(NOTE) This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the Japanese original shall prevail.
Date: September 12, 2025
Company Name: Akebono Brake Industry Co., Ltd. Representative: Hiroshi Nagaoka, President & CEO (Securities Code: 7238 TSE Prime Market)
Announcement Regarding the Issuance of Share-based Payment Stock Options (Share acquisition rights)By resolution of a meeting of the Board of Directors held on September 12 , 2025, Akebono Brake Industry Co., Ltd. (hereinafter the "Company") hereby announces, the issuance of two kinds of share acquisition rights (medium- and long-term) as performance-related share-based payment stock options for Directors (meaning Executive Directors - the same applies hereinafter), Executive Officers who are not concurrently serving as Directors, and division head-level executives of the Company in accordance with the provisions of the Companies Act Articles 236, 238 and 240.
Reason for the issuance of share acquisition rights as stock options
This issuance is to have the medium- and long-term remuneration reflect the management efforts of Directors, Executive Officers who are not concurrently serving as Directors, and division head-level executives of the Company with the aim of offering incentives for achieving the medium-term business plan announced on August 7, 2025. In addition, we aim to increase the share price through appropriate management and improve the motivation and morale to deliver better business performance.
Overview of issuance of share acquisition rights
14th (A) Performance-related medium-term share acquisition rights
Number of share acquisition rights 24,309
The total number of shares to be issued by exercising the share acquisition rights shall be 2,430,900 shares of the common shares of the Company. When the number of shares to be granted regarding the share acquisition rights is adjusted due to 3. (1) below, it shall be the number of the shares to be granted after the adjustment multiplied by the number of the share acquisition rights.
Amount to be paid upon allotment of share acquisition rights
The paid-in amount of the share acquisition rights shall be the fair valuation amount calculated by the Black-Scholes Model on the allotment date of the share acquisition rights. However, the Company shall pay the person to whom the share acquisition rights are allotted a monetary remuneration equivalent to the total paid-in amount of the share acquisition rights. This right to request remuneration and the payment obligation of the paid-in amount of the share acquisition rights shall be offset.
Details of share acquisition rights
Class and number of the shares to be issued upon exercise of share acquisition rights
The number of shares of each share acquisition right (hereinafter the "Number of Shares to
be Granted") shall be one hundred (100) common shares of the Company.
After the date of allocation of the share acquisition rights, the Number of Shares to be Granted shall be adjusted using the following formula when the Company conducts a stock split (including allotment without contribution of the Company's common shares - the same shall apply hereinafter) or a reverse stock split. However, such adjustments shall be made only for the number of shares for the share acquisition rights that have not been exercised or canceled at that time. Fractions less than one (1) share resulting from adjustment shall be rounded down.
Number of Shares to be Granted after adjustment = Number of Shares to be Granted before adjustment × Ratio of stock split (or reverse stock split)
In addition, after the allotment of share acquisition rights, if the Company conducts an absorption-type merger (kyusyu-gappei) or a consolidation-type merger (shinsetsu-gappei) with another company, if the Company exchanges shares with another company to become a wholly-owning parent company, or if the Company conducts an absorption-type demerger (kyusyu-bunkatsu) or an incorporation-type demerger (shinsetsu-bunkatsu), the Company shall be able to adjust the number of target shares within a reasonable range.
Value or calculation method of property contributed upon exercise of share acquisition rights The value of the property contributed upon exercise of share acquisition rights shall be one
(1) yen of the paid-in amount per share to be granted by exercising share acquisition rights (hereinafter the "Exercise Price") multiplied by the Number of Shares to be Granted.
Exercisable period of share acquisition rights
The period during which share acquisition rights may be exercised (hereinafter the "Exercise Period") shall be from October 11, 2028 to October 10, 2031.
Matters concerning share capital and legal capital surplus to be increased
The amount of share capital increase when shares are issued by exercising share acquisition rights shall be half of the maximum amount of increase in share capital, etc. calculated in accordance with Article 17, Paragraph 1 of the Regulation on Corporate Accounting. If a fraction less than one (1) yen is generated as a result of the calculation, the fraction shall be rounded up.
The amount of legal capital surplus increase when shares are issued by exercising share acquisition rights shall be the maximum amount of share capital increase listed in (i) above deducted by the share capital increase defined by (i) above.
Restrictions on transfer of share acquisition rights
The purchase of share acquisition rights by transfer shall require the approval of the Board of Directors of the Company in the form of a resolution.
