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As the shares of the Company allotted through the Disposal of Treasury Stock shall be delivered to Directors, etc. covered by the BIP and the Executives covered by the ESOP pursuant to the Policies on the BIP and the ESOP, and also as it is not assumed for the shares from the Disposal of Treasury Stock to temporarily flow into the stock market, the Company believes that its impact on secondary market shall be insignificant, and that the number of shares disposed of, as well as its scale of dilution, shall be within a reasonable range.

In addition, for the outlines of the BIP Trust and the ESOP Trust, please refer to the April 23, 2024 notice regarding the continuation of, and partial revision to, the performance share plan for the Nidec Group’s Directors, etc., and the April 24, 2018 notice regarding the adoption of a new performance share plan for the Nidec Group’s Executives in Japan and overseas.

Outline of the BIP Trust Agreement

Outline of the ESOP Trust Agreement

3. Basis for and Details of the Calculation of Disposal Value

To eliminate arbitrariness in determining disposal value, the Company has taken recent trends in its stock price into consideration and has set the disposal value at 6,812 yen per share, the closing price announced by Tokyo Stock Exchange, Inc. (the "Tokyo Stock Exchange") on July 22, 2024, the business day immediately prior to the date on which the resolution with regard to the disposal of treasury stock was passed by the Board of Directors. The Company’s reason for adopting the closing price announced on that date is that the market price announced immediately prior to the Board of Directors’ decision serves as an objective and reasonable indicator that provides a fair basis for the calculation of disposal value.

In addition, the Company’s Audit and Supervisory Committee (comprising five members, three of whom are Outside Directors), concluded that said disposal value was reasonably and legally calculated and does not constitute a value arbitrarily determined in favor of the Company.

4. Procedures under the Code of Corporate Conduct

The Disposal of Treasury Stock will result in only a minor dilution of shares, well below the prescribed level of 25%, while producing no changes in the holdings of controlling shareholders. Therefore, third-party opinions and the confirmation of the shareholders’ consensus, which would otherwise be mandated based on Article 432 of the Tokyo Stock Exchange’s Securities Listing Regulations, are not required.

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(Appendix) On April 23 2024, we disclosed " Notice Regarding the Continuation of the Performance Share Plan for the Nidec Group’s Executives and Others, and Partial Amendment to the Plan." in Japanese. We will disclose the notice translated in English as follows.

Released on April 23, 2024, in Kyoto, Japan

Notice Regarding the Continuation of the Performance Share Plan for the Nidec Group’s Executives and Others, and Partial Amendment to the Plan

Nidec Corporation (TOKYO:6594; OTC US: NJDCY) ("Nidec" or the "Company") today announced that it has resolved, in the meeting of its Board of Directors held on April 23, 2024, to submit to the 51^st Annual General Meeting of Shareholders (the "General Meeting of Shareholders") scheduled for June 2024 a bill regarding the partial amendment to, and the continuation thereafter of, the Board Incentive Plan Trust (the "BIP Trust") introduced as a performance share plan (the "Performance Share Plan") for the Company’s Directors (excluding Founder and Executive Chairman, Outside Directors, and those who are Audit and Supervisory Committee Members), Executive Officers and individuals who have the equivalent status (the "Company’s Directors, etc."), and Directors (excluding Outside Directors) and Vice Presidents ("Nidec Group companies’ Directors, etc.," and referred to as "Intended Directors, etc." together with the Company’s Directors, etc.) of the Company’s main group companies, as described below.

The Performance Share Plan after the amendment

(1) Outlook of the Performance Share Plan

The Performance Share Plan to be amended and continued is a stock compensation system that: covers three consecutive business years (i.e., the fiscal year ending March 31, 2025 to the one ending March 31, 2027) (the "Intended Period"); provides the Intended Directors, etc. with points based on, among others, their titles and the degree of achievement based on their annual performance targets; and, after the Intended Period, issues and pays ("issue, etc.") the number of the Company’s shares and the amount of money that corresponds to that of the Company’s shares converted into cash ("the Company’s shares, etc."), both to be calculated based on the number of given points accumulated (as defined in (5) below. The same applies hereinafter) (the "number of points accumulated").

If the BIP Trust is continued based on (4) (ii) below, the following three business years will be the Intended Period.

(2) Resolution at the General Meeting of Shareholders regarding the Performance Share Plan

At their respective General Meetings of Shareholders, the Company and its group companies will: resolve, among other necessary matters, the upper limit of the amount of money to be placed into the BIP Trust during the Intended Period, and the upper limit of the total number of the Company’s shares, etc. to be issued, etc. to the Intended Directors, etc.; and manage the Performance Share Plan within the range approved by the General Meetings of Shareholders.

