This document has been translated and summarized from the Japanese original for reference purposes only.
In the event of any discrepancy between the translated version and the Japanese original, the original
version shall prevail. The Company assumes no responsibility for this translation or for any direct, indirect
or any other form of damage arising from the translation.
(Securities Code: 6269)
March 5, 2018
To Our Shareholders with Voting Rights:
Toshiro Miyazaki
President and Chief Executive Officer
MODEC, INC.
3-10, Nihonbashi 2-chome Chuo-ku, TokyoNOTICE OF CONVOCATION OF
THE 32ND ANNUAL GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 32nd Annual General Meeting of Shareholders of MODEC, INC. (the“Company”) to be held as described below.
If you are unable to attend the meeting in person, you may exercise your voting rights in writing (by mail)or via the Internet, etc. Please review the attached Reference Documents for the General Meeting of
Shareholders and exercise your voting rights by 5:40 p.m. on Thursday, March 22, 2018.

1. Date and Time:

Friday, March 23, 2018, at 10:00 a.m. (The reception desk opens at 9:00 a.m.)

2. Place:

BELLESALLE Tokyo Nihonbashi B2 Event Hall
Tokyo Nihonbashi Tower, 7-1, Nihonbashi 2-chome Chuo-ku, Tokyo

3. Meeting Agenda:
Matters to be reported: 1. Operations Report, Consolidated Financial Statements, and Audit Reportconcerning Consolidated Financial Statements by the Accounting Auditor andthe Board of Corporate Auditors for the 32nd Term (from January 1, 2017 to
December 31, 2017)
2. Non-consolidated Financial Statements for the 32nd Term (from January 1,
2017 to December 31, 2017)

Matters to be resolved:
Appropriation of Surplus
Proposal 1:
Election of Ten Directors
Proposal 2:
Decision on the Amount and Details of Stock-Based Remuneration for Directors
Proposal 3:
Payment of Bonuses to Directors
Proposal 4:--------------------------------------------------------------------------------------------------------------------------------

1. When attending the meeting, please submit the enclosed Voting Rights Exercise Form at thereception desk.
2. In case of voting by proxy, you can exercise your voting rights by appointing one shareholder who
has voting rights as your proxy.

-1-Other Matters Concerning Procedures of Convocation of the Annual General Meeting of Shareholders
1. Disclosures on the Website
Consolidated Statement of Changes in Net Assets and Notes to Consolidated Financial Statements
as well as Non-Consolidated Statement of Changes in Net Assets and Notes to Non-consolidated
Financial Statements are posted on the Company’s website (http://www.modec.com/jp/) (Japaneseonly) pursuant to applicable laws and regulations as well as Article 15 of the Company’s Articles ofIncorporation, and they are not included in the Appendix to this notice. Accordingly, the Appendix
to this notice is a portion of the Consolidated Financial Statements or Non-consolidated Financial
Statements audited by the Accounting Auditor for the preparation of the Accounting Audit Report.
2. Revisions on the Website
In case of circumstances requiring revisions to the Reference Documents for the General Meetingof Shareholders, Operations Report, Consolidated Financial Statements or Non-consolidated
Financial Statements, the revised items will be posted on the Company’s website(http://www.modec.com/).
Information Concerning the Exercise of Voting Rights for Those Unable to Attend the Meeting
You may exercise your voting rights through either of the following methods:[Exercise of Voting Rights in Writing]
Please indicate your approval or disapproval of each of the proposals on the enclosed Voting Rights
Exercise Form and return it by mail so that it is received by 5:40 p.m. on Thursday, March 22, 2018. Please
note that if there is no indication of your approval or disapproval of any of the proposals on the returned
Voting Rights Exercise Form, you will be deemed to have approved each of the proposals.
[Exercise of Voting Rights via the Internet]
Upon reading “Exercise of Voting Rights via the Internet” (Japanese only), please access the website
designated by the Company for the purpose of exercising your voting rights (https://www.web54.net). Please
enter the “vote exercising code” and “password” written on the enclosed Voting Rights Exercise Form andfollow the instructions on the screen to enter your approval or disapproval of each of the proposals by 5:40
p.m. on Thursday, March 22, 2018.
If any voting right is exercised both in writing and via the Internet, the vote that reached the Company at alater timing will be recognized as valid. In the event that both votes arrive on the same day, the vote via theInternet will be recognized as valid.
If you exercise your voting rights more than once via the Internet, the most recent vote will be recognized
as valid.
[Guide to a Platform to Exercise Electronic Voting Rights for Institutional Investors]
Institutional investors, who have applied in advance to use the electronic voting platform operated by ICJ,
Inc., may use such platform as a method to electronically exercise voting rights at the General Meeting of
Shareholders of the Company, in addition to the exercise of voting rights via the Internet described above.

