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Amount and Details of Stock Options as Compensation for Directors

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Amount and Details of Stock Options as Compensation for Directors


May 10, 2006

TDK Corporation's (the "Company") Board of Directors today passed a resolution regarding the determination of the amounts and details of stock options as compensation for directors. This resolution is subject to approval at the 110th Ordinary Annual General Meeting of Stockholders scheduled for June 29, 2006.

Since the fiscal period ended March 31, 2006, the Company has distributed stock acquisition rights with an exercise price of ¥1 per share free of charge as a part of compensation in a stock-linked compensation plan to directors. The purpose of this stock-linked compensation is to provide the Company's directors with further incentive for improving the Company's operating results and share price. This is accomplished by structuring the compensation so that directors share with the Company's stockholders the benefits of an increase in the Company's share price as well as the risk of a decrease.

Prior to the enforcement of the Company Law of Japan (Law No. 86 of 2005), approval by special resolution at the Company's Ordinary General Meeting of Stockholders was necessary for the issuance of stock acquisition rights with favorable terms and conditions as stock options to persons other than stockholders. However, this proposal recommends approval for the amount and details of stock options as compensation for directors. This proposal is needed because stock acquisition rights distributed as stock options to the Company's directors after the enforcement of the Company Law of Japan are regarded as part of directors' compensation.

1. Details of the proposal

Stockholders at the 106th Ordinary General Meeting of Stockholders held on June 27, 2002 approved compensation of up to ¥25 million per month for TDK directors. This proposal recommends approval for a separate category of compensation for directors with an upper limit of ¥137 million per year for stock acquisition rights to be granted as stock options to TDK directors. If the proposal concerning the election of directors is approved, there will be 7 directors.

2. Details of the stock acquisition rights to be granted
(1) Total number of stock acquisition rights and class and number of shares to be issued upon exercise of the rights
(a) Total number of stock acquisition rights: Up to 176 stock acquisition rights may be issued within one year from the date of the ordinary general meeting of stockholders each fiscal year.
(b) Number of shares to be issued upon exercise of the rights: Up to 17,600 shares of the Company's common stock can be distributed due to the exercise of stock acquisition rights that are issued within one year of the date of the ordinary general meeting of stockholders each fiscal year.

The number of shares for each stock acquisition right (hereinafter the "number of shares granted") shall be 100.

In the event that the Company conducts a stock split, distributes shares free of charge or consolidates its stock, the number of shares to be issued for this purpose shall be adjusted according to the following method of calculation. This adjustment will apply to the "number of shares granted" for those stock acquisition rights that have not already been exercised prior to the relevant date. Moreover, fractions of less than one share arising out of the above adjustments shall be discarded.

Post-adjustment "Number of shares granted" = Pre-adjustment "number of shares granted" x stock split or stock consolidation ratio
(2) The Amount to be invested when exercising each stock acquisition right
The amount to be invested when exercising each stock acquisition right shall be the amount to be paid for each share that can be granted due to the exercise of stock acquisition rights, which shall be ¥1, multiplied by the "number of shares granted."
(3) Exercise period for stock acquisition rights
The exercise period shall be within 20 years from the day following the date stock acquisition rights are granted (hereinafter the "allotment date".
(4) Transfer restrictions of stock acquisition rights
Regarding the acquisition of stock acquisition rights due to transfers, approval is required by resolution of the Company's Board of Directors.
(5) Other conditions relating to the exercise of stock acquisition rights
Holders of stock acquisition rights can basically exercise their rights from three years after the next day of allotment date. Additional conditions regarding the exercise of stock acquisition rights are decided at the meeting of the Board of Directors which determines the offering details for these stock acquisition rights.

For further information, contact the Corporate Communications Dept.
Tel.: 81-3-6778-1055
E-mail: pr@jp.tdk.com

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