Our company's decision-making and supervisory process enhances corporate transparency and accountable management and thus, constitutes an environment where corporate value can be maximized.
The ceiling of remuneration for Directors shall be determined by resolution at the general meeting of shareholders
In principle, Directors are paid in cash.
* In 2000 and 2001 alone, the Company granted stock options to Executive Directors after getting approval at the general meeting of shareholders. But even in this case, the Company didn't grant stock options to Kun-Hee Lee, a specially related person with the Company.
Remuneration of Independent Directors
The Company does not pay any compensation other than basic salary and business trip expenses to the Independent Directors in order to maintain their independence. (The Company pays neither stock options nor pension benefits to Independent Directors)
* Independent Directors are entitled to stock options according to the Commercial Code and Securities Exchange Act, but the Company does not grant stock options to them to maintain their independence.
1. Basic principle
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.
Ceiling on stock option grant
- 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.
Changes in terms of stock options granted
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.
Expensing of stock options
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
|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|
|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|
|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|
|Option grant date||Apr. 16, 2004||Oat.15,2004||Dec.20,2005|
|Option grant approval||BOD||BOD||BOD|
|Granted options (shares)||590,000||10,000||10,000||6,686,600|
|Exercise price per share (KRW)||580,300||460,500||606,700|
|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.
Registered Board members shall meet the following guidelines in trading securities of the Company.
Ban on Securities Trading, Based on Important Material Inside Information
Pursuant to the Securities Exchange Act and the guidelines of the Company, registered Board members may not deal in shares of the Company, using inside information.
Immediate Report and Disclosure of Securities Trading
The Company shall disclose ownership changes by registered Board members to the Financial Supervisory Service by the tenth day of the following month after the stock trading.
Return of Short Term Trading Profits to the Company
In conformity with the Securities Exchange Act, if registered Board members gain profits from selling Company shares within six months after buying them, or from buying Company shares within six months after selling them, they shall return the profits to the Company.
In this way, the Company discourages their securities trading of less than six months.
The Company purchases Directors' liability insurance after approval from the Board of Directors or Board committees, as provided by internal regulations.
: Compensation is paid to shareholders or others who suffer loss from Directors' violation of their fiduciary duty and duty of faithfulness in doing corporate business.
In conformity with the relevant clauses of the Commercial Code and the Securities and Exchange Act, Independent Directors, who play a crucial role in maintaining the independence of the Board of Directors, are entitled to get help from outside experts in making important decisions. Accordingly, the Company provides Independent Directors with outside help, including but not limited to legal and accounting advices.
The Company holds regular meetings (when the Board meets each quarter) and irregular meetings for Independent Directors without management present, to help them discuss management issues and make proposals more freely. The Company also spares no support to make sure Independent Directors discharge their duties more aggressively and independently.
New Independent Directors shall be provided with an orientation and yearly visits to overseas sites.