-2-

Reference Documents for the General Meeting of Shareholders
Proposals and References
Proposal 1: Appropriation of Surplus
The distribution of stable and consecutive dividends to shareholders while retaining an appropriate
amount of internal reserve required for future business development and reinforcement of management baseis the Company’s basic policy on distribution of profits.
Based on this policy, as well as in light of the Company’s performance, management base reinforcement
for this fiscal year and future business development, a year-end dividend for this fiscal year is proposed asstated below.
(1) Type of dividend property
Cash(2) Allocation of dividend property and total amount thereof¥30 per share of common stock of the Company (consisting of an ordinary dividend of ¥20 and a
special dividend of ¥10)
Total amount of dividends: ¥1,692,216,750
As the Company has already paid an interim dividend of ¥20 per share, the annual dividend will be¥50 per share.
(3) Effective date of dividends from surplus
March 26, 2018-3-

Proposal 2: Election of Ten Directors
The terms of office of all the current Directors will expire at the conclusion of this General Meeting of
Shareholders.
Accordingly, the election of ten Directors is proposed, including four External Directors as well as anincrease of one additional Director with a view to strengthening the Board of Directors’ effectiveness andfunction of supervision over business execution for the further enhancement of corporate governance.
The candidates for Directors are as stated below.
No.

Name

Current positions andresponsibilities at the Company

Attendance of theBoard of Directors
meetings in FY2017

1

Toshiro Miyazaki

Reappointment

President and Chief Executive
Officer

18 / 18 (100%)

2

Takeshi Kanamori

New Appointment

–

–

3

Teruhisa Konishi

Reappointment

Director
Executive Managing Officer

18 / 18 (100%)

18 / 18 (100%)

4Minoru Sawada

Reappointment

Director
Executive Officer, General
Manager of Corporate Planning& Strategies Dept.

5

Yuji Kozai

New Appointment––

Taketsune Matsumura New Appointment

–

–

6

7

Yoshio Kometani

Reappointment

External Director

External Director

17 / 18 (94%)

8

Katsuya Natori

Reappointment

External Director
Independent Director

External Director

17 / 18 (94%)

9Shigenobu Aikyo

Reappointment

External Director
Independent Director

External Director

18 / 18 (100%)

10

Hiroshi Kanno

Reappointment

External Director
Independent Director

External Director

14 / 18 (77%)

-4-

No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company, andsignificant concurrent positions
April 1972
October 2002

1

Toshiro Miyazaki(August 21, 1949)
Reappointment

2

Takeshi Kanamori(September 7, 1956)
New Appointment

Number ofshares of theCompany held

Joined Mitsui Engineering & Shipbuilding Co., Ltd.
General Manager of Corporate Planning Dept., Mitsui
Engineering & Shipbuilding Co., Ltd.
March 2005
Corporate Auditor (part-time) of the Company
June 2005
Deputy Director, General Manager of Corporate Planning Dept.
and General Manager of Asset Utilization Sect., Mitsui
25,200Engineering & Shipbuilding Co., Ltd.
Director, in charge of Finance Dept., Accounting Dept. and IR
June 2007& Public Relations, Mitsui Engineering & Shipbuilding Co.,Ltd.
March 2008
Director of the Company
March 2011
President and Chief Executive Officer of the Company (current
position)
Reasons for selection as a Director candidate
Mr. Toshiro Miyazaki has been successively selected as a candidate for Director, as he possesses
great management ability obtained through his diverse business career including corporate planning,finance and accounting, also he has been successfully demonstrating his leadership as President andChief Executive Officer of the Company in the overall management of the MODEC Group.
April 1980
Joined Mitsui & Co., Ltd.
October 2005
General Manager of First Plant Projects Division, Infrastructure
Projects Business Unit, Mitsui & Co., Ltd.
August 2007
General Manager of Second Projects Development Division,
Infrastructure Projects Business Unit, Mitsui & Co., Ltd.
October 2009
Operating Officer of Infrastructure Projects Business Unit,
Mitsui & Co., Ltd.
March 2010
Chairman & Managing Director, Mitsui & Co. (Shanghai) Ltd.
April 2011
Managing Officer, Mitsui & Co., Ltd.
Deputy Chief Representative, Mitsui & Co., Ltd. in China andChairman & Managing Director, Mitsui & Co. (Shanghai) Ltd.
0
April 2012
Executive Officer, Chief Operating Officer of Infrastructure
Projects Business Unit, Mitsui & Co., Ltd.
March 2013
External Director of the Company
April 2013
Executive Managing Officer, Chief Operating Officer ofInfrastructure Projects Business Unit, Mitsui & Co., Ltd.
April 2016
Senior Executive Managing Officer, Mitsui & Co., Ltd.
Chief Representative, Mitsui & Co., Ltd. in China and Chairman& Managing Director, Mitsui & Co., Ltd. In China (current
position)
March 2018
Expected to retire from Mitsui & Co., Ltd.
Reasons for selection as a Director candidate
Mr. Takeshi Kanamori has been newly selected as a candidate for Director, as he has acquired awide range of experience and insight related to the Company’s business as well as abundant
experience as a member of the management of the general trading company, which is expected to beleveraged to strengthen the Board of Directors’ function of decision making and supervision overbusiness execution.

