Notice Regarding Disposal of Treasury Shares Under Stock Compensation Plan

TOKYO, Japan, September 13, 2024 ― Renesas Electronics Corporation (“Renesas”, TSE:6723), a premier supplier of advanced semiconductor solutions, today announced that it has decided to dispose treasury shares (the “Disposal of Treasury Shares”) under the restricted stock units (“RSUs”) and the performance share units (“PSUs”) granted or to be granted by the stock compensation plan, whereby shares of common stock will be delivered after vesting, to deliver the shares directly or through a trust to directors and employees of Renesas’ subsidiaries. 
 

1.   Summary of Disposal

<Disposal of Treasury Shares to be allotted to directors and employees of Renesas’ subsidiaries (“Disposal of Treasury Shares (Subsidiary Directors and Employees)”)>

<Disposal of Treasury Shares to be allotted to a trust (“Disposal of Treasury Shares (Trust)”)>

2.   Purpose and Reason of Disposal

In April 2021, Renesas revised its incentive plans for the executives and employees of Renesas and its subsidiaries (“Eligible Grantees”) and introduced the new stock compensation plan (the “Plan”), whereby shares are delivered to the Eligible Grantees after vesting.

In addition, in connection with the acquisition of all of the shares in Altium Limited (“Altium”) (the “Acquisition”), Renesas granted RSUs and PSUs under the Plan to the executives and employees of Altium and its subsidiaries in lieu of certain Altium stock compensation that had been granted to such executives and employees prior to the consummation of the Acquisition. Renesas also granted RSUs under the Plan to the executives and employees of Altium and its subsidiaries to retain talented personnel.

The Disposal of Treasury Shares (Subsidiary Directors and Employees) will be implemented pursuant to the determination of the Representative Executive Officer of Renesas made on September 13, 2024, upon the vesting of certain RSUs and PSUs which Renesas has granted to the Eligible Grantees under the Plan.

The Disposal of Treasury Shares (Trust) will be implemented pursuant to the determination of the Representative Executive Officer of Renesas made on September 13, 2024, to utilize a trust scheme in the operation of a portion of RSUs and PSUs granted or to be granted under the Plan, whereby the Allottee (Trust) will hold Renesas’ shares and deliver them to the Eligible Grantees upon the vesting of such RSUs and PSUs. The Allottee (Trust) is a trustee of an employee share ownership trust (the “Trust”) established to encourage or facilitate stock ownership by the employees of Dialog Semiconductor Limited (“Dialog”), a subsidiary of Renesas, and its subsidiary (including employees who concurrently serve as Renesas’ executive corporate officers, hereinafter “Dialog Employees”). The shares allotted to the Allottee (Trust) in the Disposal of Treasury Shares (Trust) will be delivered from the Allottee (Trust) to up to 1,760 Dialog Employees upon the vesting of RSUs which Renesas granted or will grant to such employees in or after April 2024. By delivering the shares through the Trust, Renesas may utilize the funds owned by the Trust to deliver the shares to the employees. For such reasons, Renesas selected the Trust as the allottee of the Disposal of Treasury Shares.

(Details of the Plan) 

(1)  Eligible Grantees

Directors, executive officers, executive corporate officers and employees of Renesas and its subsidiaries (among which the beneficiaries of the Trust are employees of Dialog and its subsidiary).

(2)  Overview of RSU

The RSUs granted under the Plan are stock compensation in which Renesas grants the number of units predetermined by Renesas to the Eligible Grantees in advance, and then delivers shares of its common stock to the Eligible Grantees in accordance with the number of units that vest based on the service continuation period. In principle, one-third of the number of units granted (corresponding to three years) will be vested for every one year has passed.

With respect to the RSUs that may be granted in connection with any special situation, such as when RSUs are granted to executives and employees of an acquired company where stock compensation granted by the acquired company are extinguished, or when RSUs are granted in connection with a reduction in the basic salary, Renesas may vest the units in a period different from above.

(3)  Overview of PSU

The PSUs granted under the Plan are stock compensation in which Renesas provides the Eligible Grantees in advance with the units in a number determined by it; 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 Eligible Grantees in accordance with the vested units.
On the basis of the number of units granted, Renesas will vest the PSUs 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 PSUs are granted.

With respect to the PSUs that may be granted in connection with any special situation, such as when PSUs are granted to executives and employees of an acquired company in lieu of a portion of the equity compensation granted by the acquired company, Renesas may vest the units in a calculation method different from above.

(4)  Method and Timing of Delivery of Shares of Renesas

On each vesting date, Renesas, pursuant to determination of the Representative Executive Officer, will allot to the Eligible Grantees the shares of Renesas’ common stock corresponding to the number of vested units (one share per unit) by way of issuance of new shares of Renesas’ common stock or transfer of existing shares or by other means.

The payment amount per share delivered under RSUs and PSUs under the Plan is 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 the resolution of the determination of the Representative Executive Officer 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).

