Acer 2008 Annual Report Download - page 54

Acer Incorporated 2008 Annual Report104
Financial Standing
Acer Incorporated 2008 Annual Report 105
Pursuant to SFB regulations, an amount equal to the total amount of any deduction items of shareholders’
equity shall be provided from the net income of the current year as a special reserve that cannot be
distributed as dividend or bonus. Accordingly, such special reserve shall be adjusted to reect the changes
in the deduction items. Any reversal of the special reserve can be added back to unappropriated earnings
for distribution of dividends or bonus.
In 2008, the Company estimated it would distribute NT$1,500,000 of employee bonuses and NT$85,763
of directors’ and supervisors’ remuneration. The computation for the employee bonuses distributed in
stock shares was based on the closing price of the day prior to the stockholders’ meeting, considering
the ex-rights and ex-dividend effect. If the actual distribution amount approved by the shareholders
differs from the estimated amount, the discrepancy shall be accounted for as a change in accounting
estimates and adjusted in the year 2009. Additionally, the Company’s subsidiary Weblink International
Inc. estimated it would distribute employee bonuses and directors’ and supervisors’ remuneration in the
amount of NT$800.
The appropriation of 2006 and 2007 earnings was approved by the shareholders at meetings on June 14,
2007, and June 13, 2008, respectively, as follows:
2006 2007
NT$ NT$
Employee bonus - stock (in par value) 333,708 330,000
Employee bonus - cash 424,719 544,728
Directors’ and supervisors’ remuneration 94,803 116,630
853,230 991,358
The appropriation of earnings did not differ from the resolutions approved by the Company’s directors.
Distribution of 2008 earnings has not been proposed by the board of directors and is still subject to
approval by the stockholders. After the resolutions, related information can be obtained from the public
information website.
(21) Employee stock option plan
As of December 31, 2008, the Consolidated Companies had the employee stock option plans (“ESOP”)
described below:
Stock Options
Employee stock option
plan 1
Employee stock option
plan 2
Employee stock option
plan 3
Grant date 2008/11/31 2008/09/01 (note 1) 2008/09/01 (note 1)
Granted shares (in thousands) 14,000 8,717 1,067
Fair value of options granted ($) 25.124 25.47 ~ 26.11 42.20 ~ 42.58
Contractual life 3 years 4.97 years 2 years
Vesting period 2 years of service
subsequent to grant date
1~3 years of service
subsequent to grant date
2 years of service
subsequent to grant date
Actual exit rates 0 0 0
Expected exit rates 0 0 0
Note 1: The Company assumed the employee stock option plans 2 and 3 through the acquisition of E-Ten
Information Systems Co., Ltd. as of September 1, 2008.
The Consolidated Company utilized the Black-Scholes or the binomial option pricing model to value the
stock options granted, and the main inputs to the valuation models are described below.
2008
Employee stock
option plan 1
Employee stock
option plan 2
Employee stock
option plan 3
Exercise price ($) 25.28 44.50 16.90
Expected remaining contractual life (in years) 3 4.26 0.56
Fair market value for underlying securities – Acer
shares (NT$) 45.95 59.10 59.10
Expected volatility (%) 45.01% 34.98% 37.35%
Expected dividend yield (%) note 2 note 2 note 2
Risk-free interest rate (%) 2.50% 2.40% 1.84%
Note 2: According to the employee stock option plan, the option prices are adjusted to take into account
dividends paid on the underlying security. As a result, the expected dividend yield is excluded from
the calculation of Black-Scholes or Binominal option pricing models.
Movements in number of stock options outstanding:
Employee stock option
plan 1
Employee stock option
plan 2
Employee stock option
plan 3
Number of
options (in
thousands)
Weighted-
average
exercise
price (NT$)
Number of
options (in
thousands)
Weighted-
average
exercise
price
(NT$)
Number of
options (in
thousands)
Weighted-
average
exercise
price
(NT$)
Outstanding at January 1,
2008
- - - - - -
Granted 14,000 25.28 8,717 44.50 1,067 16.90
Forfeited - - (480) - (36) -
Exercised - - - - (173) 16.90
Expired - - - - - -
Outstanding at December
31, 2008
14,000 25.28 8,237 44.50 858 16.90
Exercisable at December
31, 2008
- - - - 406 16.90
In 2008, the Consolidated Companies recognized the compensation expense related to the employee stock
option plans in the amount of NT$37,856 under “salary expense” of operating expenses in the accompanying
statement of income.
(22) Restructuring charges
In 2008, due to the acquisition of Gateway Inc. and Packard Bell B.V., the Consolidated Companies
recognized a total of NT$15,800,000 of restructuring charges under “restructuring cost” of non-operating
expenses and loss in the accompanying statements of income. The restructuring charges were associated
with severance payments to employees and integration of the information technology system.