-5-

No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company, andsignificant concurrent positions

Joined Mitsui Bank (currently Sumitomo Mitsui Banking
Corporation)
General Manager of Global Business Dept., Sumitomo Mitsui
June 2005
Banking Corporation
Head of Sydney Branch, Sumitomo Mitsui Banking Corporation
April 2008
September 2010
President, Banco Sumitomo Mitsui Brasileiro S.A.
April 2011
Deputy Director, Sumitomo Mitsui Banking Corporation,
6,600
President, Banco Sumitomo Mitsui Brasileiro S.A.
Teruhisa Konishi
Executive Officer, General Manager of Human Resources Dept.
April 2013
(November 19, 1957)of the Company
Director of the Company
March 2015
Director, Executive Officer of the Company
Reappointment
May 2016
March 2017
Director, Executive Managing Officer of the Company (current
position)
Reasons for selection as a Director candidate
Mr. Teruhisa Konishi has been successively selected as a candidate for Director, as he has acquired awide range of knowledge and practical experience related to international finance and overseas
investment through his duties at financial institutions, as well as he has been in charge of theCompany’s Human Resources, General Affairs, Environmental Safety and Health Management
Departments, etc.
April 1983
Joined Mitsui Engineering & Shipbuilding Co., Ltd.
April 2011
General Manager of Planning & Administration Dept.,
Environment & Plant Hq., Mitsui Engineering & Shipbuilding
Co., Ltd.
June 2012
General Manager of Planning & Administration Dept.,
Engineering Hq., Mitsui Engineering & Shipbuilding Co., Ltd.
April 2013
General Manager of Procurement Dept., Engineering Hq., Mitsui
4,000
Engineering & Shipbuilding Co., Ltd.
Minoru Sawada
October 2014
General Manager of Project Management Dept., Engineering(August 12, 1960)
Hq., Mitsui Engineering & Shipbuilding Co., Ltd.
April 2015
Deputy Director, Mitsui Engineering & Shipbuilding Co., Ltd.
Reappointment
October 2015
Deputy Director of the Company
March 2016
Director, Executive Officer, General Manager of Corporate
Planning & Strategies Dept. of the Company (current position)
Reasons for selection as a Director candidate
Mr. Minoru Sawada has been successively selected as a candidate for Director, as he has acquired awide range of knowledge and practical experience related to corporate planning and coordination
through his duties in the operating divisions of the Company’s parent company, as well as having
been in charge of the Company’s Corporate Planning and Strategies, Best Practice Promotion, IT
management divisions and supervising affiliated companies.
April 1981

3

4

Number ofshares of theCompany held

-6-

No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company, andsignificant concurrent positions
April 1982
June 2005

Number ofshares of theCompany held

Joined Mitsui Engineering & Shipbuilding Co., Ltd.
General Manager of Diesel Design Dept., Machinery Factory,
Machinery & Systems Hq., Mitsui Engineering & Shipbuilding
Co., Ltd.
July 2007
General Manager of Production Planning Dept., Machinery
Factory, Machinery & Systems Hq., Mitsui Engineering &Shipbuilding Co., Ltd.
January 2011
General Manager of Quality Assurance Dept., Machinery
Factory, Machinery & Systems Hq., Mitsui Engineering &0
Shipbuilding Co., Ltd.
Yuji Kozai
June 2013
General Manager of Corporate Planning Dept., Mitsui
Engineering & Shipbuilding Co., Ltd.
(February 10, 1960)
April 2015
Executive Officer, General Manager of Corporate Planning
5
Dept., Mitsui Engineering & Shipbuilding Co., Ltd.
New Appointment
October 2016
Executive Officer, Deputy General Manager of Corporate
Planning Hq., General Manager of Corporate Planning Dept.,
Corporate Planning Hq., Mitsui Engineering & Shipbuilding Co.,
Ltd. (current position)
Reasons for selection as a Director candidate
Mr. Yuji Kozai has been newly selected as a candidate for Director, as he is judged to be capable ofadvising the overall management of the Company, based on his knowledge and experience related to
the Company’s business as well as a wide range of experience and deep insight in corporate
management. Mr. Yuji Kozai concurrently serves as Executive Officer of the Company’s parent,
Mitsui Engineering & Shipbuilding Co., Ltd.
April 1991
Joined Mitsui Engineering & Shipbuilding Co., Ltd.
April 1999
Part-time Lecturer, Tokai University (current position)
April 2010
Part-time Lecturer, Yokohama National University
April 2015
General Manager of Basic Design Dept., Ship & Ocean Project
Hq., Mitsui Engineering & Shipbuilding Co., Ltd.
0
April 2017
Thesis Screening Committee Member, The Japan Society of Naval
Taketsune Matsumura
Architects and Ocean Engineers (current position)(May 25, 1967)
February 2018
General Manager of Strategic Planning Sect., Corporate Planning
6
Dept., Corporate Planning Hq. and Manager of IR Dept., Mitsui
New Appointment
Engineering & Shipbuilding Co., Ltd. (current position)
Reasons for selection as a Director candidate
Mr. Taketsune Matsumura has been newly selected as a candidate for Director, as he is judged to becapable of advising the overall management of the Company, based on his knowledge andexperience related to the Company’s business as well as a wide range of experience and deep insightin corporate management.

