Cemex 1999 Annual Report Download - page 63

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14.- STOCKHOLDERS’ EQUITY
A) CAPITAL STOCK
The previously reported share and per share amounts corresponding to 1998 and the 1999 changes done before
September 14, 1999, have been restated to give effect to the stock split made during 1999 (see note 2A).
Capital stock of the Company as of December 31, 1999 is as follows:
SERIES A (1) SERIES B (2)
Subscribed and paid shares 2,959,216,418 1,479,608,209
Treasury shares 105,241,768 52,620,884
Unissued shares authorized for Executive Stock Option Plans 132,350,424 66,175,212
3,196,808,610 1,598,404,305
(1) Series “A” or Mexican shares represent at least 64% of capital stock.
(2) Series “B” or free subscription shares represent at most 36% of capital stock.
Of the total shares, 3,267,000,000 correspond to the fixed portion and 1,528,212,915 correspond to the variable
portion.
During 1999, at the annual stockholders’ meeting, a dividends program was established, through which shareholders
elected between receiving a dividend in cash of $0.44 per share, or reinvesting such dividend in the subscription of
new shares representative of the capital stock. As a result of the program, cash dividends were declared in the amount
of $1,887,312. Likewise, of the total of dividends declared, shareholders reinvested $1,679,627, therefore, a total of
94,758,232 series “A” shares and 47,379,116 series “B” shares were subscribed and paid, generating an additional
paid-in capital of $1,677,974.
B) EXECUTIVE STOCK OPTION PLAN (see note 2A)
The Company has adopted a Stock Option Plan for shares of the variable portion of the common stock. Through this
program, the Company grants to eligible executives, designated by a technical committee, stock option “rights” to
subscribe up to 72,100,000 new CPO’s. As of December 31, 1999 and 1998 the option balances are as follows:
1999 1998
NUMBER OF EXCERCISE NUMBER OF EXCERCISE
CPO’S PRICE * CPO’S PRICE *
Granted 47,000,318 34.11 30,399,005 32.00
Canceled (55,608) 42.22 — —
Exercised (5,924,788) 25.59 (2,481,194) 25.68
Outstanding 41,019,922 27,917,811
* Weighted average exercise price per CPO
The option rights might be exercised up to 25% of the total number of options during the first four years after having
been granted. The option rigths expire after a maximum of ten years or when the employee leaves the Company. A
portion of the options has an exercise maturity period of five years which can be extended to ten years if certain
conditions are met during the first five years. Under this type of programs, the Company has no obligation to
recognize a liability for the amount of options.
During 1999 and 1998, the options granted were 16,601,313 and 9,246,120 at a weighted average price per option of
$38.07 and $42.26, respectively, and the options exercised were 3,443,594 and 234,671 at a weighted average price
per option of $24.70 and $23.52 for 1999 and 1998, respectively. The balance of CPO’s available for the Stock Option
Plan as of December 31, 1999 and 1998 were 25,099,682 CPO’s and 41,700,995 CPO’s, respectively. As of December
31, 1999 the outstanding options have a remaining average exercise period of approximately 7.3 years.
The CPO’s issued from the exercise of options were paid at their assigned value, generating an additional paid-in
capital of $88,056 and $9,706 in 1999 and 1998, respectively.
The Company’s obligations under the executive stock option program, consist in the issuance of CPO’s representative
of capital stock on each exercise date, which represents an increase in such capital.
C) RETAINED EARNINGS
Retained earnings as of December 31, 1999 include $42,593,257 earnings generated by subsidiaries and affiliated
companies, which may be distributed by the Company when the respective dividends are declared by these
companies. Furthermore, retained earnings include a reserve to repurchase the Company’s shares in the amount of
$10,697,749.
Net income of the year is subject to a 5% allocation to constitute a legal reserve, until such reserve equals one fifth
of the capital stock. As of December 31, 1999, the legal reserve amounted to $1,232,933.
Earnings distributed as dividends in excess of tax earnings will be subject to tax as defined by the Mexican Income
Tax Law, in which case, only 65% of retained earnings may be distributed to the shareholders.