Crucial 2011 Annual Report Download - page 177

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INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
As it belongs to a highly capital-
intensive industry with strong growth potential, the Company adopts a dividend distribution
policy which is in line with its capital budget and long-
term financial plans. This policy requires that the distribution of cash
dividends shall be equal to at least fifty percent (50%) of the Company’s total dividend distribution every year.
Based on the resolutions approved by the stockholders during their meetings on June 18, 2009 and May 27, 2010, no
appropriations were made of earnings in 2008 and 2009 as the Company had no earnings available for appropriations but an
accumulated deficit as of December 31, 2008 and 2009, respectively.
On August 29, 2007, December 13, 2007, September 30, 2008, April 30, 2009 and October 15, 2010, 98,000, 2,000,
80,000, 14,500 and 56,182 units of stock options, respectively, were granted to qualified full-time employees of the
Company. Each option entitles the holder to subscribe for one thousand common shares of the Company when exercisable.
The original exercise price is $31.05, $26.50, $10.00, $17.40 and $15.40 per share, respectively. As the Company issued
additional GDSs, however, the exercise price granted before August 4, 2009 has been adjusted to $28.6, $24.8, $10.0 and
$17.2 per share, respectively, according to its employee stock option plan rules. Also, as the Company issued additional
shares from capital increase in cash on February 6, 2010, however, the exercise price granted before February 6, 2010 has
been adjusted to $27.8, $24.5, $10.0 and $17.2 per share, respectively, according to its employee stock option plan rules.
These stock options are valid for 8 years and exercisable at certain percentages after the second anniversary year from grant
date. 50%, 75% and 100% of these stock options are vested after the second, third and fourth anniversary dates,
respectively. On December 15, 2009, the board of directors approved to increase the Company’s capital stock by issuing
640 million Company shares according to Article 267 of the Company Law, to retain 10% of 640 million Company shares
for employees, to set January 6, 2010 as the grant date and employee purchase price of $22.5 per share.
Options granted and capital increase in cash allocated for employees for the years ended December 31, 2008, 2009 and 2010
were priced using the Black-Scholes pricing model and the inputs to the model were as follows:
(Continued)
(d)
Share-based payment transactions
Employee Stock Option Plan
The first batch
for the year ended
December 31, 2007
The second batch
for the year ended
December 31, 2007
The first batch
for the year ended
December 31, 2008
The first batch
for the year ending
December 31, 2009
The first batch
for the year ending
December 31, 2010
Capital increase
in cash allocated
for employees
Assumptions
Expected dividend yield - % - % - % - % - % - %
Grant-date share price 31.05
26.50 10.00 17.40 15.40 28.20
Expected volatility 40.23% 38.41% 40.76% 47.01% 50.93%~53.53% 32.39%
Risk-free interest rate 2.5317% 2.4820% 2.0140% 1.1089% 0.8674% 1.0182%
Expected term 5.375 years 5.375 years 5.375 years 5.375 years 5~6 years 0.08 years
Estimated percentage of
forfeiture 16.11%
16.06% 16.11% 17.57% 16.11% - %