The following is the announcement made to KLSE, regarding MALAYSIAN PACIFIC INDUSTRIES BERHAD'S PROPOSED AMENDMENTS AND THEREAFTER ADOPTION OF THE AMENDED AND RESTATED BYE-LAWS OF THE EMPLOYEE SHARE OPTION SCHEME AND PROPOSED EXTENSION OF THE DURATION OF THE EMPLOYEE SHARE OPTION SCHEME FOR AN ADDITIONAL PERIOD OF 5 YEARS


1. INTRODUCTION

On behalf of the Board of Directors of MPI, Commerce International Merchant Bankers Berhad ("CIMB") is pleased to announce that the Company proposes to amend the existing Bye-Laws of the Executive Share Option Scheme and thereafter to adopt the amended and restated Bye-Laws of the Employee Share Option Scheme of MPI ("ESOS" or "Scheme")("Proposed Adoption") and to extend the duration of the Scheme for an additional period of five years ("Proposed Extension").

The Proposed Adoption and Proposed Extension shall collectively be referred to as "Proposals".


2. DETAILS AND RATIONALE FOR THE PROPOSALS


On 14 October 1999, MPI obtained the approval of the Securities Commission ("SC") to establish an Executive Share Option Scheme for the benefit of the Eligible Executives (as defined in the Executive Share Option Scheme Bye-Laws of MPI established on 24 December 1999). The total number of ordinary shares of RM0.50 each in MPI ("MPI Shares") to be offered under the Executive Share Option Scheme was up to 10% of the issued and paid-up share capital of the Company. The final approval required for the implementation of the Executive Share Option Scheme was obtained on 24 December 1999 from the Registrar of Companies leading to the commencement of the Executive Share Option Scheme for a period of 5 years from the said date and expiring on 23 December 2004.





As at 31 December 2001, MPI has offered to the Eligible Executives, Executive Share Option Scheme options ("Options") to subscribe for a total of 5,138,500 MPI Shares of which Options to subscribe for 269,800 MPI Shares were exercised, Options to subscribe for 341,000 MPI Shares have lapsed due to cessation of employment of certain Eligible Executives and Options to subscribe for 4,527,700 MPI Shares remained unexercised. Based on the issued share capital of the Company of 198.9 million MPI Shares as at 31 December 2001, additional options to subscribe for 15.1 million MPI Shares may be offered under the ESOS.

The Executive Share Option Scheme will expire on 23 December 2004 after 5.00 p.m. unless extended.

The Proposed Adoption is implemented to incorporate inter-alia the revisions to the Policies and Guidelines on Issue/Offer of Securities of the SC ("SC Guidelines") in relation to employees' share option scheme and to introduce new performance criteria as a basis for offer of prime value MPI Shares option contract ("PVO") to Key Employees. The amended and restated Bye-Laws of the Scheme is also intended to improve the clarity of the existing Bye-Laws of the Executive Share Option Scheme and to facilitate the administration of the Scheme.

In view of the competitive and demanding business environment, the Company recognises the need to incorporate a significant equity component in the total compensation package to key members of the management team ("Key Employees"). Thus, the Company proposes to offer a PVO in order to achieve the following objectives:

(i) align the long term interests of Key Employees with those of the shareholders of the Company and encourage Key Employees to assume greater responsibility for the performance of the businesses that they manage;

(ii) motivate Key Employees to strategic business objectives;

(iii) reward Key Employees with an equity stake in the success of the MPI Group; and

(iv) make the total compensation package more competitive in order to attract, retain and motivate high calibre employees.

Pursuant to the SC Guidelines which allows an employees' share option scheme to have a tenure of up to 10 years, MPI proposes to extend the duration of the Scheme for an additional period of 5 years from 23 December 2004 up to and including 23 December 2009. The Proposed Extension will facilitate the implementation of the PVO to reward Key Employees for achievement of prescribed performance targets and contribution criteria over a set performance period. Currently, the Company expects that the performance period relating to the offer of PVO will be between 3 to 5 years.

The committee appointed by the Board to administer the Scheme may determine the option price for the PVO at any price provided that the option price so fixed shall not be at a discount of more than 10% (or such discount as the relevant authorities shall permit) from the 5-day weighted average market price of the MPI Shares preceding the date of the offer for a PVO and shall in no event be less than the par value of the MPI Shares.






3. EFFECTS OF THE PROPOSALS

3.1 Issued and paid-up share capital

3.2 Earnings and Net Tangible Assets ("NTA")
3.3 Dividends
3.4 Shareholdings of Substantial Shareholders
4. CONDITIONS OF THE PROPOSALS 5. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS

6. DEPARTURES FROM THE SC GUIDELINES 7. STATEMENT BY BOARD OF DIRECTORS
8. ADVISER


9. SUBMISSION TO THE SC

This announcement is dated 25 March 2002.