(3) Intended targets of the Performance Share Plan (requirements for recipients)

In principle, the Intended Directors, etc., who must meet the following requirements as recipients, must follow a designated procedure to be confirmed as recipients, and be issued, etc. the Company’s shares, etc. from the BIP Trust based on the number of points.

1. In principle, the Intended Directors, etc. must be Intended Directors, etc. during the Intended Period;*¹

2. The Intended Directors, etc. must not leave office due to personal reasons, dismissal, etc., or engage in certain activities in violation of any internal or external rule, regulation, or law while in office ; and

3. The Intended Directors, etc. must meet requirements deemed necessary for them to achieve the Performance Share Plan’s aim.

*1. The Company’s shares, etc. may be issued, etc. even before the end of the Intended Period if a decision is made for an Intended Director, etc. to be transferred overseas.

(4) Trust period

(i) The trust period after the Performance Share Plan is decided to be continued

While the trust period of the BIP Trust set based on the Performance Share Plan was approximately three years until August 31, 2024, the Company plans, upon the continuation of the Performance Share Plan, to extent the BIP Trust’s trust period for an additional three years from August 2024.

(ii) Continuation of the BIP Trust

Upon the expiration of the trust period, the Company may, by revising the trust agreement or placing an additional amount in the trust, continue the BIP Trust as the Performance Share Plan or a performance share plan similar to the Performance Share Plan. In such case, the Company will extend the BIP Trust’s trust period by three years, while the Company and its group companies will obtain approval at their respective General Meetings of Shareholders regarding each extended trust period, then provide additional funds within the upper limit of the amount of money to be contributed to the BIP Trust during the new Intended Period, to continue to provide Intended Directors, etc. with points. However, when such an additional contribution is made, if there is any share of the Company and money remaining in the trust property (excluding those shares of the Company that corresponds to the points issued to Intended Directors, etc., but that are yet to be issued, etc.) ("remaining shares, etc."), the total of the remaining shares, etc. and the additional trust money to be contributed must be approved at respective General Meetings of Shareholders, and be below the upper limit of the amount of money to be contributed to the BIP Trust during the new Intended Period. The trust period may not be just one-time, but may be extended repeatedly thereafter.

(5) Number of the Company’s shares, etc. to be issued, etc. to Intended Directors, etc.

The number of the Company’s shares, etc. to be issued, etc. to Intended Directors, etc. will be based on the number of the points to be calculated based on the following point-calculation formula, and a point will be regarded as a share of the Company. If the number of the Company’s shares in the BIP Trust increases or decreases due to, for example, share split, allotment of shares without contribution, or share consolidation, the Company will, based on the degree of such increase or decrease, adjust the number of upper limit of the number of the Company’s shares, etc. to be issued, etc. per point, and the upper limit of the number of shares in (7) (ii) below.

(Point-calculation formula)
The Company will calculate the performance-linked points by multiplying the points calculated by dividing the basic compensation amount predetermined for each position with the share price as of the BIP Trust’s acquisition of the Company’s shares ("base units"), with the performance-linked points calculated based on the degree of achieving annual targets, etc., and pay the resulting amount to the Intended Directors, etc. who are in office as of each business year during the Intended Period.

(*2) The performance-linked coefficient will assess, among others: the degree of achievement in consolidated sales and operating profit in the annual business plan; and, from the business year ending March 31, 2025, the number of ESG evaluation institutions that grant us the scores and ratings we target in the three major institutions (MSCI, FTSE and CDP). The performance-linked coefficient will fluctuate in the rage of 0% - 200%.

(*3) The number of points to be provided to those Intended Directors, etc. who left office during the trust period, due to retiring, etc. will be adjusted based on the individuals’ terms in office, etc.

(6) How and when to issue, etc. the Company’s shares, etc. to Intended Directors, etc.

Those Intended Directors, etc. who meet the requirements as recipients of the Company’s shares, etc. will be issued the number of the Company’s shares that are equivalent of 50% of the number of points accumulated in (5) above during a designated period after the end of the Intended Period (Odd shares will be disregarded), while the Company’s shares equivalent to the remaining number of points accumulated will be converted into cash in the BIP Trust, and the Intended Directors, etc. will receive the amount of money equivalent to the amount converted into cash. However, if those Intended Directors, etc. do not own a brokerage account for Japanese stocks, the Company’s shares equivalent to the number of points accumulated will be converted into cash in the BIP Trust, and the Intended Directors, etc. will receive the amount of money equivalent to the amount converted into cash. Directors, etc. who leave office during the trust period (excluding those who leave office due to personal reasons, dismissal, etc.) will be issued the Company’s shares equivalent to 50% of the number of points accumulated as of leaving office (Odd shares will be disregarded), and the Company’s shares equivalent to the remaining number of points accumulated will be converted into cash in the BIP Trust, and the Directors, etc. will receive the amount of money equivalent to the amount converted into cash.