-7-

No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company, andsignificant concurrent positions
April 1985
March 2010

7

8

Number ofshares of theCompany held

Joined Mitsui & Co., Ltd.
General Manager of Planning and Administrative Division,
Infrastructure Projects Business Unit, Mitsui & Co., Ltd.
April 2013
Operating Officer of Infrastructure Projects Business Unit,
Mitsui & Co., Ltd.
May 2014
Deputy Chief Operating Officer of Asia Pacific Business Unit,
0
Mitsui & Co., Ltd. and Senior Vice President, Mitsui & Co.
Yoshio Kometani(Asia
Pacific)
Pte.
Ltd.
(locatedatSingapore)(April 11, 1962)
April 2015
Managing Officer, Deputy Chief Operating Officer of Asia
Pacific Business Unit, Mitsui & Co., Ltd.
Reappointment
March 2016
External Director of the Company (current position)
External Director
April 2016
Managing Officer, Chief Operating Officer of Infrastructure
Projects Business Unit, Mitsui & Co., Ltd. (current position)
Reasons for selection as an External Director candidate
Mr. Yoshio Kometani has been successively selected as a candidate for External Director, as he isjudged to be able to continue to provide advice on the overall management of the Company, basedon a wide range of experience and knowledge related to the Company’s business as well as
abundant experience in corporate management as a member of the management of the general
trading company.
April 1986
Registered as an attorney, joined Masuda and Ejiri Law Office(currently Nishimura & Asahi)June 1990
Joined Davis Wright Tremaine LLP (Seattle, U.S.)
July 1992
Joined Wilmer, Cutler & Pickering (Washington D.C., U.S.)
July 1993
Joined Esso Sekiyu K.K.
January 1995
Joined Apple Japan, Inc.
January 1998
Director, Sun Microsystems K.K.
March 2002
Executive Officer, FAST RETAILING CO., LTD.
700
January 2004
Director, VP, IBM Japan, Ltd.
Katsuya Natori
April 2010
VP, IBM Japan, Ltd.
(May 15, 1959)
February 2012
Founded Natori Law Office
Chief, Natori Law Office (current position)
Reappointment
April 2012
Outside Audit & Supervisory Board Member, OLYMPUS
External Director
CORPORATION (current position)
Independent Director March 2015
External Director of the Company (current position)
April 2016
Supervisory Director, Global One Real Estate Investment
Corporation (current position)
Reasons for selection as an External Director candidate
Mr. Katsuya Natori has been successively selected as a candidate for External Director, as he isjudged to be able to continue to provide advice on the overall management of the Company, basedon a wealth of experience and broad insight as a corporate manager and as an attorney gained
through his domestic and overseas business experience over the years. If election of Mr. Katsuya
Natori is approved, the Company intends to appoint him as Independent Director as prescribed by
the Tokyo Stock Exchange.

-8-

No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company, andsignificant concurrent positions
April 1972

9

Number ofshares of theCompany held

Joined Sumitomo Bank (currently Sumitomo Mitsui Banking
Corporation)
June 1999
Executive Officer, Head of Human Resources Dept., Sumitomo
Bank
April 2001
Executive Officer, Head of Corporate Management Dept.,
Sumitomo Mitsui Banking Corporation
June 2003
Managing Executive Officer, Head of Tokyo Corporate Banking
Division I, Sumitomo Mitsui Banking Corporation
June 2005
Managing Director and Managing Executive Officer, Sumitomo
Mitsui Banking Corporation
April 2006
Senior Managing Director, Sumitomo Mitsui Banking
Corporation
Senior Managing Director (Executive Officer), Sumitomo Mitsui
Financial Group, Inc.
April 2007
Deputy President, Head of Corporate Banking Unit, Sumitomo
600
Shigenobu Aikyo
Mitsui Banking Corporation(October 1, 1949)
April 2010
Chairman and Representative Director, Nikko Cordial Securities
Inc.
Reappointment
April 2011
Chairman and Representative Director, SMBC Nikko Securities
External Director
Inc.
Advisor, SMBC Nikko Securities Inc.
Independent Director April 2015
June 2015
External Director, HASHIMOTO SOGYO HOLDINGS Ltd.
(current position)
March 2016
External Director of the Company (current position)
June 2016
External Director, Sanyo Chemical Industries, Ltd. (current
position)
June 2016
External Director, DAIHEN Corporation (current position)
June 2016
Outside Director, SCSK Corporation (current position)
June 2016
External Director, NICHICON CORPORATION (current
position)
Reasons for selection as an External Director candidate
Mr. Shigenobu Aikyo has been successively selected as a candidate for External Director, as he isjudged to be capable of advising the overall management of the Company from a broad perspective,
based on his extensive knowledge regarding finance and management gained through his longtime
involvement in the management of financial institutions. If election of Mr. Shigenobu Aikyo isapproved, the Company intends to appoint him as Independent Director as prescribed by the Tokyo
Stock Exchange.

