Kuraray Co., Ltd. ("Kuraray" or "the Company") today announced that it had resolved at a meeting of its Board of Directors held on May 10, 2006, to review its compensation system for directors and corporate auditors. In order to implement this resolution, the Company also decided that it would put forward the appropriate proposal for approval at its 125th Annual General Meeting of Shareholders scheduled on June 28, 2006. Brief details of the proposal are as follows.
Kuraray will abolish its current severance and retirement benefits system for directors and corporate auditors effective the end of its Annual General Meeting of Shareholders scheduled on June 28, 2006.
For directors reappointed at the Annual General Meeting of Shareholders and Corporate Auditors yet to complete their term of office, the Company will propose payment of a termination amount for each period of incumbency in line with the abolition of the current severance and retirement benefits system. The payment of this termination amount shall coincide with the retirement of each director and corporate auditor identified above.
In conjunction with the abolition of the current severance and retirement benefits system for directors and corporate auditors, Kuraray plans to introduce a compensation-type stock option scheme that entails the issue of share acquisition rights for the purpose of further boosting directors' sensitivity and motivation towards improving the Company's performance.
As a part of this scheme, Kuraray will propose the establishment of a directors' compensation amount not to exceed ¥90 million annually and separate to the introduction of a performance-based compensation system for directors identified in 3. below.
Following the implementation of the new Corporations Law, bonuses and compensation paid to directors are subject to approval at a general meeting of shareholders. Accordingly, Kuraray plans to introduce a new compensation scheme for directors that includes a performance-based system.
To this end, the Company will propose a review of the existing amount set aside as directors' bonus. From a current maximum annual amount of ¥360 million set aside under the existing bonus scheme, Kuraray will propose a revised directors' compensation amount to be established not exceeding ¥450 million each year.
In line with the proposal to abolish its current severance and retirement benefits system for directors and corporate auditors and in an effort to enhance the Company's audit system, Kuraray will propose an increase to the maximum limit set for corporate auditors' compensation from the current level of ¥96 million per year to ¥100 million per year.