If any of Intended Directors, etc. deceases while in office, the Company’s shares equivalent to the number of points accumulated at the time of the death of the Intended Directors, etc. will be converted into cash in the BIP Trust, and the heir(s) of the deceased Intended Directors, etc. will receive the amount of money equivalent to the amount converted into cash

Additionally, if a decision is made for any Intended Directors, etc. to be transferred overseas, the Company’s shares equivalent to the number of points accumulated will be converted into cash in the BIP Trust prior to the end of the Intended Period, and such Intended Directors, etc. may receive the amount of money equivalent to the amount converted into cash while in office.

(7) Upper limit of the trust money to be contributed to the BIP Trust for the Company’s Directors, etc., and the upper limit of the number of the Company’s shares, etc. issued by the BIP Trust to the Company’s Directors, etc.

The upper limit of the trust money to be contributed to the BIP Trust as stock-based compensation to Company’s Directors, etc. during the Intended Period, and the upper limit of the Company’s shares, etc. to be issued, etc. by the BIP Trust must be below the following upper limit, provided that such amount be resolved at the Annual General Meeting of Shareholders:

(i) Upper limit of the trust money to be contributed to the BIP Trust as a stock-based compensation for Company’s Directors, etc. for the continued Intended Period: JPN2.73 billion*

However, if the BIP Trust in (4) (ii) above is to be continued, the upper limit of the trust money to be contributed to the BIP Trust as a stock-based compensation for the Company’s Directors, etc. during the Intended Period will be JPN2.73 billion for each new Intended Period (three-year business period).

*4. The amount will be the total of the BIP Trust-provided share acquisition fund and the combination of the trust fees and costs.

(ii) Upper limit of the number of the Company’s shares, etc. to be issued, etc. by the BIP Trust as a stock-based compensation for Company’s Directors, etc. regarding the continued Intended Period: 367,500 shares.*5

However, if the BIP Trust in (4) (ii) above is to be continued, the upper limit of the number of the Company’s shares, etc. to be issued, etc. by the BIP Trust as a stock-based compensation for Company’s Directors, etc. regarding a new Intended Period will be 122,500 shares per business year, and 367,500 shares for the Intended Period (three-business year period).

*5. The upper limit of the Company’s shares, etc. to be issued, etc. was set based on the present shares price, etc. used as a reference, and also based on the upper limit of the above trust money.

In addition to the above, the Company will contribute money to acquire the Company’s shares for the to be issued, etc. to the Directors, etc. of the Company’s group companies, within the upper limit of the trust money resolved at the individual companies’ General Meetings of Shareholders, and manage the Company’s shares in the BIP Trust based on the amounts of the individual group companies’ trust money.

(8) How the BIP Trust should acquire the Company’s shares

The BIP Trust plans to acquire the Company’s shares from either the stock market or the Company (the portion for treasury share disposal), within the upper limit of the trust money in (7) above and within the upper limit of the Company’s shares, etc. to be issued, etc.

(9) How to exercise the voting right for the Company’s shares in the BIP Trust

During the trust period, to secure neutrality in business management, the voting rights will not be exercised for the Company’s shares in the BIP Trust’s trust period.

(10) How to treat dividends of the Company’s shares in the BIP Trust

The BIP Trust will receive the dividends for the Company’s shares in the BIP Trust, and used it for the BIP Trust’s trust-based compensation and fees. If, after the dividends are used for the trust-based compensation and fees, there is any residue as of the end of the trust, the money will be donated to an organization not related to the Company or any of its group companies. If the Company continues to use the BIP Trust, the residual money will be utilized to acquire shares.

(11) How to treat residual shares as of the end of the trust period

If, due to failure to achieve a business target, etc., there is any residual share as of the expiration of the trust period, the Company may, by revising the trust agreement or placing additional trust, continue the BIP Trust as a performance share plan similar to the Performance Share Plan. When ending the BIP Trust at the expiration of the trust period, the BIP plans to, as a measure to return profit to shareholders, transfer the residual shares to the Company for free of charge, and the Company plans to cancel the shares based of resolution at a meeting of its Board of Directors.

Reference

Details of trust agreement

Note: The tentative dates given above are subject to change to appropriate dates according to the applicable laws and regulations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240723471638/en/

Contacts

Teruaki Urago
General Manager
Investor Relations
+81-75-935-6140