the employees stock options are issued, if the ratio of
       the cash dividend per share of the Company's common shares to the
       current share price of the Company is more than 1.5%, the purchase
       price will be adjusted by the formula set out below (calculated
       to the 10th of a New Taiwan Dollar, with sums below that rounded off).
       Adjusted purchase price per share = purchase price per share before
       adjustment × [1-(Cash dividend per share / Current share price)]
       The above-mentioned current share price shall be the simple
       arithmetic average closing prices of the Company's common shares
       over the period of one, three or five business day(s) prior to the
       date of the Company's making public announcements of a record date
       for determination of shareholders entitled to receive annual
       dividends distributions.
   (3) If, after the stock options are issued, there is any capital
       reduction resulting in a decrease in the shares of common stock,
       from a cause other than cancellation of treasury shares, the
       purchase price will be adjusted by the formula set out below
       (calculated to the 10th of a New Taiwan Dollar, with sums below
       that rounded off).
       When capital reduction for loss compensation:
       Exercise price after adjustment = exercise price before adjustment
       × (Number of shares already issued/shares issued after capital
       reduction)
       When cash capital reduction:
       Exercise price after adjustment = (exercise price before adjustment
       -the amount of money returned per share) × (Number of shares already
        issued/shares issued after capital reduction)
8. Procedures for the exercise of option rights
   (1) Except during a book closure period as provided by law or regulation
       and except as provided in paragraph (4) of this Article, the stock
       option holder may exercise share purchase rights in accordance with
       these Rules, and may complete a share purchase request and submit
       its application to HTC.
   (2) After processing the purchase request, HTC will notify the stock
       option holder to pay the share price at a designated bank within
       the time limit. If the price is not paid within the time limit,
       the holder is deemed to have voluntarily forfeited the share
       purchase rights in that request, and the portion requested but not
       paid for shall be deemed not to have been purchased, and the stock
       option holder will need to submit a new request for purchase.
       Furthermore, once a stock option holder has made a payment for a
       share purchase, the payment may not be canceled.
   (3) Once HTC has verified that the share price has been fully received,
       it will instruct HTC's shareholder services agent to enter the
       number of shares purchased by the employee and the employee's name
       into HTC's shareholder register, and to transfer within 5 business
       days, by book-entry through the central depository, the shares of
       new common stock issued by HTC. Those shares of common stock shall
       be listed for trading from the date that they are delivered to the
       stock option holder.
   (4) A stock option holder may, within the scope and time limits set out
       in Article 6, paragraph (2) of these Rules, complete a share
       purchase request and submit the application to HTC's shareholder
       services agent, except during the following periods, during which
       the option holder is prohibited from exercising option rights:
       1.The statutory book closure period before the annual shareholder
         meeting of the given fiscal year.
       2.When HTC arranges a book closure date with the Taiwan Stock
         Exchange for an issue of bonus shares, cash dividends, or a
         cash capital increase rights issue: the period from 15 business
         days before the book closure date until the record date of the
         rights distribution.
       3.The period from the record date of a capital reduction until the
         day before the commencement of trading of the replacement shares
         issued in connection with the capital reduction.
   (5) Within 15 days after the end of each quarter, HTC shall publicly
       announce the number of shares delivered for the exercise of employee
       stock options in the preceding quarter. And at least once each
       quarter, it shall apply to the competent authority for company
       registration to make an amendment to its registered capital to
       reflect the shares that have been purchased under the options.
   (6) If a stock option holder referred to in paragraphs (1) to (4)
       (hereinabove is an employee who has a household registration in
       the mainland area, the exercise of option rights shall be performed
       on the option holder's behalf by the option holder's agent or
       representative in the Taiwan area.
9. Rights and obligations after share purchase:
   (1) The rights and obligations pertaining to common stock shares
       delivered by HTC under these Rules are identical to those of
       other HTC common stock. The stock purchased by stock option
       holders under these Rules, and tax burdens arising in connection
       with any transaction thereof, shall without exception be subject
       to and handled in compliance with the then-current tax regulations
       adopted by ROC tax authorities and the tax regulations of the places
       of registration of the overseas subsidiaries where the options are
       allocated and the countries where the employees are located.
   (2) If an employee who has a household registration in the mainland
       area holds common shares delivered by HTC under these Rules, the
       voting rights of those shares, unless otherwise provided by
       law or regulation, may not be exercised in any matter that would
       involve substantial control or influence over the operations or
       management of the company, and the rights may be exercised only
       through its Taiwan agent or representative who attends a shareholder
       meeting on its behalf.
10. Other important stipulations
   (1) Confidentiality: after a stock option holder has been allocated
       stock options, the option holder shall comply with confidentiality
       requirements, and except as required by law or regulation or by
       demand of a competent authority, may not disclose any information
       related to the content or quantity of the stock options allocated.
       Any violation will be handled pursuant to Article 6, paragraph (2),
       subparagraph 2 of these Rules.
   (2) These Rules shall become effective after they have been passed
       by a majority of the directors present at a board of directors
       meeting attended by at least two-thirds of the directors, and
       have been reported to and approved by the competent authority.
       The same shall apply in the event of any amendment to these Rules
       before they are actually issued. Any amendments request by competent
       authority, the Chairman is authorized to amend the Rules and become
       effective upon the Board of Directors' approval.
   (3) The limit on the quantity of stock options issued by HTC shall be
       determined in accordance with Article 60-8 and other applicable
       provisions of the Regulations Governing the Offering and Issuance
       of Securities by Securities Issuers.
   (4) Any matter on which these Rules are silent shall be handled in
       accordance with applicable laws and regulations.
5.Effect on the Company's finances and business after the change:None
6.Any other matters that need to be specified:None