-9-

No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company, andsignificant concurrent positions

Number ofshares of theCompany held

April 1983
August 1991

10

Joined Nikken Sekkei Ltd
Joined The Boston Consulting Group
Partner and Managing Director, the last position at The Boston
Consulting Group
July 2008
Professor, Hitotsubashi University Graduate School ofInternational Corporate Strategy
June 2011
External Director, Omron Healthcare, Co., Ltd. (current position)
April 2012
Dean, Hitotsubashi University Graduate School of International
Corporate Strategy
0
Hiroshi Kanno
October 2012
Outside Director, Japan Display Inc.
(November 14, 1958) June 2014
External Director, WOWOW INC. (current position)
June 2015
Outside Audit and Supervisory Board Member, STANLEY
Reappointment
ELECTRIC CO., LTD. (current position)
External Director
March 2016
External Director of the Company (current position)
Independent Director September 2016 Professor, Waseda Business School (Graduate School ofBusiness and Finance) (current position)
August 2017
Outside Director of ERI HOLDINGS CO., LTD. (current
position)
Reasons for selection as an External Director candidate
Mr. Hiroshi Kanno has been successively selected as a candidate for External Director, as he isjudged to be able to continue to provide advice on the overall management of the Company, basedon abundant experience as a business management consultant and professional insights as a
researcher on business strategy planning. If election of Mr. Hiroshi Kanno is approved, theCompany intends to appoint him as Independent Director as prescribed by the Tokyo Stock
Exchange.

(Notes) 1. Mitsui Engineering & Shipbuilding Co., Ltd. is the Company’s parent company. The positions and responsibilities at theparent company of the candidates who currently serve or had served during the past five years as executives at Mitsui
Engineering & Shipbuilding Co., Ltd. are stated in the above “Career summary, positions and responsibilities at theCompany, and significant concurrent positions.”
Other candidates for Directors have no special interest in the Company.
2. The terms of office of the current External Directors as the Company’s External Director will be three years for Mr.
Katsuya Natori and two years for Messrs. Yoshio Kometani, Shigenobu Aikyo and Hiroshi Kanno as of the conclusion ofthis General Meeting of Shareholders.
3. Liability limitation contract with the External Directors
The Company stipulates in its current Articles of Incorporation that the Company may enter into contracts with External
Directors which limit their liabilities for compensation of damages to the Company within a certain range so that theCompany can invite competent personnel as External Directors. If the reelection of Messrs. Yoshio Kometani, Katsuya
Natori, Shigenobu Aikyo and Hiroshi Kanno, candidates for External Director, is approved, the Company intends torenew the liability limitation contracts with them with a content as stated below.
- In the event that External Directors cause damages to the Company by performing their duties, the maximum amountof liability shall be the minimum amount prescribed in Article 425, Paragraph 1 of the Japanese Companies Act, on thecondition that they perform their duties in good faith and without gross negligence.

