Tokyo - Terumo Corporation (TSE: 4543 Section 1) announced that its Board of Directors has decided to propose a resolution introducing a stock option scheme as stock-based compensation plan to members of the Board of Directors at the Company's 98th Annual General Meeting of Shareholders scheduled to be held on June 26, 2013. Details are as follows.
1. Purpose of introduction of the scheme
Terumo has reviewed its system of compensating directors (all references to directors hereafter exclude independent directors) in order to increase the ratio of performance-based compensation. As part of revision, Terumo decided to newly introduce a stock option as stock-based compensation plan in order to provide clearer incentives to improve corporate value over the long term, and to align their interest in increasing benefits with that of shareholders.
The stock-based compensation to be introduced would provide remuneration to directors within the maximum limits of 500 million yen annually, which was approved at the 66th Annual General Meeting of Shareholders. Bonuses to directors will continue to be based on performance for each fiscal year, and payment will be subject to approval each year at the general meeting of shareholders.
2. Details of stock acquisition rights issued as stock options
(1) Class and number of shares subject to stock acquisition rights
The class of shares subject to stock acquisition rights shall be the Company's common stock, and the number of shares subject to a single stock acquisition right (hereafter, "the number of shares allotted") shall be one share. In the event that the Company conducts a stock split of its common stock (including free allotment of the Company's common stock; this applies to all mentions of a stock split hereafter) or a consolidation, on and after the day the proposal to introduce the stock-based compensation is resolved (hereafter, "the day of resolution"), the number of shares allotted shall be adjusted according to the following formula, rounding down any fractions of less than one share resulting from the calculation.
Number of shares allotted after adjustment = number of shares allotted before adjustment X ratio of stock split or stock consolidation
Furthermore, in the event the number of shares allotted needs to be adjusted in accordance with different circumstances described above, including a company merger, split-off, or other kind of reorganization, on and after the day of resolution, Terumo shall be able to appropriately adjust the number of shares allotted to a reasonable extent.
(2) Maximum number of stock acquisition rights
The maximum number of stock acquisition rights allotted to the Company's directors within one year from the day of the annual general meeting of shareholders corresponding to each fiscal year shall be 70,000.
(3) Amount of payment through the exercise of stock acquisition rights
The amount of payment per each exercise of a stock acquisition right shall be decided in a meeting of the Board of Directors based on the fair value of stock acquisition rights, estimated by using impartial calculation methods such as the Black-Scholes Model at the time of allotting the stock acquisition rights.
(4) Amount of assets to be contributed upon the exercise of stock acquisition rights
The amount of assets to be contributed upon exercise of stock acquisition rights shall be determined by multiplying the per-share value by the number of allotted shares, where the value per share to be issued upon exercise of the stock acquisition rights shall be one yen.
(5) Period in which stock acquisition rights can be exercised
The period shall be within 30 years from the day following the day of allotting the stock acquisition rights, and decided in a meeting of the Company's Board of Directors.
(6) Restrictions on the acquisition of stock acquisition rights through transfer
The acquisition of stock acquisition rights through transfer must be approved by a resolution of the Company's Board of Directors.
(7) Conditions for exercising stock acquisition rights
The meeting of the Company's Board of Directors shall determine the conditions for exercising stock acquisition rights, including the conditions that those who have been allotted stock acquisition rights may exercise these rights on and after the day from which three years have passed from the day following the original allotment.
With respect to items (1), (3), and (7) above, effective after the annual general meeting of shareholders has concluded, Terumo plans to allot the same stock acquisition rights as described above to senior executive officers who do not serve concurrently as directors, and issue a number of shares it deems as necessary. The amount of payment will be determined based on the fair value of the said stock acquisition rights. With respect to these stock acquisition rights, the total number of shares to be allotted to these officers shall have an upper limit of 20,000, and be allotted within one year from the day of the annual general meeting of shareholders corresponding to each fiscal year.
Terumo (TSE: 4543) is a global leader in medical technology and has been committed to “Contributing to Society through Healthcare” for 100 years. Based in Tokyo and operating globally, Terumo employs more than 28,000 associates worldwide to provide innovative medical solutions in more than 160 countries and regions. The company started as a Japanese thermometer manufacturer, and has been supporting healthcare ever since. Now, its extensive business portfolio ranges from vascular intervention and cardio-surgical solutions, blood transfusion and cell therapy technology, to medical products essential for daily clinical practice such as transfusion systems, diabetes care, and peritoneal dialysis treatments. Terumo will further strive to be of value to patients, medical professionals, and society at large.