(5)  Handling at the time of retirement

The vesting of the units shall be made, in principle, subject to the condition that the Eligible Grantees are directors, executive officers, executive corporate officers, or employees, etc., of Renesas or its subsidiaries at the time of the vesting. However, even if the Eligible Grantees lose their position prior to the vesting of the units, in the event of losses of positions due to certain causes set forth in the employment contract, etc. or other special circumstances, 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 Renesas.

〈Overview of the trust deed of the Trust〉

Trust category:                      Trust of money other than money trust

Trust objective:                      To encourage or facilitate stock ownership by employees of Dialog and its subsidiaries

Settlor:                                    Dialog

Trustee:                                  SG Kleinwort Hambros Trust Company (CI) Limited

Beneficiary:                            Employees, former employees and their dependents of Dialog and its subsidiaries

Trust administrator:             Not applicable (provided that in cases where it is difficult to continue the trust due to a decrease in assets or otherwise, in principle, the settlor will make important decisions such as contributing new money or terminating the trust)

Date of trust Agreement:    October 29, 1998

Exercise of voting rights:     Exercisable

3.   Basis for and Details of Calculation of the Payment Amount

In order to exclude arbitrariness, Renesas determined (i) that the payment amount for the Disposal of Treasury Shares (Subsidiary Directors and Employees) be 2,116 yen, being the closing price of the shares of Renesas’ common stock on the Tokyo Stock Exchange on September 12, 2024 (the business day immediately prior to the date of the determination of the Representative Executive Officer) and (ii) that the payment amount for the Disposal of Treasury Shares (Trust) be 14.81 US dollars, being the amount (as calculated to three decimal places and rounded to the nearest two decimal places) obtained by converting 2,116 yen, at the foreign exchange rate of 1 US dollar = 142.835 yen (the spot rate provided by Bloomberg as of 3:00 PM (Japan time) on September 12, 2024). These payment amounts per share are the market share price immediately preceding the date of the Representative Executive Officer’s decision or the amount obtained by converting such amount at the foreign exchange rate on the same date, and Renesas considers they are reasonable prices appropriately reflecting its corporate value.

The Audit Committee of Renesas (consisting of three independent outside directors) is of the opinion that the above disposal prices are not particularly advantageous to any of the proposed allottees and are lawful based on the reasoning that the basis of calculation of the above disposal prices is reasonable.

4． Procedures in accordance with the Corporate Code of Conduct

Renesas is not required to execute procedures to obtain an independent third-party opinion and confirm the intent of shareholders as prescribed in Article 432 of the Securities Listing Regulations of the Tokyo Stock Exchange because (i) the dilution resulting from the Disposal of Treasury Shares is below 25%, and (ii) does not involve any changes in controlling shareholders.

About Renesas Electronics Corporation

Renesas Electronics Corporation (TSE:6723) empowers a safer, smarter and more sustainable future where technology helps make our lives easier. A leading global provider of microcontrollers, Renesas combines our expertise in embedded processing, analog, power and connectivity to deliver complete semiconductor solutions. These Winning Combinations accelerate time to market for automotive, industrial, infrastructure and IoT applications, enabling billions of connected, intelligent devices that enhance the way people work and live. Learn more at renesas.com. Follow us on LinkedIn, Facebook, Twitter, YouTube, and Instagram.

(FORWARD-LOOKING STATEMENTS)

The statements in this press release with respect to the plans, strategies and financial outlook of Renesas and its consolidated subsidiaries (collectively “we”) are forward-looking statements involving risks and uncertainties. Such forward-looking statements do not represent any guarantee by management of future performance. In many cases, but not all, we use such words as “aim,” “anticipate,” “believe,” “continue,” “endeavor,” “estimate,” “expect,” “initiative,” “intend,” “may,” “plan,” “potential,” “probability,” “project,” “risk,” “seek,” “should,” “strive,” “target,” “will” and similar expressions to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements discuss future expectations, identify strategies, contain projections of our results of operations or financial condition, or state other forward-looking information based on our current expectations, assumptions, estimates and projections about our business and industry, our future business strategies and the environment in which we will operate in the future. Known and unknown risks, uncertainties and other factors could cause our actual results, performance or achievements to differ materially from those contained or implied in any forward-looking statement, including, but not limited to, general economic conditions in our markets, which are primarily Japan, North America, Asia, and Europe; demand for, and competitive pricing pressure on, products and services in the marketplace; ability to continue to win acceptance of products and services in these highly competitive markets; and fluctuations in currency exchange rates, particularly between the yen and the U.S. dollar. Among other factors, downturn of the world economy; deteriorating financial conditions in world markets, or deterioration in domestic and overseas stock markets, may cause actual results to differ from the projected results forecast.

This press release is based on the economic, regulatory, market and other conditions as in effect on the date hereof. It should be understood that subsequent developments may affect the information contained in this presentation, which neither we nor our advisors or representatives are under an obligation to update, revise or affirm.