Mitsubishi Motors : Introduction of a Stock Compensation Plan for Executives(355KB)

	December 15, 2020
Name of company:	MITSUBISHI MOTORS CORPORATION
Representative:	Takao Kato
	Representative Executive Officer, CEO
	(7211 TSE 1st section)
Contact:	Keiko Sasaki
	General Manager, IR Office
	(TEL．[phone])

Introduction of a Stock Compensation Plan for Executives

MITSUBISHI MOTORS CORPORATION (hereinafter "MMC" or "the Company") hereby provides notice that the Compensation Committee as of December 15, 2020 resolved to introduce a new stock compensation plan (hereinafter "the Plan"), that utilizes trusts as an incentive plan for our Executive Officers and Corporate Officers, etc. (hereinafter referred to as "Executive Officers, etc."). The details are described below.

1. Introduction of the Plan

1. MMC will introduce a new stock compensation plan for Executive Officers, etc. (excluding those who are current, and expected in the future to be, domestic non-residents; the same shall apply hereinafter) that is highly correlated with business performance, highly transparent, and objective with the aim of achieving sustainable improvement in corporate value while sharing value with shareholders.
   Incentive for our Executive Officers, etc. consists of annual base salary, performance-linked incentive (short-term/medium-tolong-term/individual addition), and incentive at the time of retirement. The plan will be applied to medium-tolong-termperformance-linked incentive and incentive at the time of retirement. (However, it has been decided that the mid-tolong-termperformance-linked incentive for fiscal 2020 will not be paid.)
2. The Plan adopts a structure called the Board Incentive Plan Trust (hereinafter the "BIP Trust"). The Plan is a plan which makes to Executive Officers etc. delivery or payment (hereinafter "delivery etc.") of MMC's shares and money equivalent to the converted value of such shares (hereinafter MMC's shares, etc.") according to their individual rank.

2. Mechanism of the Plan

1)

Compensation Committee

[Entruster]

8) Grantis transfer and

MMC

cancellation of residual

2) Share issuance rules

shares

5) Dividend

3) Establishment of trust

9) Grant of residual

assets

7) Delivery of

MMC's shares and

[Trustee]

monetary payment

[Beneficiaries]

4) Acquisition

of

Mitsubishi UFJ Trust and Banking

Executive

MMC's shares

Corporation

Officers, etc.

Stock market

Joint Trustee: The Master Trust Bank of Japan, Ltd.

4) Payment

BIP trust

6) Instructions not to exercise voting rights

Trust

administrator

1. MMC obtains approval for the introduction of the Plan to introduce the Plan at the Compensation Committee.
2. MMC establishes the share issuance rules with respect to the introduction of the Plan ate the Compensation Committee.
3. MMC entrusts a trustee with money to the extent approved by the Compensation Committee in 1) above and establishes a trust (the Trust) the beneficiary of which is the Executive Officers etc. who meet the beneficiary requirements.
4. This Trust follows the instruction of the trust administrator and acquires MMC's shares from the stock market using the money contributed in 3).
5. MMC's shares held in the Trust are entitled to receive dividends in the same manner as other MMC's shares.
6. No voting rights shall be exercised on MMC's shares held in the Trust during the trust period.
7. During the trust period, the Applicable Personnel shall, in accordance with the stock issuance rules, be granted the number of points according to the position of Executive Officers, etc. and the degree of achievement of the Performance Target, etc. and, if the Beneficiary Requirements are satisfied, receive the delivery of MMC's shares (rounded up for shares less than one unit) equivalent to a certain percentage of the number of such points, and, in accordance with the provisions of the Trust Agreement, receive the amount of money equivalent to MMC's shares equivalent to the remaining number of points converted into cash within the Trust.
8. In the event any remaining shares arise at the expiration of the trust period due to the failure to meet the Performance Target during the trust period, etc., and the Trust will continue to be used for the Plan or a share compensation plan similar to the Plan, such remaining shares will be eligible for the delivery to Executive Officers, etc. However, in the event the Trust is not used continuously, we will transfer the remaining shares from the Trust to MMC free of charge and cancel the shares through the prescribed procedures.
9. The residual assets at the time of termination of the Trust will vest in MMC to the extent that the share acquisition fund is deducted from the trust money.

• In the event there is a possibility that the number of shares in the Trust falls short of the number of shares delivered to Executive Officers, etc. during the Trust Period or there is a possibility that the money in the Trust will be insufficient for payment of trust fees and trust expenses, MMC may contribute additional money to the Trust.

