2021年2月19日

TOKYO, Japan, February 19, 2021 ― Renesas Electronics Corporation (“Renesas”, TSE:6723), a premier supplier of advanced semiconductor solutions, today announced that it was resolved at the Board of Directors Meeting held today to submit the proposal concerning a revision of its existing compensation plan for directors and an introduction of a new stock compensation plan where shares are delivered after vesting (“the Plan”) to the 19th Ordinary General Meeting of Shareholders (the “Ordinary General Meeting of Shareholders”) scheduled for March 31, 2021 as described below.

    1. Purpose of the Introduction

The purpose of the revision of the current stock compensation type stock option plan for directors to replace with the Plan that is adopted globally and broadly, is to further enhance incentives for the increase in the share price and corporate values as well as to secure talented personnel with diversity in terms of nationality and experience in order to achieve further global business development and growth in the future.

Specifically, Renesas intends to change the current stock compensation type stock option plan as follows: stock options subject to duration of service conditions to the restricted stock units (the “RSU(s)”); and stock options subject to stock price-linked conditions to the performance share units (the “PSU(s)”).

     2. Overview of the Plan

  (1) Classification of the Plan

   The Plan is divided into the following two categories:

    (i) RSU

Stock compensation in which Renesas provides the eligible directors in advance with the units in a number corresponding to the period stipulated by its Board of Directors (in principle, in the case of directors other than outside directors, the number corresponding to three (3) years, and, in the case of outside directors, the number corresponding to one (1) year); vests the units in a number determined on a pro-rata basis in accordance with the number of years until the expiration of such period for every one (1) year has passed (in principle, in the case of directors other than outside directors, the number calculated by one-third (1/3) for every one (1) year has passed, and, in the case of outside directors, the total amount at the time one (1) year has passed) subject to continuation of service; and then delivers shares of Renesas’ common stock to such directors in accordance with the vested units.

With respect to the RSUs that may be granted in connection with a reduction in the basic salary or any special situation, Renesas may shorten such period and vest the units immediately or within a period of several months pursuant to a resolution of its Board of Directors.

    (ii) PSU

Stock compensation in which Renesas provides the eligible directors (excluding outside directors) in advance with the units in a number determined by its Board of Directors; vests the units in a number determined in accordance with the extension rate of the total shareholder return of Renesas during three-year period from April 1 of the year in which the units are granted; and then delivers shares of Renesas’ common stock to such directors in accordance with the vested units.

       (2) Structure of the Plan

 The structure of the Plan is as follows:

(i) Renesas establishes the standard amount applicable to each eligible director according to the importance of its roles and other factors and determines the number of units to be granted to each eligible director base on such amount at the Board of Directors and grants such units to each eligible director.

(ii) Renesas determines by the resolution of the Board of Directors the number of shares of its common stock to be delivered to each eligible director, in accordance with duration of service or the extension rate of the total shareholder return of Renesas and based on the number of units granted.

(iii) Renesas provides each eligible director the monetary compensation receivables to be contributed in kind in accordance with the number of shares of its common stock to be delivered to such director as determined in (ii) above, and each eligible director receives an allotment of shares of Renesas’ common stock by contributing all of such monetary compensation receivables in kind.

3. Eligible Directors

     (1) RSU

All directors shall be covered. If the proposal for election of directors submitted to the Ordinary General Meeting of Shareholders is approved, the number of directors shall be 6 (including 5 outside directors).

     (2) PSU

Directors excluding outside directors shall be covered. If the proposal for election of directors submitted to the Ordinary General Meeting of Shareholders is approved, the number of such directors shall be 1.

   4. Method of calculating the number of shares to be delivered and the amount of monetary compensation receivables

     (1) Calculation of the number of shares delivered

     (i) RSU

Renesas will deliver the shares of its common stock (one share per unit) corresponding to the number of units vested on a pro-rata basis in accordance with the period of duration of service each time the period stipulated by its Board of Directors passes.

In principle, in the case of directors other than outside directors, one-third of the number of units granted (for three years) will be vested for every one year has passed, and, in the case of outside directors, the total number of units granted (for one year) will be vested for one year has passed.

With respect to the RSUs that may be granted in connection with a reduction in the basic salary or any special situation, Renesas may shorten such period and vest the units immediately or within a period of several months pursuant to a resolution of its Board of Directors.

