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March 4, 2020

Company:

DyDo Group Holdings, Inc.

Representative:

Tomiya Takamatsu, President

(Code 2590 on the First Section of the Tokyo Stock Exchange)

Inquiries:

Naokazu Hasegawa, Corporate Officer

and General Manager of Corporate Communication Department

Announcement on Implementation of Trust-Type Employee Stock Ownership Incentive Plan

DyDo Group Holdings, Inc., is striving to realize sustainable growth while increasing its medium- and long-term corporate value in keeping with the Group Mission 2030, which sets forth a vision for the Group in 2030. To ensure employees can grow along with the Company while competing successfully in a demanding market environment and promoting coexistence and coprosperity with all stakeholders, the Company is working to foster an organizational culture that thrives on embracing challenges.

In order to help increase its medium- and long-term corporate value together with employees, the Company’s Board of Directors today resolved to implement an E-Ship® Trust-Type Employee Stock Ownership Incentive Plan (“the incentive plan”).

The Company will make a further announcement when it decides any details as to the date of setting up a trust regarding to the incentive plan, the total amount of loan the trust would borrow, the trust period of the incentive plan and as such.

1. Summary of the incentive plan

The Incentive Plan is available to all DyDo Group Holdings employees who participate in the DyDo Group Holdings Employee Stock Purchase Plan (hereinafter, ESPP). Under the Incentive Plan, the Company will set up a trust – DyDo group Holdings ESPP Trust (hereinafter, “ESPP Trust”) – with a trust bank. The ESPP Trust will purchase Company shares up front for the amount ESPP will likely to purchase over the next 5 years (currently estimated at around 500 million yen), financing its transaction with bank loans. Afterwards, the ESPP Trust will sell Company shares to the ESPP for its periodical purchases. At the end of the trust period, if the ESPP Trust asset balance resulted positive with the accumulated gains on Company shares, such residual assets will be distributed to members of the ESPP who meet beneficiary eligibility criteria. As the Company will guarantee ESPP Trust for its bank borrowing in financing its purchase of Company shares, any shortfalls in repayment at the end of Trust period, due to the accumulated loss at ESPP Trust caused by the drop in Company share price.

The Incentive Plan aims to provide employees with incentives to raise corporate value in medium to long-term, and to support wealth building of employees through their stock purchase.

2. Framework of the incentive plan

  1. The Company will set up the ESPP Trust as a third-party trust whose beneficiaries are members of the ESPP who meet beneficiary eligibility criteria.
  2. The ESPP Trust will borrow cash from banks to fund its Company share purchase. The Company will guarantee the repayment of such borrowing. The Company will receive guarantee commissions from the ESPP Trust for its guarantee obligation.
  3. The number of Company shares purchased by the ESPP Trust will be equivalent to the number of shares that the ESPP is expected to purchase during the trust period.
  4. Throughout the trust period, the ESPP Trust will periodically sell the Company shares it acquired in accordance with (3) above to the ESPP at market price, in line with a pre-defined conditions and methods.
  5. The ESPP Trust will use proceeds from the sales of Company shares to the ESPP as well as dividends on Company shares which it holds, to repay loan interest and principal.
  6. Voting rights associated with Company shares held by the ESPP Trust will be exercised according to instructions from the trust administrator, who will be selected to act on behalf of beneficiaries.
  7. Any residual assets held in the ESPP Trust at the end of trust period will be distributed to individuals who meet beneficiary eligibility criteria.
  8. Any loans outstanding at the end of the trust period will be repaid by the Company under loan guarantee obligations, as described in (2) above.

3. Outline of the Shareholders Association Exclusive Trust

  1. Name

DyDo Group Holdings Employee Stock Purchase Plan Trust

(2) Trustor

The Company

(3) Trustee

The Nomura Trust and Banking Co., Ltd.

(4) Beneficiaries

Employees who meet beneficiary eligibility criteria

  1. Date of trust contract July 15, 2020 (Plan)
  2. Trust period

July 15, 2020 to July 1, 2025 (Plan)

(7) Purpose of trust

Stable and continuous supply of shares to the ESPP and distribution of trust assets to those employees who meet beneficiary eligibility criteria

(8) Beneficiary eligibility criteria

To be eligible, a beneficiary must be alive on the date when procedures for confirming eligibility begin (such as, the date on which the trust period ends, when all trust assets are converted to cash or all the Company stock held as trust assets are sold to the Employee Shareholders Association), and be a member of this Employee Shareholders Association (or a former member who had to withdraw membership due to mandatory retirement, job transfer or promotion to an executive position on or after the trust contract was signed and up to the date when procedures for confirming beneficiary eligibility begin).

(Reference)

E-Ship® is the registered trademark of Nomura Securities Co., Ltd.

E-Ship® (an abbreviation of Employee Shareholding Incentive Plan) is an incentive plan for employees modeled after employee stock ownership plans widely used in the United States. It was jointly developed by Nomura Securities Co., Ltd., and The Nomura Trust and Banking Co., Ltd., for use as an employee stock ownership plan.

This is a translation of the Japanese press release for reference purposes only. In the event of any discrepancy, the Japanese original shall prevail.

Disclaimer

TSE – Tokyo Stock Exchange Inc. published this content on 04 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2020 06:03:12 UTC



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