HTC 2014 Annual Report Download - page 137

• Financial information Financial information •
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If the Company was able to settle the bonuses paid to employees by cash or shares, the Company presumed that the entire amount of the
bonus would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding
used in the computation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential shares was included
in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at
their meeting in the following year.
26. SHARE-BASED PAYMENT ARRANGEMENTS
Employee share option plan of the Company
Qualified employees of HTC and its subsidiaries were granted 15,000 thousand options in November 2013. Each option entitles the
holder to subscribe for one common share of HTC. The options granted are valid for 7 years and exercisable at certain percentages after
the second anniversary from the grant date.
Qualified employees of HTC and its subsidiaries were granted 19,000 thousand options in October 2014. Each option entitles the holder
to subscribe for one common share of HTC. The options granted are valid for 10 years and exercisable at certain percentages after the
second anniversary from the grant date.
The exercise price equals to the closing price of HTC’s common shares on the grant date. For any subsequent changes in the HTC’s
common shares, the exercise price is adjusted accordingly.
Information on employee share options was as follows:
For the Year Ended December 31
2014 2013
Number of
Options
(In Thousands)
Weighted-average
Exercise Price
(NT$)
Number of
Options
(In Thousands)
Weighted-average
Exercise Price
(NT$)
Balance at January 1 15,000 $ 149 - $ -
Options granted 19,000 134.5 15,000 149
Options forfeited (2,092) -
Balance at December 31 31,908 15,000
Options exercisable, end of the year - -
Weighted-average fair value of options granted per unit (NT$) $ 31.231 $ 43.603
Information about outstanding options as of the reporting date was as follows:
December 31
2014 2013
Range of exercise price (NT$) $ 134.5-149 $ 149
Weighted-average remaining contractual life (years) 8.22 years 6.8 years
Options granted in October 2014 and November 2013 were priced using the trinomial option pricing model and the inputs to the model
were as follows:
October 2014 November 2013
Grant-date share price (NT$)
Exercise price (NT$)
Expected volatility
Expected life (years)
Expected dividend yield
Risk-free interest rate
$ 134.5
134.5
33.46%
10 years
4.40%
1.7021%
$ 149
149
45.83%
7 years
5.00%
1.63%
Expected volatility was based on the historical share price
volatility over the past 1 year. The Company assumed that
employees would exercise their options after the vesting
date when the share price was 1.63 times the exercise price.
Employee Restricted Shares
In the shareholder meeting on June 19, 2014, the
shareholders approved a restricted stock plan for employees
with a total amount of $50,000 thousand, consisting of
5,000 thousand shares. On October 31, 2014, HTC’s board of
directors passed a resolution to issue 4,600 thousand shares.
The restrictions on the rights of the employees who acquire
the restricted shares but have not met the vesting conditions
are as follows:
a. The employees cannot sell, pledge, transfer, donate or in
any other way dispose of these shares.
b. The employees holding these shares are entitled to
receive cash and dividends in share.
c. The employees holding these shares have no voting
rights.
If an employee fails to meet the vesting conditions, HTC will
recall or buy back and cancel the restricted shares.
Information about outstanding employee restricted shares
as of December 31, 2014 was as follows:
Grant-date November 2, 2014
Grant-date fair value (NT$)
Exercise price
Numbers of shares (thousand shares)
Vesting period (years)
$ 134.5
Gratuitous
4,600
1-3 years
Compensation Cost of Share-based Payment
Arrangements
Compensation cost of share-based payment arrangement
recognized were NT$269,013 thousand and NT$26,742
thousand for the years ended December 31, 2014 and 2013,
respectively.
27. DISPOSAL OF SUBSIDIARIES
In September 2013, the Company sold its 100% stake in
Saffron Media Group Ltd. for US$47,000 thousand to CDMG
Holdings UK Limited. Saffron Media Group Ltd is a provider
of digital multimedia delivery services.
Consideration Received
Saffron Media Group Ltd.
Cash and cash equivalents
Deferred sales proceeds
$ 223,970
1,179,573
$ 1,403,543
At the completion of sales of Saffron Media Group Ltd.,
CDMG Holdings UK Limited paid HTC US$7,500 thousand
in cash plus a purchaser note (the “Note”) with five years
term and 6% interest rate per annum, which was classified
as “long-term receivable”, in the amount of US$39,500
thousand. The Note and interest payment will be made on
due date. The Note and accrued interest were secured by
pledge of the shares obtained by the buying party in this
transaction.
Analysis of Asset and Liabilities Over Which
Control Was Lost
Saffron Media Group Ltd.
Current assets
Cash and cash equivalents
Other current assets
Non-current assets
Current liabilities
$ 79,704
105,670
1,120,421
(86,324)
Net assets disposed of $ 1,219,471
Gain on Disposal of Subsidiary
Saffron Media Group Ltd.
Consideration received
Net assets disposed of
Cumulative exchange differences
in respect of the net assets of the
subsidiary reclassified from equity
to profit or loss on loss of control of
subsidiary
$ 1,403,543
(1,219,471)
(8,636)
Gain on disposal $ 175,436