Conditions for exercise of share acquisition rights
In accordance with the achievement rates of the Company's performance targets for the three fiscal years from the fiscal year ending March 31, 2026 to the fiscal year ending March 31, 2028 (hereinafter the "Applicable Period"), which are set forth in the medium-term business plan approved by the Board of Directors on August 7, 2025 (hereinafter the "Medium-Term Business Plan"), a share acquisition rights holder may exercise up to the number of share acquisition rights (any fractions less than one (1) share acquisition right shall be rounded down - the same applies hereinafter) obtained by multiplying the number of allotted share acquisition rights by the percentage (hereinafter the "Exercisable
Percentage") obtained by adding together (A) the figure obtained by multiplying (a) the percentage calculated by dividing the total amount of consolidated operating profit for the Applicable Period by the target value for consolidated operating profit for the Applicable Period specified in the Medium-Term Business Plan (hereinafter the "Consolidated Operating Profit Achievement Rate") by (b) 50% and (B) the figure obtained by multiplying (a) the percentage calculated by dividing the total amount of the free cash flow (hereinafter the "FCF") for the Applicable Period by the target value of the FCF for the Applicable Period specified in the Medium-Term Business Plan (hereinafter the "FCF Achievement Rate") by (b) 50%. However, in order for the share acquisition rights holder to exercise the share acquisition rights, the Consolidated Operating Profit Achievement Rate and the FCF Achievement Rate must both be at least 70%, and the maximum achievement rate of each shall be 100%.
FCF is calculated by subtracting CAPEX from EBITDA and adding Changes in Working Capital. EBITDA, CAPEX, and Changes in Working Capital will be calculated by referring to the consolidated statements of income and consolidated statements of cash flows, etc. included in the Company's Annual Securities Reports. (A) EBITDA refers to the amount obtained by adding depreciation and goodwill amortization stated in the consolidated statements of cash flows to the operating profit stated in the consolidated statements of income; (B) CAPEX refers to the amount of purchase of property, plant and equipment and intangible assets stated in the consolidated statements of cash flows;
(C) Changes in Working Capital refers to the total amount of decrease (increase) in trade receivables, decrease (increase) in inventories, and increase (decrease) in trade payables as shown in the consolidated statements of cash flows. In determining EBITDA, CAPEX, and Changes in Working Capital, if changes in the applicable accounting standards or events such as corporate acquisitions that significantly impact the Company's performance occur, and the Board of Directors determines that it is inappropriate to use the actual figures stated in the consolidated statements of income or the consolidated statements of cash flows for such determination, the Company may, within a reasonable scope, exclude the impact of such corporate acquisitions and adjust the actual figures used for such determination. In the event of significant changes in the scope of items to be referenced due to the application of International Financial Reporting Standards, changes in the fiscal year-end, or other reasons, the Board of Directors will determine other indicators to be referenced. Additionally, if the Company revises or updates the Medium-Term Business Plan and the Board of Directors deems it necessary, the Company may, within a reasonable scope, revise the conditions for exercising share acquisition rights.
Notwithstanding (i) above, in the event that the Company discontinues or withdraws the
Medium-Term Business Plan, a share acquisition rights holder may exercise up to the number of share acquisition rights obtained by multiplying the number of share acquisition rights allotted to such holder by the percentage obtained by dividing the number of days from the allotment date to the exercise date by the number of days in the Applicable Period (however, such percentage shall not exceed 100%). [However, the percentage obtained by dividing the number of days from the allotment date to the exercise date by the number of days in the Applicable Period must be 70% or higher.]
If a share acquisition rights holder loses their position as a Director, Executive Officer or division head-level executive of the Company (hereinafter the "Qualification to Exercise") before the end of October 10, 2031, the person may not exercise their share
acquisition rights. Provided that if the Board of Directors determines that there is a valid reason for the loss of the Qualification to Exercise such as mandatory retirement, the share acquisition rights holder may exercise up to the number of share acquisition rights obtained by multiplying the number of allotted share acquisition rights by the lesser of:
(A) the Exercisable Percentage calculated pursuant to (i) above on the date on which the holder lost their Qualification to Exercise, or (B) the percentage obtained by dividing the number of days from the allotment date to the date on which the holder lost their Qualification to Exercise by the number of days in the Applicable Period.
A share acquisition rights holder may not exercise part of one (1) share acquisition right (exercise of less than one (1) unit).
If a share acquisition rights holder passes away before the end of October 10, 2031, only his or her legal heir may exercise share acquisition rights. Provided that the legal heir may exercise share acquisition rights until the day on which four (4) months have passed from the day following the day the share acquisition rights holder passed away or the maturity date of the Exercise Period, whichever is earlier.
