Samsung
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stock options
The company shall grant stock options in accordance with relevant laws and the articles of Incorporation.
The company may grant stock options to its officers and employees who have contributed, or can contribute, to management and overseas sales or technological innovation of the company.
- Stock options shall be granted by special resolution at a general meeting of shareholders or by resolution at a Board meeting to the extent of 15% of outstanding shares of the Company. (Article 11-4 of the Articles of Incorporation)
*2006-05-28 board members may not be granted stock options by resolution at a board meeting, but only by special resolution at a general meeting of shareholders. - Provided that for recruitment of core workers, a few number of stock options may be granted just by resolution at a board meeting to the extent of 1% of of outstanding shares of the company.
(Article 84-6 of enforcement ordinance of securities and exchange act) - Exercise period of stock options : Within one year after options become exercisable, less than one third of the options are granted to exercise and within two years, less than two thirds of them allowed and after then, all of them permitted to exercise.
In case share value materially changes after resolution is passed for stock option grant either at a general meeting of shareholders or at a Board meeting and before the exercise of the options (Due to bonus issue, stock dividend, stock split or consolidation, capital reduction, retirement of repurchased shares, merger or split of the Company) the Company may change the exercise price or the number of shares under stock options granted in accordance with relevant laws or the Articles of Incorporation, in order to keep stock option value at the same level. (Please refer to the attachment for further the detail)
*Since starting to grant stock options in 2000, the Company has changed the number of shares under stock options granted, due to stock buy-back/retirement. But the Company has not changed the exercise price of stock options granted.
The Company calculates stock option value using the Black Scholes model and finishes expensing stock options within two years of the grant of the options
| First round of stock option grant | Second | Third | Fourth | Fifth (continued below) |
|
|---|---|---|---|---|---|
| Option grant date | Mar. 16, 2000 | Mar. 9, 2001 | Feb. 28, 2002 | Mar. 25, 2002 | Mar. 7, 2003 |
| Option grant approval | AGM | AGM | AGM | BOD | BOD |
| Option grantee | 76 | 560 | 174 | 11 | 85 |
| Granted options (shares) | 1,500,000 | 3,099,550 | 988,000 | 121,000 | 368,100 |
| Exercise price per share (KRW) | 272,700 | 197,100 | 329,200 | 342,800 | 288,800 |
| Exercise period | Mar.17,2003 ~ Mar.16,2010 |
Mar.10.2004 ~ Mar.9,2011 |
Mar.1,2004 ~ Feb.29,2012 |
Mar.26,2004 ~ Mar.25,2012 |
Mar.8,2005 ~ Mar.7,2013 |
| Method of providing shares in case of exercise | Share issuance or treasury stock | Share issuance or treasury stock | Share issuance or treasury stock | Share issuance or treasury stock | Share issuance or treasury stock |
| Class of shares granted in case of exercise | Common Shares | Common Shares | Common Shares | Common Shares | Common Shares |
| Number of Available Stock Options | 1,371,460 | 2,705,732 | 934,141 | 108,058 | 329,251 |
| Sixth | Seventh | Eighth | Total (1st-8th) |
|
|---|---|---|---|---|
| Option grant date | Apr. 16, 2004 | Oat.15,2004 | Dec.20,2005 | |
| Option grant approval | BOD | BOD | BOD | |
| Option grantee | 119 | 1 | 2 | 1,028 |
| Granted options (shares) | 590,000 | 10,000 | 10,000 | 6,686,600 |
| Exercise price per share (KRW) | 580,300 | 460,500 | 606,700 | |
| Exercise period | Apr.17,2006 ~ Apr.16,2014 |
Oct.16,2006 ~ Oct.15,2008 |
Dec.21,2007 ~ Dec.20,2015 |
|
| Method of providing shares in case of exercise | Treasury stock | Treasury stock | Treasury stock | |
| Class of shares granted in case of exercise | Common Shares | Common Shares | Common Shares | |
| Number of Available Stock Options | 560,649 | 10,000 | 10,000 | 6,029,291 |
The Company does not take out loans to its officers and employees who exercise stock options.
- As the stock option scheme has such side effects as inequity brought by fluctuations in stock prices, since the late 2005, the Company has granted stock options only to newly recruited core workers, and instead the Company has adopted a long-term performance-based incentive system.
- Long-term performance-based incentive system The system quantities the performance of executives in the three- year evaluation process and provides executives with different incentives, based on the evaluation results.
*Evaluation method : Business performance (ROE) 70%, stock performance 30%
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