2012 Annual Report - ZTE

ZTE CORPORATIONNotes to Financial Statements (continued)(Prepared in accordance with PRC ASBEs)(All amounts in RMB’000 unless otherwise stated)(English translation for reference only)VII.SHARE-BASED PAYMENT (continued)2. Share incentive schemeThe implementation of the Phase I Share Incentive Scheme (Revised Version dated 5 February 2007)(hereinafter referred to as the “Share Incentive Scheme”) commenced upon consideration andapproval by shareholders at the first extraordinary general meeting of the Company for 2007 convenedon 13 March 2007, after the receipt of a no-comment letter from the China Securities RegulatoryCommission. The Company granted 47,980,000 Subject Shares to the Scheme Participants by wayof the issue of new shares (A shares), including the grant to 3,435 Scheme Participants of SubjectShare quotas with 43,182,000 shares (accounting for 90% of the Subject Share quotas under the ShareIncentive Scheme, hereinafter referred to as the “First Award”) and the reservation of 4,798,000Subject Shares accounting for 10% of the Subject Share quotas under the Share Incentive Scheme. Atthe Twentieth Meeting of the Fourth Session of the Board of Directors held on 25 November 2008, thegrant of the full amount of the reserved Subject Share quotas to 794 Scheme Participants (hereinafterreferred to as the “Second Award”) was considered and approved. The Scheme Participants of theShare Incentive Scheme were the directors and senior management of the Company and key staff ofthe Company and its subsidiaries.The grant price of the Share Incentive Scheme shall be the closing price of the Company’s A sharesas quoted on the Shenzhen Stock Exchange on the trading day immediately preceding the date of theBoard Meeting at which the Share Incentive Scheme is reviewed. The price of the First Award wasRMB30.05 per share. Scheme Participants shall pay the subscription amounts for the Subject Shares onthe basis of the purchase of 5.2 Subject Shares for every 10 Subject Shares granted, out of which thesubscription amounts for 3.8 Subject Shares shall be funded by Scheme Participants at their own costand the subscription amounts for 1.4 Subject Shares shall be funded by the conversion of the deferredbonus that Scheme Participants would have received had they participated in the distribution of 2006deferred bonus, calculated as a percentage of the grant price. The price of the Second Award wasRMB21.28 per share. Scheme Participants shall pay the subscription amounts for the Subject Shareson the basis of the purchase of 5.2 Subject Shares for every 10 Subject Shares granted.The Share Incentive Scheme shall be valid for 5 years, comprising a lock-up period of 2 years and anunlocking period of 3 years:(1) The Lock-up Period shall last for a period of two years commencing on the date of approval ofthe Share Incentive Scheme by shareholders in a general meeting of the Company, during whichthe Subject Shares granted to Scheme Participants under the Share Incentive Scheme shall besubject to lock-up and shall not be transferable;268