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March 25, 2015
OKASAN SECURITIES GROUP INC.
In its March 25, 2015 meeting, the Board of Directors of Okasan Securities Group Inc. resolved to revise its executive compensation system and to abolish the system of executive severance pay for directors. The Board of Directors also decided to present at its 77th regular general meeting of shareholders scheduled for June 2015 a resolution on adopting a compensation-type stock option system, as described below.
1.Abolition of system of executive severance pay for directors
The system of executive severance pay for directors will be abolished as of the conclusion of the 77th regular general meeting of shareholders scheduled for June 2015. A resolution shall be presented to the regular general meeting of shareholders calling for payment to directors remaining in their posts after the regular general meeting of shareholders of final executive severance pay for their terms in office through the conclusion of the regular general meeting of shareholders. Plans call for such payment of final executive severance pay to be made at the time the director leaves office.
2.Adoption of compensation-type stock option system
A compensation-type stock option system (involving issue of stock acquisition rights with an exercise price of 1 yen per share) will be adopted for Company directors. (The term "directors" hereinafter shall exclude directors who would be audit committee members if the transition to a company with an audit committee is approved at the 77th regular general meeting of shareholders scheduled for June 2015.) This system is intended to strengthen the link between executive compensation and share prices, which reflect the Company's corporate value. This system will replace the system of executive severance pay for directors. Matters such as compensation related to the stock acquisition rights granted to Company directors in the form of compensation-type stock options will be discussed under a resolution to be presented to the 77th regular general meeting of shareholders scheduled for June 2015.
Details of the plan to offer the compensation-type stock options are provided below.
3.Details of the plan to offer the compensation-type stock options
(1) Class of stock subject to stock acquisition rights
The class of stock subject to the stock acquisition rights shall be shares of Company common stock.
(2) Number of shares of stock subject to stock acquisition rights
The number of shares covered by each of the stock acquisition rights ("shares awarded" hereinafter) shall be 100 shares of Company common stock.
On or after the date of allotment of stock acquisition rights ("allotment date" hereinafter), if the Company chooses to perform a stock split (the term "stock split" hereinafter shall include allocations of shares of Company common stock without compensation) or reverse stock split, the shares awarded shall be adjusted by the following formula, with the resulting adjusted number of shares rounded down to the nearest whole share:
Adjusted shares awarded = unadjusted shares awarded * ratio of stock split or reverse stock split
If the Company must adjust the shares awarded due to a merger, demerger, or similar reason occurring on or after the allotment date, the Company may choose to adjust the shares awarded within the scope it deems reasonable.
(3) Total number of stock acquisition rights
The number of stock acquisition rights awarded to directors in each fiscal year shall not exceed the total compensation related to the stock acquisition rights awarded to directors as stock options divided by the fair price per stock acquisition rights, as calculated as of the allotment date by the Black-Scholes model, rounded down to the nearest whole number of stock acquisition rights.
(4) Price of assets contributed in exercise of stock acquisition rights
The price of assets contributed in the exercise of each stock acquisition rights shall be determined by multiplying the number of shares awarded by the exercise price of 1 yen per share of stock that may be awarded through the exercise of the stock acquisition rights.
(5) Period during which stock acquisition rights may be exercised
The period during which stock acquisition rights may be exercised is to be established by the Board of Directors as within 30 years from the day after the date of allotment of the stock acquisition rights.
(6) Restrictions on acquisition of stock acquisition rights through transfer
Acquisition of stock acquisition rights through transfer shall require approval by resolution of the Board of Directors.
(7) Conditions of exercise of stock acquisition rights
The Board of Directors shall establish conditions on the exercise of stock acquisition rights, including conditions prohibiting individuals receiving allotment of stock acquisition rights from exercising stock acquisition rights during their terms of office as Company directors. This provision shall include directors who are members of the audit or similar committee.
Note
Plans call for allotment of these compensation-type stock options as described above both to Company directors and to directors of Okasan Securities Co., Ltd., a Company subsidiary.