Share acquisition rights allotment date October 10, 2025
Matters concerning the acquisition of share acquisition rights
If the proposal for the approval of a merger agreement in which the Company becomes an extinguished company is approved at the General Meeting of Shareholders of the Company, or if a proposal for the approval of a share exchange agreement or share transfer plan for which the Company becomes a wholly-owned subsidiary is approved at the General Meeting of Shareholders of the Company, the Company may acquire the share acquisition rights free of charge from the share acquisition rights holder on the date separately determined by the Board of Directors of the Company.
If the share acquisition rights holder or his or her legal heir becomes unable to exercise all or part of the share acquisition rights in accordance with the provision of 3. (6) above, the Company may acquire the share acquisition rights free of charge on the date separately determined by the Board of Directors of the Company.
Handling of share acquisition rights in the event of Reorganization
When the Company conducts a merger (limited to cases where the Company is extinguished due to the merger), absorption-type demerger (kyusyu-bunkatsu), incorporation-type demerger (shinsetsu-bunkatsu), share exchange (kabushiki-kokan) or share transfer (kabushiki-iten) (collectively hereinafter the "Reorganization"), the Company shall grant share acquisition rights of the stock companies listed in Article 236, Paragraph 1, Item 8 (a) to (e) of the Companies Act (hereinafter the "Reorganization Target Company") to share acquisition rights holders on the effective date of the Reorganization based on the following conditions. Provided that it is the case that the absorption-type merger (kyusyu-gappei) agreement, consolidation-type merger (shinsetsu-gappei) agreement, absorption-type demerger (kyusyu-bunkatsu) agreement, incorporation-type demerger (shinsetsu-bunkatsu) plan, share exchange (kabushiki-kokan) agreement or share transfer (kabushiki-iten) plan (collectively hereinafter the "Reorganization Agreement, etc.") states that share acquisition rights of the Reorganization Target Company are granted based on the following conditions.
Number of share acquisition rights of the Reorganization Target Company to be granted
The same number as the number of share acquisition rights held by the share acquisition rights holder shall be granted.
Class of shares of the Reorganization Target Company for share acquisition rights
It shall be the Reorganization Target Company's common shares.
Number of the shares of the Reorganization Target Company for share acquisition rights Considering the terms of the Reorganization, it shall be determined by the Reorganization
Agreement, etc. in accordance with 3. (1) above.
Value of property contributed upon exercise of share acquisition rights
The value of the property contributed upon exercise of share acquisition rights to be granted shall be, considering the conditions of the Reorganization, the Exercise Price after the Reorganization obtained by adjusting the Exercise Price determined by 3. (2) above multiplied by the number of shares of the Reorganization Target Company for the share acquisition rights determined in accordance with 6. (3) above.
Exercisable period of share acquisition rights
It shall be from the first day of the Exercise Period defined by 3. (3) above or the effective date of the Reorganization, whichever comes later, to the end of the Exercise Period defined by 3. (3) above.
Matters concerning share capital and legal capital surplus to be increased when shares are issued due to the exercise of share acquisition rights
It shall be determined by the Reorganization Agreement, etc. in accordance with 3. (4) above.
Restrictions on transfer of share acquisition rights
The transfer of share acquisition rights shall require the approval of the Board of Directors of the Reorganization Target Company in the form of a resolution.
Conditions for exercise of other share acquisition rights
It shall be determined by the Reorganization Agreement, etc. in accordance with 3. (6) above.
Matters and conditions concerning the acquisition of share acquisition rights
It shall be determined by the Reorganization Agreement, etc. in accordance with 5 of the above.
Other conditions shall be determined by the Reorganization Agreement, etc. in accordance with the terms of the Reorganization Target Company.
Matters concerning certificates pertaining to share acquisition rights
The Company does not issue certificates pertaining to share acquisition rights.
Persons and number of share acquisition rights allotted
Directors 2 persons, 1,233
Executive Officers 5 persons, 4,950
Division head-level executives 18 persons, 18,126 If the number of applications for share acquisition rights by each target person does not reach
the number of allocations to each target person set by the Board of Directors of the Company, the number of the allocation to the target person shall be decreased to the number of applications.
14th (B) Performance-related long-term share acquisition rights
Number of share acquisition rights 12,780
The total number of shares to be issued by exercising the share acquisition rights shall be 1,278,000 shares of the common shares of the Company. When the Number of Shares to be Granted regarding the share acquisition rights is adjusted due to 3. (1) below, it shall be the Number of shares to be Granted after the adjustment multiplied by the number of the share acquisition rights.
Amount to be paid upon allotment of share acquisition rights