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Elimination of System Providing Retirement Benefits to Directors and Introduction of Stock Options

Date
31 May 2007
Nippon Sheet Glass Co., Ltd. ( hereinafter referred to as the Company ) today announced that its Board of Directors meeting held on May 31, 2007 passed a resolution to submit “Revision of the compensation for directors and determination of the nature of stock options,” a proposal based on eliminating the system providing retirement benefits to directors and introducing stock options, to the 141st General Shareholders’ Meeting scheduled for June 28, 2007 ( hereinafter referred to as the General Shareholders’ Meeting ) as part of an initiative to revise its directors’ remuneration system. Details of the proposal are as follows.

1. Elimination of system providing retirement benefits to directors

The system of providing retirement benefits to directors and auditors shall be abolished as of the close of the General Shareholders' Meeting.

This will end the provision of retirement benefits to those in the position of directors and auditors as of March 31, 2007 ( excluding those retiring at the close of the General Shareholders' Meeting ) with the payment of amounts corresponding to their tenure through the close of the General Shareholders' Meeting, within limits stipulated by the Company based on certain standards. Upon approval by the General Shareholders' Meeting, the Company shall pay the said amount to each director when he steps down both as director and executive officer and to each auditor when he steps down as auditor.

2. Introduction of stock options

(1) Objective

As part of its initiative to revise remuneration system for directors, the Company shall, while eliminating the system providing retirement benefits to directors, offer new stock acquisition rights to its directors ( excluding external directors ) under the stock option program.

(Note) The actual recipients of the stock acquisition rights shall be stipulated by a resolution of the Board of Directors.

(2) Details of the stock acquisition rights to be allotted under the stock option program

Under the scheme, the Company, while allotting new stock acquisition rights with amount to be paid in that is of fair value, shall give the recipients remuneration rights, with value equivalent to the amount to be paid in for the stock acquisition rights each of them are to receive, on the date of payment and issue stock acquisition rights on the same day by canceling the monetary payment with the said remuneration rights. Details of the stock acquisition rights are as follows.

(i) The total number of stock acquisition rights

The total number of stock acquisition rights to be allotted within one year from the general shareholders' meeting for a business year shall be set so that the total of fair value of each stock acquisition right as of the date of allotment ( hereinafter referred to as the allotment date ) multiplied by the number of the said stock acquisition rights shall not exceed 110 million yen.
The fair value of each stock acquisition right as of the allotment date is calculated using the Black-Scholes Model based on the closing share price of the Company's common stock listed on the Tokyo Stock Exchange on that day.

(ii) Class and number of shares to be issued for the purpose of stock acquisition rights

The class of shares to be issued shall be shares of the Company's common stock and the number of shares allocated per stock acquisition right ( hereinafter referred to as the number of shares granted ) shall be 1,000 shares.
Furthermore, from the day of resolution at the General Shareholders' Meeting, the Company shall carry out required adjustments, whenever it is deemed appropriate, to adjust the number of shares granted due to a stock split ( including gratis distribution of shares in the Company's common stock ) or reverse stock split.

(iii)  Amount of the assets to be contributed upon exercise of stock acquisition rights

The amount of the assets to be contributed upon exercise of stock acquisition rights shall be the amount obtained by multiplying 1 yen, which is the amount to be paid in per share issued upon exercise of stock acquisition rights, with the number of shares granted.

(iv)  Period during which stock acquisition rights may be exercised

The period during which stock acquisition rights may be exercised shall be the period from the day following the allotment date of stock acquisition rights to the day on which thirty years have passed from the allotment date.

(Note) However, the period during which the stock acquisition rights may be exercised shall be, in principle, as listed under ( vi ) below, whereby it is limited to a five-year period from the day following the date of forfeiture of the both positions of director and executive officer of the Company.

(v)  Restrictions on the acquisition of stock acquisition rights through transfer

Acquisition of stock acquisition rights through transfer requires the approval of the Board of Directors.

(vi)  Other conditions for exercising stock acquisition rights

The persons granted stock acquisition rights, in principle, may exercise their stock acquisition rights during a period of five years from the day following the date of forfeiture of the both positions of director and executive officer of the Company.
Other conditions for exercising the stock acquisition rights shall be stipulated at the Board of Directors meeting at which the terms of the stock acquisition rights are determined.

(Note) The matters mentioned above are subject to the approval of the proposal “Revision of the compensation for directors and determination of the nature of stock options" at the General Shareholders' Meeting.

(Reference)

The Company also plans to offer stock acquisition rights under the stock option program with the same condition as described above to executive officers and officers who do not hold the additional position of director upon resolution by the Board of Directors.

The actual recipients shall be determined by the Board of Directors.