Central Glass : Notice of Introduction of Performance-Based Stock Compensation Plan for Directors（141KB）

May 11, 2023

Central Glass Co., Ltd.

Note: This document is a translation of the Japanese original for reference purposes only. In case of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from or in connection with the translation.

Notice of Introduction of Performance-Based Stock Compensation Plan for Directors

At the meeting of the Board of Directors held on May 11, 2023, Central Glass Co., Ltd. (the Company) resolved to introduce a performance-based stock compensation plan using a trust (the "Plan") to directors of the Company (excluding outside directors as described below). The Company has decided to submit a proposal for the introduction of the Plan to the 109th Ordinary General Meeting of Shareholders (the "Annual Shareholders Meeting") to be held on June 29, 2023. The Company hereby announce as follows;

1. Introduction of the Plan

The remuneration of directors of the Company consists of two components: fixed remuneration and performance-based remuneration. The Company has introduced a new stock remuneration the Plan for directors of the Company.

The purpose of the Plan is to clarify the linkage between the remuneration of directors and our performance and stock value, and to raise the awareness that directors will contribute to improving medium-tolong-term performance and increasing corporate value by sharing profits and risks from stock price fluctuations with shareholders.

Under the Plan, compensation will pay to Directors (excluding Outside Directors, the same applies hereafter) in office during the five fiscal years from the fiscal year ending March 31,2024 to the fiscal ending March 31, 2028 (the "Target Period"), in addition to the maximum amount of compensation for Directors approved at the 92th Annual Shareholders Meeting held on June 29, 2006 (up to 36 million yen per month, not including employee salaries).

With the introduction of the Plan, the remuneration of directors of the Company will consist of "fixed remuneration," "performance-linked remuneration," and "stock remuneration" under the Plan.

The introduction of this Plan shall be subject to the approval of the Shareholders Meeting.

In addition, if the Plan is approved at the Annual Shareholders Meeting, the Company plans to introduce a performance-based stock compensation plan similar to the Plan to the executive officers who have entered into a proxy agreement with the Company (hereinafter referred to as the "Executive Officers"). (In this case, the Executive Officers will become beneficiaries of the trust established by the Company for the management of the Plan, similar to the Company's Directors.).

2. Outline of the Plan

1. Structure of the Plan

The Plan is an equity compensation plan under which a trust established by us by contributing money (the "Trust") acquires Company shares and a number of Company shares, which is equivalent to the number of points we grant to each director, are delivered to each director through the Trust.

In principle, the time when a director receives the delivery of Company shares is upon the retirement of the director.

1. Establishment of the trust

Subject to obtaining approval for the introduction of the Plan at the Annual Shareholders Meeting, the Company will establish the Trust by contributing the funds necessary for the Trust to acquire a certain amount of Company shares in advance for a certain period of time, which is reasonably expected to be necessary for the delivery in accordance with (6) below. As described in (5) below, the Trust will acquire Company shares using the funds the Company contribute.

Sumitomo Mitsui Trust Bank, Limited, as trustee under the Plan, will entrust (sub-entrust) the trust assets to The Custody Bank of Japan, Ltd.

1. Trust Period

The trust period shall be approximately five years from August 2023 (planned) to August 2028 (planned). However, the term of the trust may be extended as described in (4) below.

1. Maximum amount of trust money contributed to the Trust as a fund for share acquisition

During the applicable period, the Company will make contributions as compensation to directors in office during the applicable period in the amount of money up to a total of 200 million yen to fund the acquisition of Company shares necessary to deliver Company shares to directors under the Plan, and establish the Trust as the beneficiary of the directors who acquire beneficial interests as described in

(6)③ below. The Trust will acquire Company shares from the money we have entrusted through a method of disposition of treasury stock from the Company or a method of acquisition from the exchange market (including off-floor transactions).

NOTE : In addition to the above-mentioned funds for the acquisition of Company shares, the Company will entrust the necessary expenses such as trust fees and trust administrator fees as well. In addition, in the event that the Company introduces an equity compensation plan similar to the Plan to the Executive Officers as described above, the Company will also entrust the funds required for the acquisition of shares of the Company to be delivered to the Executive Officers under the plan.

In addition, upon the decision of the Board of Directors based on the report of the Nomination and Compensation Committee, the applicable period shall be extended from time to time within five business years, and the trust period of the Trust may be extended accordingly (including the substantial extension of the trust period by transferring the trust assets of the Trust to the trust for the same purpose as the Trust established by the Company; the same shall apply hereinafter) and the Plan may be continued. In this case, during the period covered by the extension, the Company will make an additional contribution to the Trust in an amount up to the amount calculated by multiplying the number of business years during the period covered by the extension by 40 million yen as the funds for the additional acquisition of Company shares necessary for the delivery to directors under the Plan, and will continue the grant of points as described in (6) below and the delivery of Company shares (the same shall apply thereafter).

