Revision of Compensation Scheme for Directors and Auditors
(Abolition of Retirement Bonus Scheme and Adoption of Compensation-type Stock Option Scheme)
DISCO Corporation (hereafter the "Company") hereby announces that it resolved, at the meeting of its Board of Directors held on May 10, 2004, to abolish the current retirement bonus scheme and adopt compensation-type stock option scheme. The Company will issue Share Acquisition Rights to the Company's directors and auditors at no cost pursuant to the provisions of Article 280-20 and 280-21 of the Commercial Code. The proposal will be made at the 65th Ordinary General Meeting of Shareholders of the Company to be held on June 24, 2004.
| 1. |
Reason for issuance of Share Acquisition Rights on especially favorable terms to directors
and auditors |
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The company issues Share Acquisition Rights to the Company's directors and auditors at no cost for the purpose of boosting their sensitivity to the share price and the consolidated business performance of the Company, thus having interests of the directors and auditors of the Company relate the Company's business performance so as to raise their motivation. It is therefore proposed to issue Share Acquisition Rights at no cost as the means of compensation-type stock option scheme, the exercise period of which will start from the day following the retirement date of such directors and auditors and the amount to be paid upon exercise of the right is (1) yen per unit.
Furthermore, the Company plans to drastically review the compensation scheme for directors and auditors based on the discussion of the benefit committee, abolish the current retirement bonus scheme for directors and auditors and to allocate Share Acquisition Rights as compensation-type stock option scheme to the directors and auditors with approval at the Ordinary General Meetings of Shareholders of the Company every year during their administration period as a condition.
As for the impact on the Company's economic situation, this revision has the same effect as the company offers retirement bonus for directors and auditors by own shares in exchange for cash. And it enables to relate interest of shareholders to that of directors and auditors more than before.
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| 2. |
Outline of issuance of Share Acquisition Rights |
| (1) |
Persons to whom Share Acquisition Rights will be allocated: |
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Directors of the Company (the "Optionee") |
| (2) |
Class and number of shares to be issued upon exercise of Share
Acquisition Rights:
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| |
Not to exceed 16,000 shares of the Company common stock.
If a share split or consolidation is carried out for the Company, the following formula will be used to make adjustments to the number of shares subject to the Share Acquisition Rights. Provided, however, that if such adjustment pertains only to the number of shares subject to the Share Acquisition Rights for which rights have not been exercised at the relevant time and, as a result, fractional shares less than 1 arise, such shares will be rounded off.
No. of shares after adjustment =No. of shares before adjustment × ratio of split (or consolidation)
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| (3) |
Total number of Share Acquisition Rights |
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Not to exceed 160.
(100 Shares per share acquisition right. Provided that if an adjustment to the number of shares prescribed in the foregoing (2) is made, then the same adjustment will be made hereto.)
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| (4) |
Exercise price of the Share Acquisition Rights |
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Free of charge. |
| (5) |
Amount to be paid in upon exercising Share Acquisition Rights |
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The amount to be paid per share will be 100 yen. |
| (6) |
Period during which the Share Acquisition Rights may be exercised: |
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The period will last until the day on which twenty years have elapsed from the issuance date of the Share Acquisition Rights and will be decided at the Board of Directors Meeting of the Company. Provided, however, that the exercise of rights during the period may be limited by an agreement concerning the allocation of Share Acquisition Rights entered into between Optionee to whom Share Acquisition Rights are allocated and the Company (the "Agreement on Allocation of Share Acquisition Rights"). |
| (7) |
Terms of exercising Share Acquisition Rights |
| i |
The Optionee may exercise Share Acquisition Rights to the extent that he or she has retired from the position of director of the Company (not including cases where he or she is reelected). |
| ii |
If the Optionee passes away, the heirs may exercise the Share Acquisition Rights that remain unexercised at the time of the Optionee's death. Provided, however, that such exercise of rights will be governed by the terms prescribed in the Agreement on Allocation of Share Acquisition Rights. |
| iii |
No assignment, creation of a pledge or any other disposition of the Share Acquisition Rights will be approved. |
| iv |
Other terms pertaining to the exercise of Share Acquisition Rights will be based on resolutions of the Company's Board of Directors concerning the issuance of Share Acquisition Rights and will be governed by the terms prescribed in the Agreement on Allocation of Share Acquisition Rights. |
| (8) |
Events and conditions for cancellation of Share Acquisition Rights: |
| i |
When a merger agreement on the extinction of the Company is approved, or a proposal
for the approval of a share exchange agreement or a share transfer through which the
Company becomes a wholly-owned subsidiary is approved at the General Meeting of
Shareholders, the Share Acquisition Rights may be cancelled at no charge.
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| ii |
If the Optionee to whom Share Acquisition Rights are allocated does not
fulfill the conditions of the exercise of the rights or abandons such rights, his or her Share Acquisition
Rights may be canceled at no charge.
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Contact: Tsutomu Nakayama
Phone: 81-3-4590-1099 |
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