i. 2011-2021 Share Stapled Units option scheme of the HKT Trust and HKT
On November 7, 2011 (the “Adoption Date”), the HKT Trust and HKT conditionally adopted a Share Stapled Units option scheme (“HKT 2011-2021 Option Scheme”) which became effective upon listing of the Share Stapled Units, to enable the HKT Trust and HKT, acting jointly by mutual agreement between them, to grant options to (a) any full-time or part-time employees of HKT and/or any of its subsidiaries; (b) any director (including executive, non-executive and independent non-executive director) of HKT and/or any of its subsidiaries; and (c) any consultant or adviser (whether professional or otherwise and whether on an employment or contractual or honorary basis or otherwise and whether paid or unpaid), distributor, contractor, supplier, service provider, agent, customer and business partner of HKT and/or any of its subsidiaries (the “Eligible Participants”) as incentives or rewards for their contribution to the growth of the HKT Group and to provide the HKT Group with a more flexible means to reward, remunerate, compensate and/or provide benefits to the Eligible Participants.
No Share Stapled Unit options have been granted under the HKT 2011-2021 Option Scheme since the Adoption Date. Accordingly, there were no outstanding options under the HKT 2011-2021 Option Scheme as at December 31, 2013 and 2014 and no options were granted to or exercised by any directors or chief executives of HKT and the trustee-manager of the HKT Trust or employees of the HKT Group or other participants nor cancelled or lapsed during the years ended December 31, 2013 and 2014.
ii. Share Stapled Units award schemes of HKT
On October 11, 2011, HKT conditionally adopted two award schemes pursuant to which awards of Share Stapled Units may be made, namely the HKT Share Stapled Units Purchase Scheme and the HKT Share Stapled Units Subscription Scheme (collectively the “HKT Share Stapled Units Award Schemes”).
The HKT Share Stapled Units Award Schemes are on similar terms and were conditionally adopted by HKT which became effective upon listing of the Share Stapled Units as a potential means to incentivize and reward the eligible participants as follows:
In the case of the HKT Share Stapled Units Purchase Scheme:
(i) any full-time or part-time employees of HKT and/or any of its subsidiaries; and
(ii) any director (including executive, non-executive and independent non-executive director) of HKT and/or any of its subsidiaries.
In the case of the HKT Share Stapled Units Subscription Scheme:
The same group of potential eligible participants as referred to above except for any directors of HKT or its subsidiaries and/or any other connected persons of HKT.
The eligible participants are awarded Share Stapled Units purchased in the market under the HKT Share Stapled Units Purchase Scheme and newly issued Share Stapled Units under the HKT Share Stapled Units Subscription Scheme respectively.
The HKT Share Stapled Units Award Schemes are administered by the board of directors of HKT (the “HKT Board”) and an
independent trustee (the “Trustee”), as trustee appointed to hold the relevant Share Stapled Units until such time as the Share Stapled Units vest in the selected participants. Under both schemes, following the making of an award to an eligible participant, the relevant Share Stapled Units are held by the Trustee for that eligible participant and then shall vest over a period of time provided that the eligible participant who is an employee of HKT or any of its subsidiaries remains an employee of HKT or any of its subsidiaries at the relevant time and satisfies any other conditions specified at the time the award is made, notwithstanding that the relevant committee of the HKT Board shall be at liberty to waive such condition.
d. Equity compensation benefit of HKT Trust and HKT (continued)
ii. Share Stapled Units award schemes of HKT (continued)
Awards may be made by the HKT Board or any committee, sub-committee or person duly delegated, such as the remuneration committee and, in the case of Share Stapled Units that are not vested or transferred as originally intended, the Trustee may hold such units and income deriving therefrom for the purpose of any eligible participants, having taken into consideration the recommendations of the HKT Board.
No awards have been made or agreed to be made, under the HKT Share Stapled Units Subscription Scheme for the years ended December 31, 2013 and 2014.
A summary of movements in Share Stapled Units held under the HKT Share Stapled Units Purchase Scheme during the year is as follows:
Number of Share Stapled Units 2013 2014
Beginning of year 1,158,000 7,360,797
Purchase from market by the Trustee at weighted average market price of HK$9.05
(2013: HK$7.71) per Share Stapled Unit 6,737,000 190,000
Purchase under the rights issue of the HKT Trust and HKT by the Trustee at subscription
price of HK$6.84 (2013: nil) per Share Stapled Unit – 1,007,112
Share Stapled Units vested (534,203) (2,579,800)
End of year 7,360,797 5,978,109
Details of Share Stapled Units awarded pursuant to the HKT Share Stapled Units Purchase Scheme during the year and the Share Stapled Units unvested, are as follows:
(i) Movements in the number of unvested Share Stapled Units and their related weighted average fair value on date of award
2013 2014
Weighted average fair value on the
date of award
Number of Share Stapled Units
Weighted average fair value on the
date of award Number of Share Stapled Units HK$ HK$ Beginning of year 5.98 1,140,265 7.27 2,955,982
Awarded (note (iii)) 7.59 2,387,498 9.03 12,962,935
Forfeited (note (iv)) 6.84 (37,578) 8.99 (344,000)
Vested (note (v)) 5.98 (534,203) 7.71 (2,579,800)