Release: April 27, 2005
The board of directors of NGK INSULATORS, LTD. (President & COO: Shun Matsushita; Head Office: Nagoya, Aichi, Japan) today resolved to make a proposal at its annual general meeting of shareholders scheduled for June 2005 to issue Stock Acquisition Rights at no cost for the purpose of granting stock compensation-type stock options to NGK's directors, corporate auditors and corporate officers pursuant to provisions of Articles 280-20 and 280-21 of Japan's Commercial Code. Particulars are provided in the following:
With this free issuance of Stock Acquisition Rights as stock compensation-type stock options, NGK intends to link its compensation system for directors, corporate auditors and corporate officers more to the company's stock price and consolidated business performance. Thereby, they will share with stockholders both advantages and risks generated by ups and downs of the stock price, leading them to enhance their motivation and morale to raise the value of the stock and consolidated business performance through appropriate management of the company.
NGK will drastically review its compensation system for directors and corporate auditors abolishing the existing retirement benefits system; and instead granting directors, corporate auditors and corporate officers Stock Acquisition Rights free of charge as stock compensation-type stock options subject to an approval at each general shareholders meeting held every fiscal year during their service.
(1) Grantees of Stock Acquisition Rights
NGK's directors, corporate auditors and corporate officers.
(2) Type and the number of shares to be issued upon exercise of Stock Acquisition Rights
Up to 200,000 shares of NGK's common stock
In the event, however, that NGK carries out stock splits or reverse stock splits, the number of common stocks to be issued upon exercise of Stock Acquisition Rights shall be adjusted in accordance with the following calculation formula, with any resulting fractional figure less that 1 share being rounded down.
Post-adjusted number of shares = Pre-adjusted number of shares X Ratio of stock split or reverse stock split
Furthermore, in the event of merger or consolidation with other company where Stock Acquisition Rights are succeeded to such company, or in the event of any corporate division, NGK may adjust the number of common stocks to be issued upon exercise of Stock Acquisition Rights.
(3) The aggregate number of Stock Acquisition Rights
The aggregate number of Stock Acquisition Rights shall be up to 200.
1,000 shares will be allotted to each Stock Acquisition Right. If, however, an adjustment of the number of common stocks is carried out in a manner stipulated in "(2)", this aggregate number shall be adjusted as well.
(4) Issuing price of Stock Acquisition Rights
Free of charge
(5) Amount to be paid in upon exercise of each Stock Acquisition Right
The amount to be paid in upon exercise of each Stock Acquisition Right shall be the amount obtained by multiplying the amount to be paid in per share to be issued or transferred upon exercise of each Stock Acquisition Right, which is one (1) yen, by the number of shares allotted to each Stock Acquisition Right.
(6) Exercise period of Stock Acquisition Rights
The period in which Stock Acquisition Rights are exercisable is determined by NGK's board of directors within the period of July 1, 2005 to June 30, 2035.
(7) Other conditions regarding exercise of Stock Acquisition Rights
(8) Causes and conditions of cancellation of Stock Acquisition Rights
(9) Restriction on transfer of Stock Acquisition Rights
Any transfer, pledge or other means of disposal of Stock Acquisition Rights shall require an approval of NGK's board of directors.
(10) Succession of Stock Acquisition Rights in the case of a share exchange or share transfer
In the case of a share exchange or transfer where NGK becomes a wholly-owned subsidiary of other company, any obligations with regard to Stock Acquisition Rights shall be succeeded by such company that becomes the 100%-parent company as a result of the share exchange or transfer. This, however, shall be applied provided that a share exchange agreement and a resolution of a general shareholders meeting held for a share transfer includes stipulations concerning the succession of Stock Acquisition Rights in the line with the following principles.
(The principles of deciding the conditions of Stock Acquisition Rights to be succeeded.)
Specifics of the issuance and allotment of Stock Acquisition Rights will be determined by a resolution of a meeting of NGK's board of directors to be held after the annual general meeting of shareholders scheduled for June 2005, provided that the bill described above is approved at the said shareholders meeting.