DENSO CORPORATION announces that the Board of Directors has decided to dispose treasury stock (hereinafter referred to as the 'disposal of treasury stock' or 'disposal').
Purpose and reasons for disposal
At the Board of Directors meeting held on May 18, 2020, the Company has resolved to introduce a stock-based compensation plan (hereinafter referred to as the 'Plan') as a new compensation system for the Company's directors other than non-executive directors and outside directors (hereinafter referred to as 'Eligible Directors') and Senior Executive Officers who do not concurrently serve as Directors of the Company (hereinafter collectively referred to as 'Eligible Directors, etc.') with the aim of providing medium- to long-term incentives to Eligible Directors, etc. and sharing shareholder value.
In addition, at the 97th Ordinary General Meeting of Shareholders held on June 19, 2020, the Company has received approval to pay monetary claims of up to 200 million yen per year to Eligible Directors, issue or dispose of up to 100,000 shares of the Company common stock per year, and set a period of restriction on the transfer of Restricted Stock for a period of between 3 and 30 years as determined by the Board of Directors of the Company, as monetary compensation (hereinafter referred to as 'Restricted Stock Compensation') for the acquisition of Restricted Stock. The outline of this Plan is as follows.
Outline of the Plan
The Eligible Directors, etc. will pay in all of the monetary claims provided by the Company under this Plan as assets contributed in kind, and will receive the issuance or disposition of the Company's common stock. The amount to be paid per share shall be determined by the Board of Directors to the extent that the amount is not particularly advantageous to the eligible directors, etc., who subscribe for the common stock and to be based on the closing price of the Company's common stock on the Tokyo Stock Exchange on the business day preceding the date of each Board of Directors resolution (or, if no transaction has been conducted on the same day, the closing price on the most recent trading day preceding the transaction). In addition, when issuing or disposing of the Company's common stock under this system, the Company and the Eligible Directors, etc., shall enter into a restricted stock allotment agreement, which includes: (1) Eligible Directors, etc. the Company prohibits the transfer to a third party, the creation of a security interest, or any other disposition of the Company's common stock that has been allocated under the restricted stock allotment agreement and (2) In occurring the certain event, the Company shall acquire the relevant common stock, free of charge.
This time, after deliberation at the Officer Nomination and Compensation Meeting, we have decided to grant a total of 205,695,517.5 yen in monetary claims (hereinafter referred to as the 'Monetary Claims') and 78,405 shares of common stock to in order to further improve the motivation of each eligible director with taking into account the purpose of this system, the company's business conditions, the scope of duties of each Eligible Director, and various other circumstances. Additionally, in order to achieve the purpose of introducing this system, which is to share shareholder value over the medium to long term, the transfer restriction period is set at 30 years. Under the Disposal of Treasury Stock, the nine Eligible Directors, etc. to whom the allotment is scheduled will pay all of the Monetary Claims against the Company as assets contributed in kind, and will receive disposal of the Company's common stock (hereinafter referred to as the 'Allotted Shares').
Basis for calculating the payment amount and its specific details
This disposal of treasury stock to the scheduled allottee will be carried out using the monetary claims provided as Restricted Stock Compensation for the Company's 101st fiscal year under this system as capital assets. Regarding the disposal price, in order to eliminate arbitrariness, the closing price of the Company's common stock on the Tokyo Stock Exchange prime market on May 9, 2024 (the business day before the date of the Board of Directors' resolution) was determined as 2,623.5 yen. This is the market share price immediately before the date of the Board of Directors' resolution, and the Company believe that this is a reasonable price and does not constitute a particularly advantageous price.
Contact:
Tadashi Arai
Tel: +81-50-1738-6018)
DENSO CORPORATION 
