【Hongde Energy】Announcement of the Board of Directors' Resolution to Issue Restricted Stock to Employees for the Year 115

1. Date of Board of Directors' resolution: 115/04/24
2. Estimated issue price: Free issue.
3. Estimated total issue amount (shares): Limited to no more than 1,000 thousand common shares, approximately 0.70% of the currently issued common shares. Each share has a par value of NT$10, for a total of NT$10,000 thousand.
4. Vesting conditions:
- Employees must be employed on each vesting date after receiving the restricted stock, and during this period, the company must certify that they have not violated company employment contracts, codes of conduct, trust agreements, integrity management guidelines, employee work rules, non-competition and confidentiality agreements, or other contractual agreements with the company.
- Simultaneously achieve individual performance indicators and company operational goals set by the company. The vesting ratios on each vesting date are as follows:
- Upon completion of one year: 25% of the shares will vest.
- Upon completion of two years: 25% of the shares will vest.
- Upon completion of three years: 25% of the shares will vest.
- Upon completion of four years: 25% of the shares will vest.
- Individual performance indicators: The performance evaluation for the most recent year at the end of the vesting period must be rated 'Good' (inclusive) or above, and the individual employee performance indicators set by the company must be achieved.
- Company operational goals: For the fiscal year including the issue date of the restricted stock and the subsequent three fiscal years, based on the consolidated financial statements audited and certified by a CPA, the annual revenue growth rate and earnings per share must both grow by more than 10%.
5. Handling of employees who do not meet vesting conditions or in case of inheritance:
- If an employee fails to meet the vesting conditions, the company will reclaim their shares for free and process their cancellation.
- Other handling methods for various circumstances will be in accordance with the issuance regulations set by the company.
6. Other issuance conditions: None.
7. Employee qualification conditions:
- The beneficiaries of this incentive plan are limited to full-time employees of the company and its controlled or affiliated companies who are employed on the date of restricted stock grant and have achieved a certain level of performance.
- Qualified employees must be (A) those who have a significant impact on the company's operational decisions, or (B) key talents for the company's future core technologies and strategic development.
- The number of shares granted to qualified employees will be determined based on the company's operating results, as well as individual job grade, work performance, and other appropriate reference factors. The allocation standards will be proposed by the Chairman for approval by the Board of Directors. However, employees who are directors or managers of the company must first obtain the consent of the Remuneration Committee, while employees who are not directors or managers must first obtain the consent of the Audit Committee.
- The determination and calculation of the number of shares that can be allocated will be handled in accordance with the "Regulations Governing the Offering and Issuance of Securities by Issuers" and related regulations.
8. Necessary reasons for issuing this restricted stock:
- To attract and retain key excellent talent, to achieve the company's medium to long-term goals, to encourage employees to do their utmost to achieve company operational goals, to create higher benefits for the company and shareholders, and to ensure the alignment of company employee interests with shareholder interests.
9. Possible expensed amount:
- The company should measure the fair value of the shares on the grant date and recognize related expenses annually over the vesting period.
- Based on the simulated calculation using the closing price of the company's common stock on April 16, Year 115, at NT$88.80, the total possible expensed amount if all vesting conditions are met is NT$79,920 thousand.
- If issued at the end of December, Year 115, the estimated expensed amounts for Years 116 to 119 are tentatively NT$41,625 thousand, NT$21,645 thousand, NT$11,655 thousand, and NT$4,995 thousand, respectively.
10. Dilution of company earnings per share:
- Based on the company's current outstanding common shares and the restricted stock within this issue limit, the estimated reduction in earnings per share for Years 116 to 119 is tentatively NT$0.29, NT$0.15, NT$0.08, and NT$0.03, respectively.
11. Other matters affecting shareholder equity:
- The dilution of the company's earnings per share is limited, hence there is no significant impact on shareholder equity.
12. Rights restricted for employees after receiving new shares and before meeting vesting conditions:
- Employees who have received restricted stock may not sell, pledge, transfer, gift, set collateral, or otherwise dispose of the restricted stock before meeting the vesting conditions.
13. Other important agreements (including stock trust custody, etc.):
- The restricted stock issued by the company shall be fully entrusted by the company to a trust institution for custody on behalf of the employees.
14. Other matters that should be specified:
- If any of the conditions set for this issue of restricted stock need to be revised or amended due to instructions from the competent authority, amendments to relevant laws and regulations, or in response to financial market conditions, it is proposed to authorize the Board of Directors or its authorized person at the Annual General Meeting to handle all related matters.
- Other restrictions and important agreements, or unresolved matters regarding this issue of restricted stock, shall be handled in accordance with relevant laws and regulations and the issuance regulations set by the company.