Bank Withdraws Option Scheme, Admitting Plan Was Faulty

Korea First Bank has nullified the prices at which its president and other executives can buy its shares under a planned stock option, and decided to accept those set by government regulators.

An official at the Financial Supervisory Commission said Thursday that Wilfred Horie, the bank's president and chief executive officer, sent a letter to the watchdog commission saying there had been some "faults" in the process of granting stock options and promised to cancel the option prices set by the bank.

Until now, Korea First Bank has claimed that there was no legal problem in the exercise price, which the bank determined last year, while the commission argued that under Korean law, the exercise price of stocks issued by an unlisted company is a commission decision. The bank also failed to make its plans public until March, violating the disclosure rules, the commission said.

The bank set the prices at 5,076 won ($3.87) last year and 6,343 won this year. The provisional prices set by the commission are higher than those - 9,000 won to 10,000 won in 2000 and 14,000 won this year. Regulators will come up with final prices and inform Korea First Bank of them.

"The commission will hold a meeting next week to discuss what actions should be taken against the bank for violating the procedural and disclosure rules," the official said. "Given that Korea First Bank has admitted and corrected its faults, only symbolic sanctions are likely to be imposed."

Korea First Bank decided to give Mr. Horie and 18 executives an option to buy 512 million shares last year and another 600,000 shares this year.

by Huh Kwi-shik