- 10 -

Proposal 3: Decision on the Amount and Details of Stock-Based Remuneration for Directors
1. Reasons for the proposal and its appropriatenessThe remuneration for the Company’s Directors currently comprises basic remuneration and bonus todirectors. The Company, in this proposal, requests the approval of the adoption of a stock-based
remuneration system (the “System”) for the Company’s Directors (excluding Outside Directors; the same
applies throughout proposal 3). The Company also requests that the details of the System be left to thediscretion of the Board of Directors, within the scope of the limit set forth in 2. below.
The adoption of the System is intended to further clarify the link between Directors’ compensation and
the Company’s stock value as well as to ensure that Directors share the benefit and risk from stock pricefluctuations with shareholders, which in turn raises awareness of their contribution to the enhancement of theCompany’s performance and corporate value in the medium and long term. The Company, therefore,
believes that the adoption of this remuneration system is appropriate.
The Company, at the 27th Annual General Meeting of Shareholders held on March 28, 2013, has obtained
approval for the amount of remuneration for Directors (300 million yen or less per annum; including
remuneration for External Directors and excluding salaries as employees). Separately from this amount of
remuneration, the Company asks for the approval to provide stock-based remuneration to Directors in officeduring five fiscal years from the year ending December 31, 2018 to the year ending December 31, 2022 (the“Target Period”).
If the “Election of Ten Directors” in proposal 2 is approved as originally proposed, four Directors will fallunder the System.
2. Amount of remuneration, etc. and its details under the System(1) Outline of the System
The System is a stock-based remuneration system under which the Company’ shares are acquired by
the trust established with funds contributed by the Company (the “Trust”). The shares acquired by theTrust are provided to Directors through the Trust according to the points granted by the Company to
Directors.
Directors are granted the Company’s shares upon their retirement in principle.
(i) Persons eligible for the System
Directors of the Company (excluding Outside
Directors)(ii) Initial trust period
Approximately five years(iii) Upper limit of the amount of contribution by
the Company for the acquisition of the¥135 million
Company’s shares during the initial trust period
stipulated in (ii)
(iv) Method of acquisition of the Company’s shares Through the stock market (including after hour
trading) or by underwriting the disposition of
the Company’s treasury stock(v) Upper limit of the total points granted to
21,000 points in each fiscal year
Directors stipulated in (i)(vi) Criteria for granting points
Grant points according to position, etc.
(vii) Timing of granting the Company’s shares toUpon Director’s retirement in principle
Directors stipulated in (i)(2) Upper limit of the amount of contribution by the Company
The initial trust period of the Trust is approximately five years. The Company will establish the Trustby contributing an upper limit of ¥135 million over the initial trust period as remuneration for Directors
in office during the Target Period, which shall be used as the funds required for the acquisition of theCompany’s shares to be granted to Directors under the System. The beneficiaries of the Trust shall be
Directors of the Company who meet certain requirements. The Trust shall acquire the Company’s sharesthrough the stock market (including after hour trading) or by underwriting the disposition of theCompany’s treasury stock with funds entrusted by the Company.
Note: The monetary amount to be actually entrusted to the Trust by the Company shall include theestimated necessary expenses such as trust fees and compensation for the trust administrator,etc., in addition to the funds required to acquire shares of the Company.
At the time of expiration of trust period (at the time of expiration of extended trust period in the casethat continuation of the Trust is decided as a result of the extension of trust period pursuant to the- 11 -

following procedure), the Board of Directors of the Company may resolve to continue the System byextending trust period at intervals of a maximum period of five years (including an effective extensionof trust period by transferring trust assets of the Trust to another trust established by the Company forthe same purpose; the same applies throughout proposal 3). If the trust period is thus extended, theCompany shall additionally contribute an upper limit of ¥27 million for each year of the extended trust
period to the Trust as the funds required for the acquisition of the Company’s shares for the purpose of
granting to Directors under the System. At the same time, the Company shall extend the Target Period in
accordance with the length of continuation of the System and the extended trust period, and shallcontinue to grant the points stipulated in (3) (i) below and grant the Company’s shares stipulated in (3)(iii) below within the extended trust period.
Furthermore, even where the Company does not continue the System or extend the trust period as
described above, if there are Directors who have not retired from office and who have accumulated
points at the time of the expiration of trust period, the Company may decide to extend the trust period of
the Trust until such Directors retire from office and the corresponding grant of the Company’s shares iscompleted.
(3) Methods for calculating the number of the Company’s shares to be granted to Directors and the upperlimit(i) Method for granting points
The Company confers to Directors a certain number of points as specified in accordance with
their individual rank, etc., on a given date during the trust period, in accordance with the Share
Grant Regulations.
However, the total number of points to be conferred to all Directors by the Company during asingle fiscal year shall not exceed 21,000.
(ii) Grant of the Company’s shares in proportion to granted points
Directors will receive grants of the Company’s shares in proportion to their accumulated
number of points granted pursuant to (i) above, following the procedures described in (iii) below.
One point shall correspond to one share of the Company to be granted. However, if a stock
split, reverse stock split, or any other event where it would be considered reasonable to adjust the
number of shares of the Company to be granted occurs, the Company will make reasonableadjustments depending on the ratio of such stock split or reverse stock split.
(iii) Grant of the Company’s shares
Upon retirement from office, Directors will receive shares of the Company as described in (ii)above from the Trust. Such Payment will be made by the Trust to directors who have completed
the required procedures to be designated as beneficiaries.
Nevertheless, a certain proportion of shares of the Company may be sold by the Trust andgranted to Directors in the form of cash to withhold and payout individual tax of each Director.
Furthermore, in any case where a settlement is made for shares of the Company within the
Trust by subscribing to a tender offer, the cash proceeds may be paid out in place of delivering
shares of the Company.
(4) Exercise of voting rights
In accordance with instructions from the trust administrator which is independent of the Company or
any officer of the Company, voting rights associated with the shares of the Company held in the Trustshall not be exercised at all, in order to ensure neutrality towards the management of the Company withrespect to the shares of the Company held in the Trust.
(5) Handling of dividends
Dividends of the shares of the Company held in the Trust shall be received by the Trust to be used toacquire shares of the Company and for trust fees to be paid to the trustee with respect to the Trust.

- 12 -

[Reference] Structure of the System② Establishment of trust[Assignor]

The Company③ ’Payment for purchase

Stock market③ Payment[Trustee]
Sumitomo Mitsui Trust Bank, Ltd.