In addition, even if the Company does not continue the Plan without extending the applicable period as described above, in case there are directors who have already been awarded points but have not yet retired at the expiration of the trust period, the term of the Trust may be extended until such director

resigns and the delivery of Company shares is completed.

(5) Method of acquisition of Company shares by the Trust, etc.

The initial acquisition of Company shares by the Trust is planned to be repurchased from the Company or from the exchange market by disposing of treasury shares within the upper limit of the share acquisition funds set forth in (4) above. The details of the acquisition method will be decided and disclosed after the resolution of this Annual Shareholders Meeting.

If, during the period of the trust, there is a possibility that the number of shares of Company shares in the trust may be insufficient to the number of shares corresponding to the number of points granted to directors during the trust period due to the increase in the number of directors, the Company may acquire additional shares of Company shares in the trust (provided, however, that the total amount of money to be contributed to fund the acquisition of Company shares will be within the limit of the trust money set forth in (4) above).

1. Calculation method and limit of Company shares to be delivered to directors ① Method of Granting Points to Directors
   The range of performance-linked indicators and performance-linked factors shall be determined by Board of Directors of the Company based on the recommendations of the Nomination and Compensation Committee. However, the performance-linked indicators for the initial applicable period shall be "consolidated ordinary income," etc., and the performance-linked factors will be within the range of 0% to 150%.
   However, the total number of points that the Company grants to directors will be limited to 23,000 points per fiscal year.

• Delivery of Company shares according to the number of points granted

Directors receive the delivery of Company shares in accordance with the procedures described in

• below, depending on the number of points granted in ① above. However, if a director retires due to his/her own discretion, all or part of the points granted up to that time will be extinguished, and Company shares corresponding to the extinguished points will not be delivered.

1 point shall be one Company share. However, in the event that it is deemed reasonable to adjust Company number of shares to be delivered, such as a stock split or reverse stock split, Company number of shares per point shall be adjusted according to such split ratio and reverse stock split ratio, etc.

• Delivery of Company shares to directors
  In principle, each Director shall acquire the beneficial interest in the Trust through the prescribed

procedures at the time of his/her resignation, and as the beneficiary of the Trust, shall receive the Company shares mentioned in ② above from the Trust.

However, with respect to a certain percentage of Company shares, we may issue them in cash in lieu of Company shares after liquidating the funds paid for withholding income tax, etc. in the Trust for the purpose of withholding tax. In addition, if Company shares in the Trust are converted into cash, such as when Company shares in the Trust are settled in a tender offer, the Company may issue

them in cash in lieu of Company shares.

(7) Exercising voting right

The voting rights pertaining to Company shares in the Trust will not be exercised based on the instructions of us and the trust administrator independent of officers of the Company. In this way, the Company intends to ensure the neutrality of management with respect to the exercise of voting rights on shares in the Trust.

(8) Treatment of Dividends

Dividends on Company shares in the Trust will be received by the Trust and used to fund the purchase price of Company shares and the trust fees of the Trustee related to the Trust.

(9) Handling of Company shares and money at the end of the trust

All of Company shares are scheduled to be retired by resolution of the Board of Directors after being acquired of the residual assets of the Trust at the closing of the Trust by us free of charge.

In addition, the Company plans to donate a certain amount of money from the residual assets of the Trust at the termination of the Trust to a specified public interest promotion corporation that has no interest in the Directors of the Company by stipulating in the Share Delivery Regulations and the Trust Agreement in advance.

(Reference) Outline of the Trust Contract pertaining to the Trust

Trustor	The Company
Trustee	Sumitomo Mitsui Trust Bank, Ltd.
	(Sub-trustee: Japan Custody Bank, Ltd.)
Beneficiary	Our directors who satisfy the beneficiary requirements (corporate officers
	may also be beneficiaries).
Trust administrator	The Company plans to select independent third parties from the Company
	and our executives.
Exercising	No voting rights relating to shares in the Trust have been exercised throughout
voting right	the term of the Trust.
Type of Trust	No voting rights relating to shares in the Trust have been exercised throughout
	the term of the Trust.
Trust Contract Date	August 2023 (planned)
Term of Trust	August 2023-August 31, 2028 (planned)
Purpose of the trust	Delivery of Company shares to beneficiaries in accordance with the rules for
	the issuance of shares