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IC designers plan to issue restricted stock units to employees

2012/05/01 16:46:57

Taipei, May 1 (CNA) Several local integrated circuit designers are planning to issue restricted stock units to their employees as incentives to retain them and encourage them to work hard, market sources said Tuesday.

The sources said several IC designers, such as Sunplus Technology Co., Etron Technology, Inc., ITE Tech Inc. and Realtek Semiconductor Corp., will propose restricted stock issuance plans at their upcoming annual general meetings.

Financial authorities are expected to release rules governing the issuance of restricted stock units for free or at preferential prices later this year, after the Legislative Yuan revised the Company Act last year, the sources said.

Restricted stock units have come into vogue in place of stock options around the world after accounting rules changed to expense employee stock options.

Popular among high-tech firms to lure talent, the units become vested when employees meet certain conditions, such as seniority or performance. Stock issuers can also set restrictions on voting rights, stock dividends, or a time frame for share sales for the employees.

Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, had long been a strong advocate for the restricted stock mechanism before the Company Act was revisedto allow them in Taiwan.

Sunplus, a multimedia solutions provider, plans to issue 28 million shares of restricted stock, the most among IC designers, for free or up to NT$15 (US$0.34) per share.

The IC designer said that if the shares are issued to their employees for free, the issuance will cost the company about NT$280 million, with the costs to be booked over three years.

The issuance is expected to lower the company's earnings per share by less than NT$0.2 a year, Sunplus said.

Specialty memory chip maker Etron Technology plans to issue 15 million shares of restricted stock to its employees for free and the issuance is expected to cost the company about NT$140 million.

Etron said the company will account for the move by booking costs of NT$55.45 million in 2013, NT$58.37 million in 2014, NT$20.43 million in 2015 and NT$5.83 million in 2016.

Those additional costs would cut its EPS by about NT$0.12 in 2013, NT$0.13 in 2014, NT$0.05 in 2015 and NT$0.01 in 2016.

ITE Tech. Inc., a keyboard control chip designer, said it is planning to issue 8 million shares of restricted stock to employees at NT$10 each, and the move is expected to cost the company about NT$176 million.

Meanwhile, Realtek, an Internet connectivity chip designer, is also planning to issue 8 million shares to its employees for free and the costs will total about NT$452 million, the company said.

(By Jackson Chang and Frances Huang)