FOR IMMEDIATE RELEASE
May 26, 2006
ADVANTEST CORPORATION
(Toshio Maruyama, President and CEO)
(Stock Code Number: 6857, TSE first section)
(Ticker Symbol: ATE, NYSE)
CONTACT:
Yuri Morita
(Managing Executive Officer and
Senior Vice President, Corporate Affairs Group)
Phone: +81-(0)3-3214-7500
Advantest determines the amount of remuneration in connection with stock option
grants to directors and corporate auditors
Tokyo - May 26, 2006 - Advantest Corporation (the "Company") resolved at a
meeting of its Board of Directors today to submit to its shareholders a proposal
to determine the amount of remuneration for granting stock options to directors
and corporate auditors. The proposal will be made at the Company's 64th ordinary
general meeting of shareholders (the "Shareholders' Meeting") to be held on June
27, 2006.
1. Reason for requesting shareholder approval
The Company has issued stock acquisition rights as stock options to
directors and corporate auditors of the Company since 2002 to improve
directors' performance and morale, and corporate auditors' awareness of
proper auditing. In this manner, the Company aims to promote a management
style conscious of increasing shareholder value and to attract and retain
outstanding personnel. Before the implementation of the Company Law (Law
No.86 of 2005), we requested approval by special resolution at
shareholders' meetings for issuance of the stock acquisition rights as
stock options on especially favorable terms to persons other than
shareholders. But now that the Company Law is in effect, because the stock
acquisition rights allocated to directors and corporate auditors as stock
options are regarded as remuneration, we request Shareholders' Meeting
approval for the determination of the details of remuneration for granting
stock options to directors and corporate auditors.
2. The amount of remuneration for Directors and Corporate Auditors
Taking into consideration all circumstances, including the grant of stock
options up to the present, the amount of remuneration for granting the
stock acquisition rights as stock options to directors shall be no more
than 700,000,000 yen per fiscal year, in addition to the amount of
remuneration approved at the 54th ordinary general meeting of shareholders
held on June 27, 1996, and the amount of remuneration for granting the
stock acquisition rights as stock options to corporate auditors shall be no
more than 50,000,000 yen per fiscal year, in addition to the amount of
remuneration approved at the 55th ordinary general meeting of shareholders
held on June 27, 1997. The Company may issue the stock acquisition rights
to directors and corporate auditors up to such remuneration amount. Stock
options will be granted by (i) allocating the stock acquisition rights with
a fair value as the subscription price, (ii) providing cash compensation
that is equal to the total amount of such subscription price, and (iii)
setting off such compensation obligation against the subscription price of
the stock acquisition rights. Currently, the number of directors is seven
(7) and the number of corporate auditors is four (4). However, the number
of directors will be nine (9) and the number of corporate auditors will be
four (4) if Agenda Item Nos. 3 and 4 are approved without any change.
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3. Details of the stock acquisition rights
(1) Class and total number of shares to be issued or delivered upon exercise of
the stock acquisition rights
The class of shares to be issued or delivered upon exercise of the stock
acquisition rights shall be common stock of the Company.
The number of shares to be issued or delivered upon exercise of each stock
acquisition right shall be 100 shares, provided that if the subscription
price per share has been adjusted in accordance with sub-paragraph (3)
below, the number of such shares shall be adjusted according to the
following formula. This adjustment shall be made only with respect to stock
acquisition rights that have not yet been exercised as of the time of
adjustment. Any fractional share that arises as a result of an adjustment
will be rounded down to the nearest whole number of shares.
Number of shares to be issued or delivered Total subscription price
upon exercise of each stock acquisition right = ----------------------------
Subscription price per share
(2) Total number of the stock acquisition rights to be issued
The total amount of the fair value of the stock acquisition rights to be
issued to directors and corporate auditors within one (1) year from the
ordinary general meeting of shareholders for each fiscal year, shall not
exceed the amount of compensation for granting the stock acquisition rights
in paragraph 2 above. The fair value of such stock acquisition rights shall
be obtained by multiplying each stock acquisition right by its fair value
computed based on the Black Sholes model on the date of allocation.
(3) Subscription price to be paid upon exercise of each stock acquisition right
The subscription price to be paid upon exercise of each stock acquisition
right shall be determined by multiplying (i) the subscription price per
share as determined in the following paragraph, by (ii) the number of
shares to be issued or delivered upon exercise of each stock acquisition
right as specified in sub-paragraph (1) above (initially, 100 shares).
The subscription price per share shall be 1.05 times the average closing
price, rounded up to the nearest yen, of the common stock of the Company in
regular trading on the Tokyo Stock Exchange on each day of the month
preceding the month in which any stock acquisition rights are allocated
(excluding any such day on which there was no trade); provided that if such
amount is less than the closing price of the common stock of the Company on
such day of allocation (or, if there was no trade on such day of
allocation, the closing price on the immediately preceding day on which
there was any trade), the subscription price per share shall be equal to
the closing price on such day of allocation. The Company may determine the
subscription price per share for the stock acquisition rights to be issued
within one (1) year from the ordinary general meeting of shareholders for a
fiscal year to be the same as that for the first stock acquisition rights
issued after the ordinary general meeting of shareholders for that fiscal
year (if the subscription price per share for the first stock acquisition
right is adjusted by the method described below, such adjusted subscription
price per share) for any subsequent stock acquisition rights issued.
If, subsequent to the issuance of stock acquisition rights, the Company
splits or consolidates its common stock, or issues new shares or disposes
of its treasury shares below market price (subject to certain exceptions,
including the issuance or delivery of shares upon exercise of the stock
acquisition rights), the subscription price per share shall be adjusted
according to the formula set forth below, rounded up to the nearest yen.
Furthermore, the subscription price per share may, to the extent necessary
and reasonable, be adjusted in a way deemed appropriate by the Company, in
the case of merger or split of the Company, stock-for-stock exchange or
certain other events. The Company may determine the subscription price per
share for each stock acquisition right issued after such adjustment but
within one (1) year from the previous ordinary general meeting of
shareholders to be the same as such adjusted subscription price per share.
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(a) Formula for adjustment in the case of share split or consolidation
Subscription price per share = Subscription price per 1
after adjustment share before adjustment x ----------------------------------
Ratio of split / consolidation
(b) Formula for adjustment in the case of issue of new shares or
disposition of treasury stock below market price
Number of new Subscription
Outstanding shares to be X price per share
Subscription Subscription number of + issued to be issued
price per price per x shares ----------------------------------------
share after = share before Market price per share
adjustment adjustment --------------------------------------------------------------
Outstanding number of + Number of new shares
shares to be issued
In the above formula, "outstanding number of shares" shall mean the total
number of outstanding shares of the Company after deduction of shares held
by the Company as treasury stock. In the case of a disposition of treasury
stock, "number of new shares to be issued" in the above formula shall be
read as "number of treasury shares to be disposed of".
(4) Exercise period of the stock acquisition rights
The exercise period for each stock acquisition right shall be determined by
resolution at the meeting of the Board of Directors to approve the issuance
of that stock acquisition right, and shall be not more than five (5) years
from the day following the date of allocation.
(5) Other details of the stock acquisition rights
Details of items described in sub-paragraphs (1) through (4) above and
other matters will be determined by resolution at the meeting of the Board
of Directors to approve the issuance of the stock acquisition rights.
(Note) The above terms are subject to approval at the Shareholders' Meeting
of the proposal entitled "Determination of the amount of remuneration
for granting stock options to directors and corporate auditors".
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