     (ii) PSU

On the basis of the number of units granted, Renesas will vest the units in a number obtained by multiplying a certain coefficient determined in accordance with the extension rate of total shareholders return of Renesas for the period of three years from April 1 of the year in which the units are provided and deliver the shares of Renesas’ common stock corresponding to the number of the vested units.

      (iii) Handling at the time of retirement

The vesting of the units shall be made, in principle, subject to the condition that the eligible directors are directors, executive officers, or employees, etc., of Renesas or its subsidiaries at the time of the vesting. However, even if the eligible directors lose their position prior to the vesting of the units, in the event of losses of positions due to causes predetermined by the Board of Directors of Renesas, the number of the shares of Renesas’ common stock to be delivered and the timing of the delivery may be adjusted by the method provided by its Board of Directors.

    (2) Calculation of the amount of monetary compensation receivables

The amount of monetary compensation receivables per share to be provided to each eligible director shall be the closing price of the shares of Renesas’ common stock on the Tokyo Stock Exchange on the business day immediately prior to the date of resolution of the Board of Directors of Renesas for the delivery of Renesas’ common stock (or, if no transaction is effected on the same day, the closing price on the most recent trading day prior thereto).

    (3) The maximum number of shares to be delivered and the maximum amount of monetary compensation 
         receivables

The amount of compensation to be paid to directors of Renesas has been approved at the 16th Ordinary General Meeting of Shareholders of Renesas (held on March 29, 2018) as an annual amount not to exceed 2 billion yen (of which the amount paid to outside directors is not more than 400 million yen, but not including the amount paid as salary for employees to those directors who are also employees of Renesas). 

After the revision, the total amount of monetary compensation receivables relating to the units under the Plan shall be within the framework of the above-mentioned compensation, and the total number of shares of common stock of Renesas to be delivered to the eligible directors shall be within 2.7 million shares per annum (including within 0.2 million shares for outside directors). The upper limit of the total number of shares was calculated by dividing the upper limit of the compensation amount by the average closing price of Renesas' common stock on the Tokyo Stock Exchange in 2020.

After the date of the resolution of the proposal for the Plan at the Ordinary General Meeting of Shareholders, in the event of a share split of Renesas’ common stock (including the gratuitous allotment of shares of Renesas’ common stock) or a share consolidation, or in the event of any other similar event that an adjustment is required to the total number of shares of Renesas’ common stock to be allotted, the maximum number of shares of Renesas’ common stock to be delivered to the eligible directors may be reasonably adjusted.

 5. Others

     (1) Extinguishment of units, etc.

In the event that an eligible director is liable for any misconduct stipulated by the Board of Directors of Renesas or falls under any of the circumstances stipulated by the Board of Directors, such director shall lose all or part of the unvested units. Further, if it is later found that any such circumstance or any conduct that caused any such circumstance existed prior to the vesting of the vested units and the Board of Directors deems necessary, the eligible director shall return all or part of the shares of Renesas’ common stock delivered upon vesting of such units or cash equivalent to the value of such shares, in each case, without any compensation.

     (2) Handling of units upon reorganization

If a proposal relating to a merger agreement in which Renesas is to be dissolved, a share exchange agreement or a share transfer plan in which Renesas becomes a wholly-owned subsidiary, or any other organizational restructuring has been approved at a general meeting of shareholders of Renesas (or, if such organizational restructuring does not require the approval at a general meeting of shareholders of Renesas, at the meeting of the Board of Directors) prior to the delivery of shares of Renesas’ common stock under the Plan, Renesas may adjust the number of shares of its common stock to be delivered and the timing of the delivery, the amount of money to be provided and any other terms of the Plan pursuant to a resolution of its Board of Directors.

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Renesas plans to introduce the same plan to its executive officers and employees and to directors and employees of its subsidiaries after the conclusion of the General Meeting of Shareholders.


About Renesas Electronics Corporation

Renesas Electronics Corporation (TSE: 6723) delivers trusted embedded design innovation with complete semiconductor solutions that enable billions of connected, intelligent devices to enhance the way people work and live. A global leader in microcontrollers, analog, power, and SoC products, Renesas provides comprehensive solutions for a broad range of automotive, industrial, infrastructure, and IoT applications that help shape a limitless future. Learn more at renesas.com. Follow us on LinkedIn, Facebook, Twitter, and YouTube.