Several local integrated-circuit (IC) designers are planning to issue restricted stock units to their employees as incentives to retain their services and increase their productivity, market sources said yesterday.
The sources said various IC designers, such as Sunplus Technology Co (凌陽), Etron Technology Inc (鈺創), ITE Tech Inc (聯陽) and Realtek Semiconductor Corp (瑞昱), will propose restricted stock issuance plans at their upcoming annual general meetings.
Financial authorities are expected to release regulations on the issuance of restricted stock units for free or at preferential prices later this year, after the Legislative Yuan revised the Company Act (公司法) last year, the sources said.
Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest contract chipmaker, had long been a strong advocate for the restricted stock mechanism before the Company Act was revised to allow them.
Issuing restricted stock units has become popular in place of stock options after accounting rules to expense employee stock options changed.
Favored by high-tech firms as a way to attract talent, the units become vested when employees meet certain conditions, such as seniority or performance targets.
Stock issuers can also set restrictions on voting rights, stock dividends, or a time frame for share sales for the employees.
Sunplus, a multimedia solutions provider, plans to issue 28 million shares of restricted stock, the most among IC designers, for free or charging up to NT$15 per share.
The IC designer said that if the shares are issued to their employees for free, the issuance would cost the company about NT$280 million (US$9.6 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 chipmaker Etron Technology plans to issue 15 million shares of restricted stock to its employees for free, which is expected to cost the company about NT$140 million.
Etron said the company would account for the move by booking costs of NT$55.45 million next year, NT$58.37 million in 2014, NT$20.43 million in 2015 and NT$5.83 million in 2016.
Those additional costs will cut its earnings by about NT$0.12 per share next year, NT$0.13 in 2014, NT$0.05 in 2015 and NT$0.01 in 2016.
ITE Tech, a keyboard control chip designer, said it plans to issue 8 million shares of restricted stock to its workers at NT$10 each. The move is predicted to cost the company about NT$176 million.
In accordance with the trend, Realtek, an Internet-connectivity chip designer, is also planning to issue 8 million shares, charging employees nothing and incurring costs of about NT$452 million, the company said.