③ Disposal of treasury
shares(Re-trust trustee: Japan Trustee Services Bank, Ltd.)

Cashshares

① Establishment of
Share Grant Regulations⑥ Sale of shares

Trust delivering sharesCompany⑤ Conferring
points③ ’Purchase of shares④ Instruction not to exercise
voting rights⑥ Sale proceeds⑥ Shares or cash

Trust administrator[Beneficiaries]

Directors① The Company establishes Share Grant Regulations for Directors.
② The Company establishes the Trust (a third-party-benefit trust) for granting shares with Directors as
beneficiaries. In doing so, the Company entrusts an amount of money to the trustee equivalent to that for
funds to acquire shares (limited to the amount approved at the Shareholders Meeting).
③ The trustee acquires, in a single tranche, a number of shares of the Company sufficient for the expected
future grant of shares (from the stock market, including in after-hours trading or from subscribing to thetreasury shares to be disposed of by the Company).
④ The Company appoints a trust administrator (must be a party independent of the Company or any officerof the Company) to be responsible for protecting the interests of the beneficiaries subject to the Share
Grant Regulations and for supervising the trustee throughout the trust period. The trust administrator will
issue instructions to the trustee not to exercise any voting rights associated with the shares of theCompany held in the Trust throughout the trust period, and the trustee will comply with these instructions.
⑤ The Company confers points to eligible Directors in accordance with the Share Grant Regulations.
⑥ Directors meeting the requirements set forth in the Share Grant Regulations and the trust agreement
receive, as beneficiaries of the Trust, a grant of shares of the Company corresponding to the accumulated
number of points from the trustee. In certain specific cases set forth in advance in the Share Grant
Regulations and the trust agreement, the trustee sells in the stock market a portion of the shares to be
granted and grants cash instead.
It should be noted that Sumitomo Mitsui Trust Bank, Limited, which will be the Trustee under thisPlan for the Beneficiaries will entrust (retrust) the management of the trust assets to Japan Trustee
Services Bank, Ltd.
In addition, for the outline of the System, please refer to the “Introduction of New Stock-based Incentive
System for Directors of MODEC, Inc.” announced on February 6, 2018.

- 13 -

Proposal 4: Payment of Bonuses to Directors
In view of the Company’s performance for this fiscal year, it is proposed that bonuses of up to ¥25
million in total be paid to three Directors (excluding External Directors.) who were in office as of December
31, 2017.

- 14 -

[Appendix]
Operations Report (from January 1, 2017 to December 31, 2017)

Overview and Results of Operations
During for the consolidated fiscal year ended December 31, 2017, the Japanese economy continued agradual recovery trend, reflecting the improvement in corporate earnings as well as conditions for
employment and income. The global economy continued to expand, mainly in Europe and the United States.
However, the situation is still uncertain mainly due to the uncertainty in the U.S. policy management andincreasing geopolitical risks.
Looking at crude oil prices, WTI oil prices increased towards the end of the year and ended up at thelevel of 60 dollars per barrel due to easing oversupply concerns on the back of the continuation of joint
reduction by major oil producing countries. Oil companies are likely to continue oil and gas exploration anddevelopment activities of offshore oilfields and gas fields, with a view to ensuring the sustainable supply ofenergy resources. Accordingly, business related to floating production systems is expected to grow in themedium and long term.
Under these circumstances, for the consolidated fiscal year ended December 31, 2017, orders resulted in¥700,924 million (up 656.1% year on year) mainly due to new orders for two large charter projects as well asa change to the specification for existing projects and O&M services. Revenue was ¥191,182 million (down
16.9%) due to steady progress in construction of FPSOs.
In terms of profit, operating profit stood at ¥11,448 million (down 36.5%) due to steady progress inconstruction of FPSOs. Ordinary profit came to ¥24,322 million (down 17.3%), owing to the posting of stable
equity in earnings of the affiliates accounted for by the equity method in the lease business. As a result, profit
attributable to owners of parent was ¥19,454 million (down 7.4%).

- 15 -

Financial Statements
Consolidated Balance Sheet(December 31, 2017)(Millions of Japanese yen)
Description

AmountDescription(Assets)
Current assets

Amount(Liabilities)
198,035

Current liabilities

128,581

Cash and time deposits

31,380Accounts payable - trade80,335

Accounts receivable - trade98,188

Short-term loans payable

3,390

Inventories

1,096

Current portion of long-term loans payable

11,077

Short-term loans receivable

46,282

Lease obligations

6

Deferred tax assets

2,403

Accrued expenses

13,971Other current assets

19,983

Income taxes payable

6,717

Less - allowance for bad debts(1,297)

