SEC Form 20-IS - iRemit Global Remittance

17. Special Stock Purchase Program (SSPP)
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On July 20, 2007, the Parent Company’s BOD approved the proposal to set up an SSPP totaling
15,000,000 shares for the employees of the Parent Company who have been in the service for at
least one (1) calendar year as of June 30, 2007, as well as its BOD members, resource persons and
consultants (collectively referred to as “the Participants”). A Notice of Exemption under
Section 10.2 of the Securities Regulations Code had been approved by the SEC on
September 13, 2007. Notwithstanding the aforesaid confirmation by the SEC of the exempt
status of the SSPP shares, the SEC nonetheless required the Parent Company to include the SSPP
shares among the shares of the Parent Company which were registered with the SEC prior to the
conduct of its Initial Public Offering in October 2007. The registration of the Parent Company
shares, together with the SSPP shares, was rendered effective on October 5, 2007.
All 15,000,000 shares were exercised. The shares subject to the SSPP were sold at par value or
P=1.00 per share. Total shares amounting to P=11.74 million were paid in full, while the difference
totaling P=3.26 million were paid by way of salary loan. Shares acquired through SSPP are subject
to a lock-up period of 2 years from date of issue, which ended on September 19, 2009.
The sale is further subject to the condition that should the officer or employee resign from the
Parent Company prior to the expiration of the lock-up period, the shares purchased by such
resigning employee or officer shall be purchased at cost by the Parent Company as Treasury
stock. As of December 31, 2009, 24 employees resigned (9 in 2009, 13 in 2008 and 2 in 2007)
and their shares totaling 808,100 (130,900 in 2009, 548,500 in 2008 and 128,700 in 2007) were
bought back by the Parent Company.
As approved by the Parent Company’s BOD, the fair value of the shares issued under the SSPP
was measured at the grant date using the price-earnings multiple model taking into account the
terms and conditions upon which the shares were granted. The fair value at grant date was
P=1.33 per share. This transaction also resulted in an increase in equity by P=1.53 million,
P=2.16 million and P=1.00 million recognized as ‘Share-based payment’ under equity in 2009, 2008
and 2007, respectively.
On September 19, 2009, which is the end of the lock up period, the 808,100 shares bought back at
cost was transferred to the Parent Company’s retirement fund upon reimbursement of the
P=0.81 million paid by the Parent Company for those shares (see Note 16).
The expense arising from the share-based payment plan is recognized over the two-year lock-up
period. The expense recognized under ‘Salaries, wages and employee benefits’ in the parent
company statements of income amounted to P=1.53 million in 2009.
18. Operating Lease Commitments
The Parent Company has entered into the following lease agreements for its office spaces:
(a) On September 30, 2008, a lease agreement with Sta. Elena Divisoria Condo was made for a
period of 60 months commencing on October 1, 2008 to September 30, 2013 with a 10.00%
escalation rate effective on the second year up to the fifth year of the lease term. The contract
was cancelled in May 2009.
*SGVMC116501*