kuraray


News Releases 2006

Notice Concerning the Revision of Compensation System for Directors' and Corporate Auditors

May 10, 2006
Kuraray Co., Ltd.

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.

1. Abolition of the Current Severance and Retirement Benefits System for Directors and Corporate Auditors

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.

2. Introduction of a Compensation-Type Stock Option Scheme for Directors

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.

[Overview of Proposed Issue of Share Acquisition Rights]

(1) Number of Share Acquisition Rights, and the Class and Number of Shares to be Issued upon Exercise of Share Acquisition Rights
  • The number of share acquisition rights shall not exceed 120 each year.
  • The class and number of shares to be issued upon exercise of share acquisition rights shall not exceed 60,000 shares of the Company's common stock each year.
  • One share acquisition right shall equal 500 shares of the Company's common stock.
  • In the event a change in the number of shares through corporate merger, separation, stock split (including gratis issue of new shares) or share consolidation is deemed appropriate, Kuraray shall make adjustments to the number of shares subject to share acquisition rights as considered necessary.
(2) Amount to be Paid on Exercise of Share Acquisition Rights
The amount to be paid on exercise of share acquisition rights shall be the number of the Company's common shares applicable to each share acquisition right multiplied by the exercise price of ¥1.
(3) Period during which Share Acquisition Rights may be Exercised
The period will last until the day on which 15 years have elapsed from the issuance date of share acquisition rights.
(4) Restrictions on the Transfer of Share Acquisition Rights
The transfer of share acquisition rights is subject to approval by the Company's Board of Directors.
(5) Terms and Conditions for Exercising Share Acquisition Rights
Not restricted by item (3), the share acquisition rights holder may exercise his or her share acquisition rights the day following retirement or forfeiture of the position as director of the Company. Other terms and conditions pertaining to the exercise of share acquisition rights shall be based on resolutions by the Company's Board of Directors in connection with the issue of share acquisition rights.

3. Introduction of a Performance-Based Compensation System for Directors

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.

4. Review of Compensation System for Corporate Auditors

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.