Advances received

6,425

Non-current assets

123,129

Property and equipment

6,863

Buildings and structures

79

Machinery and equipment
Other property and equipment
Construction in progress

Accrued employees’ bonuses

43

Accrued directors’ bonuses

13

Provision for product warranty
Provision for repairs

49

5,046

Other provisions

5

1,626

Other current liabilities

7,446

Long-term loans payable

Goodwill

1,207

Lease obligations

Other

6,239

Net defined benefit liabilities

Investments and other assets

1,049

110
Non-current liabilities

Intangible assets

5,495

44,19731,5862
310

Liabilities from application of equity method

6,875

108,819

Other non-current liabilities

5,422

63,225

Total liabilities

Investment securities
Long-term loans receivable fromunconsolidated subsidiaries andaffiliated companies
Deferred tax assets

34,762(Net assets)

1,767

Shareholders’ equity

135,468

Other investments

9,063

Common stock

30,122

Capital surplus

30,852Retained earnings

74,495Less - treasury stock at cost
Accumulated gains (losses) from valuation
Unrealized gains (losses) on available-for-salesecurities, net of tax
Unrealized gains (losses) on hedging derivative,
net of tax
Foreign currency translation adjustments
Retirement liability adjustments for foreign
consolidated subsidiaries, net of tax
Non-controlling interests

Total assets

321,165(Note) The figures are rounded down to the nearest million yen.

- 16 -

172,778

(2)
1,032
(17)
(9,109)10,472(312)
11,885

Total net assets

148,387

Total liabilities and net assets

321,165

Consolidated Statement of Income(For year ended December 31, 2017)(Millions of Japanese yen)
Description

AmountRevenue

191,182

Cost of sales

166,377

Gross profit

24,804

Selling, general and administrative expenses

13,356

Operating profit

11,448Non-operating income
Interest and dividend income
Equity in earnings of affiliates and unconsolidated
subsidiaries
Other

5,143
9,686
940

15,770Non-operating expenses
Interest expense

1,389

Foreign exchange gains (losses), net

1,321

Other

184

Ordinary profit

2,895
24,322Extraordinary profit
Gain on sales of affiliate’s stock

491

Gain on liquidation of affiliates

249

741

Income before income taxes

25,064

Income taxes - current

3,028

Income taxes - prior(89)

Income taxes - deferred

1,976

Net income

20,149Profit attributable to non-controlling interests

695

Profit attributable to owners of parent

19,454- 17 -

Non-Consolidated Balance Sheet(December 31, 2017)(Millions of Japanese yen)
Description

AmountDescription(Assets)
Current assets

Amount(Liabilities)
106,538

Current liabilities

92,983

Cash and time deposits

8,823

Accounts payable - trade56,965

Accounts receivable - trade42,855

Short-term loans payable

3,390

20

Current portion of long-term loans payable

10,897

Advance payments - trade

21

Lease obligations

Prepaid expenses

324

Accounts payable - other701

Accrued expenses

357

Work in process

Short-term loans receivable

50,924

6

Accrued income

269

Income taxes payable

1,307

Other current assets

5,061

Advances received

278

Less - allowance for bad debts(1,762)

Deposits received

86

CMS deposits received

18,62697,990Accrued employees’ bonuses

8110

Accrued directors’ bonuses

13

Buildings

79

Other provisions

5

Tools, furniture and fixtures

22

Other current liabilities

Leased assets

8

Non-current assets
Property and equipment

Non-current liabilities
Long-term loans payable

21

Lease obligations

Software19

Provision for retirement benefits

Other

1

Deferred tax liabilities

Intangible assets

Other non-current liabilities
Investments and other assets
Investment securities
Investment in subsidiaries and affiliates
Long-term loans receivable fromunconsolidated subsidiaries andaffiliated companies
Other investments

97,859147

Total liabilities

30,24329,2402
310
6
682
123,226(Net assets)

83,613

Shareholders’ equity

82,333

11,399Common stock

30,122

2,698

Capital surplus

30,852

Legal capital surplus
Retained earnings

Other retained earnings

21,292

Valuation and translation adjustments
Unrealized gains (losses) on available-for-salesecurities, net of tax
Unrealized gains (losses) on hedging derivative,
net of tax
Total net assets
Total liabilities and net assets- 18 -

21,36068

Less-treasury stock at cost

204,52930,852

Legal retained earnings

Retained earnings brought forward

Total assets

338

21,292(2)(1,031)(17)(1,013)81,302
204,529

Non-Consolidated Statement of Income(For year ended December 31, 2017)(Millions of Japanese yen)
Description

AmountRevenue

79,384

Cost of sales

73,354Gross profit

6,030

Selling, general and administrative expenses

6,705

Operating loss

(675)

Non-operating income
Interest and dividend income

8,090

Other

771

8,861

Non-operating expenses
Interest expense

1,586

Foreign exchange loss

1,336

Other

179

Ordinary profit

3,102
5,083

Extraordinary profit
Gain on sales of affiliate’s stock

217

Gain on liquidation of affiliates

0

218

1,072

1,072

Extraordinary losses
Loss on valuation of shares of affiliates
Income before income taxes

4,229

Income taxes - current

986

Net income

3,243- 19 -