Resolution of the BOD for the issuance of restricted stock awards to key employees

Company code: 6285
No: 2
Subject: Resolution of the BOD for the issuance of restricted stock awards to key employees
To which item it meets--article 4 paragraph xx: 11
Date of events: 2023/03/10

Contents:

• Date of the board of directors resolution: 2023/03/10
• Expected issue price: The shares are issued gratis.
• Expected total amount (shares) of issuance: Not exceeding 2.5% of the outstanding shares of WNC, with 10,000,000 shares tentatively allotted.
• Vesting conditions:
  • Employees who are still in service at the end of vesting periods, are qualified to receive Restricted Stock Awards (RSAs) on the first anniversary of the grant date of RSAs, in a number determined for grant that year. Based on WNC's overall performance and the employees' performance assessment results, WNC shall determine the number of the RSAs distributable within the total number of shares to be granted during the year.
    • A. WNC's overall performance indicators 
      (a). The vested ratio of the total number of RSAs to be granted during the year is determined based on WNC's EPS from the consolidated financial statements (which have been audited and certified by a certified public accountant) of the most recent year upon the expiration of the vesting period. WNC's EPS will be compared with those of other companies in the network communications industry category: If WNC's EPS ranks among the top 1/3 of the companies in the network communications industry, the vested ratio will be 100%. If WNC's EPS ranks below the top 1/3 but among the top 2/3 of companies in the network communications industry, the vested ratio will be 80%. If WNC's EPS fails to rank among the top 2/3 of the companies in the network communications industry, the vested ratio will be 0%. 
      (b). The companies in the same network communications industry category as WNC refer to: Sercomm Corporation, Gemtek Technology Co., Ltd., Microelectronics Technology Inc., Prime Electronics and Satellitics Inc., Zinwell Corporation, Alpha Networks Inc., CyberTAN Technology, Inc., Accton Technology Corporation, Arcadyan Technology Corporation, AzureWave Technologies, Inc., and Senao Networks, Inc. If there are changes to this list, the Remuneration Committee of WNC is in charge of approving the changes. 
      (c). With regard to WNC's overall performance indicators, upon the occurrence of circumstances unforeseeable during the formulation of the current measures (such as international industry and economic situations having a significant impact on WNC's operations), WNC's remuneration committee may propose to adjust such indicators or the vested ratio. Any proposed adjustments to the indicators or ratio shall be approved by the Board of Directors before they can be applied.
    • B. Employees' performance indicators Subject to the company's overall performance indicators above, employees with service of one year, two years, and three years following the grant date of RSAs, and who obtain an A or above twice in their annual performance assessment results in the corresponding year(s), can receive up to 100% of the total number of shares to be granted during that/those year(s). Employees who obtain an A and an A- in their performance assessment may receive up to 80% of the total number of shares to be granted during the corresponding year. Employees who obtain an A- twice may receive up to 60% of the total number of shares to be granted during the corresponding year. Employees with a performance assessment result of B or below forfeit any right to shares during the corresponding year. 
  • The maximum percentage of granted RSAs that may be vested each year are as follows: One-year anniversary of the grant: 33%; Two-year anniversary of the grant: 33%; Three-year anniversary of the grant: 34%. The number of RSAs to be vested will be rounded to the nearest ten shares.
• Measures to be taken when employees fail to meet the vesting conditions or in the event of inheritance: Where an employee fails to meet the vesting conditions, WNC will reclaim and cancel the granted RSAs at no extra cost to WNC.
• Other issuance criteria: Class of the shares to be issued: WNC's common stock. 
• Qualification criteria for employees:
  • Only full-time employees of WNC who are employed as of the date of the granting of the RSAs and who meet certain performance requirements are eligible for this incentive plan. Eligible employees must also be those who (a) are key personnel for WNC's future development (b) have shown themselves to be very valuable to WNC via their work performance or (c) are important new hires. 
  • The number of RSAs granted to each eligible employee will be determined by the Chairman by referencing WNC's operational requirements and business development strategies as well as the years of service, job grade, work performance, overall contribution and potential future contribution of the eligible employees, then submitted to the Board of Directors for approval. Before the RSAs are granted, the list of eligible employees who are executive officers and the list of those who are not will be sent to the Remuneration Committee and the Audit Committee respectively for approval, then both lists will be sent to the Board of Directors for review and approval.
• The necessary reason of the current issuance of RSA: To attract and retain key talent as well as enhance employee cohesiveness and sense of belonging in order to maximize the benefit for WNC and its shareholders.
• Calculated expense amount: Based on the closing price of WNC common stock on March 1, 2023 of NT$84.3, the yearly amortization of the expense amount for 2023, 2024, 2025, and 2026 will be NT$115,913,000; NT$278,190,000; NT$281,702,000; and NT$167,195,000 respectively.
• Dilution of the Company's earnings per share (EPS): Based on the aggregate of 404,808,413 outstanding shares of WNC, the dilution of WNC's earnings per share for 2023, 2024, 2025, and 2026 will be NT$0.29, NT$0.69, NT$0.70, and NT$0.41 respectively.
• Other matters affecting shareholder's equity: Concluding from the preceding evaluation, the dilution of WNC's future EPS will be limited, and there is no material impact on existing shareholders' equity.
• Restrictions before employees meet the vesting conditions once the RSA are received or subscribed for: The restricted stock awards issued may be deposited in a security trust account.
• Other important terms and conditions (including stock trust custody, etc.): The restricted stock awards issued may be deposited in a security trust account.
• Any other matters that need to be specified: None