3. Details of the Plan

1. Outline of the Plan

The Plan applies to "medium-tolong-termperformance-linked incentive" and "retirement compensation." Mid-to-long-termperformance-linked incentive is paid every year according to the position of Executive Officers, etc. and the degree of achievement of performance goals for the three years from the fiscal year ending on March 31, 2021 to the fiscal year ending on March 31, 2023 (hereinafter referred to as the "applicable period"). For incentive at the time of retirement, points shall be granted annually in accordance with the position of Executive Officers, etc. and, in principle, the Company will make the delivery, etc. of MMC Shares, etc. in a lump sum at the time of retirement.

(2) Persons subject to the Plan (Beneficiary Requirements)

Executive Officers, etc. who meet the requirements for beneficiaries shall receive from the Trust the delivery, etc. of the number of MMC's Shares, etc. equivalent to the number of points by performing the prescribed procedures for determining the beneficiaries at a certain time of each year and at the time of retirement.

The beneficiary who meets the requirements shall be a person who falls under any of the following conditions:

≪Mid-tolong-termperformance-linked incentive ≫

• He/she holds office as our Executive Officers, etc. on March 31 of each year and is a resident in Japan on the payment date.

• In the event that the Compensation Committee determines that it is appropriate to make the delivery, etc., even in the event of resignation during the term

• In the event that he/she is eligible for the Plan as the applicable personnel at the time of the abolition of the Plan.

≪Retirement Compensation ≫

• In the event the Executive Officers, etc. of the Company who are domestic residents retire due to the expiration of their terms of office.

• In the event that the Compensation Committee determines that it is appropriate to make the delivery, etc., even in the event of resignation for a reason other than expiration of the term of office.

• When he/she is decided to become a domestic non-resident during the term of office.

1. • In the event that he/she is eligible for the Plan the applicable personnel at the time of the abolition of the Plan.
2. Trust Period

From December 17, 2020 to August 31, 2023 (scheduled).

The Trust may be continued upon expiration of the Trust Period by amending the Trust Agreement or by making additional trusts. In this case, the trust term of the Trust will be extended for each of the following three fiscal years.

Provided, however, that in the event of such additional trust, if there are any remaining shares in the trust assets before the extension (excluding MMC's shares equivalent to the points granted to Executive Officers, etc. for which delivery has not been completed) and money (hereinafter referred to as "remaining shares, etc."), the total amount of remaining shares, etc. and additional trust money shall be included in the trust assets after the extension.

(4) Number of MMC's Shares to be delivered to Executive Officers, etc.

The number of MMC's Shares, etc. to be delivered to Executive Officers, etc. is determined by the number of points to be granted according to their position and the degree of attainment of performance targets, etc.

The number of shares per point shall be one share of MMC's common stock.

• In the event that it is fair to adjust the points as a result of our stock split, consolidation of shares, etc., the number of our common shares per point will be adjusted according to the split ratio, consolidation ratio, etc.

(5) Method of acquisition of MMC's shares by the Trust

The Trust expects to acquire MMC's shares from the Stock Market.

(6) Methods and timing of delivery of MMC's shares to Executive Officers, etc.

The Executive Officers, etc. who meet the beneficiary requirements of (2) above may receive from the Trust the delivery of a certain number of shares of us equivalent to a certain percentage of the points granted (the odd-lot shares shall be rounded up) after the performance evaluation is finalized each year and at the time of resignation, and, after the remaining MMC's shares are converted into cash within the Trust, receive from the Trust the payment of money equivalent to the converted value.

Shares of the Company acquired through the Plan shall be subject to the Rules for Prevention of Insider Trading stipulated by the Company and related laws and regulations.

(7) Exercise of voting rights in respect of MMC's Shares in the Trust

No voting rights shall be exercised over the term of the Trust with respect to MMC's Shares in the Trust in order to ensure the neutrality to management.

(8) Treatment of Dividends on MMC's Shares in the Trust

Dividends on MMC's Shares in the Trust will be received by the Trust and used to pay the Trust Fees and Trust Expenses.

(9) Treatment upon Termination of the Trust

In the event any remaining shares arise at the expiration of the trust period and the Trust will continue to be used for the Plan or a share compensation plan similar to the Plan, such remaining shares will be eligible for the delivery to Executive Officers, etc. In the event of termination of the Trust, the remaining Shares will be transferred to MMC free of charge from the Trust and we will retire them through prescribed procedures.

In addition, the balance of dividends on MMC's Shares in the Trust arising upon the expiration of the Trust Period shall be utilized as funds for the acquisition of shares if the Trust is to be continuously utilized, but, in the event of termination of the Trust, the portion in excess of the Reserve for Trust Expenses will be donated to organizations which have no conflicting interest with MMC and its Executive Officers, etc.