(Note) This document has been translated from the Japanese original for reference purposes only. In the eventof any discrepancy between this translated document and the Japanese original, the original shall prevail.

May 22, 2018
Company Name: Tokuyama Corporation
Representative Name: Hiroshi Yokota,
Representative Director, President and Executive Officer(Code No. 4043, First Section TSE)
Contact: Taro Kobayashi, General Manager
Corporate Communications & Investor Relations Dept.
TEL: +81-3-5207-2552

Introduction of Performance-linked Share-based Remuneration Plan for Directors,
etc., of Tokuyama Corporation

Tokuyama Corporation (hereinafter the “Company,” “Tokuyama” or “we”) hereby announces that theBoard of Directors of the Company, at its meeting held today, made a resolution to introduce a
performance-linked share-based remuneration plan (the “Plan”) for Directors (excluding Directors who are
Audit and Supervisory Committee Members, non-executive Directors, External Directors, and persons notresident in Japan; hereinafter the same applies) and Executive Officers (excluding non-residents of Japan;
hereinafter the same applies; hereinafter collectively referred to with Directors as “Directors, etc.”) of theCompany as follows, and make a proposal on the agenda to seek shareholders’ approval of the introductionof the Plan at the 154th Ordinary General Meeting of Shareholders (hereinafter “this Ordinary General
Shareholders’ Meeting”) to be held on June 22, 2018.

1. Introduction of the Plan
(1) In 2016, Tokuyama set forth the basic policy of management that we aim to achieve by 2025 as a “NewFoundation,” and we have set forth the goal of becoming a global leader in advanced materials throughunique technologies across growth businesses, and becoming a leader in Japan in traditional businesses
through strengthening competitiveness. As we focus on creating the necessary driving force to propel
new profit growth, we are steadily implementing the key strategies set forth in the Medium-Term
Management Plan, the “cornerstone of the Group’s revitalization,” covering the five-year period startingin fiscal 2016: “change the Group’s organizational culture and structure,” “rebuild the Group’s businessstrategies,” “strengthen Group management,” and “improve the Company’s financial position.” Now, as
we aim to realize the above Medium-Term Management Plan, the Company shall introduce the Plan in1

order to clarify the linkage between the remuneration of Directors, etc., and Tokuyama’s corporate value,enhance motivation to achieve the business performance targets in the Medium-Term Management Plan,
and further press forward with shared interests between Directors, etc. and shareholders by promoting
the holding of the Company’s shares by Directors, etc.
(2) The introduction of the Plan will be subject to obtaining approval at this Ordinary General Shareholders’Meeting.
(3) The Plan employs a framework using a trust for officer remuneration plan, which is a so-called Board
Incentive Plan (BIP) (this trust, hereinafter “BIP trust”). As with performance shares and restricted
shares in Europe and North America, a BIP trust is a system whereby shares in the Company and cash
equivalent to the conversion amount of the Company’s shares (hereinafter “the Company’s shares, etc.”)
will be delivered or paid in accordance with business performance and the recipient’s rank.

2. Overview of the Plan
1) Resolution of this Ordinary General Shareholders’ Meeting8) Gratis transfer andcancellation of[Settlor]

residual shares

The Company

9) Provision of2) Formulation ofresidual assets
3) Trust establishment

5) Dividends

Share Delivery
Regulations[Trustee (joint trustee)] (planned)
Mitsubishi UFJ Trust and Banking
4) The Company’s
shares7) Delivery or payment

Corporation
The Master Trust Bank of Japan,
Ltd.

Stock marketof the Company’s
shares, etc.

Directors, etc.

The Trust4) Payment[Beneficiaries]

The Company’s shares and cash6) Instruction not to exercise voting rights

Trust administrator

1) The Company will obtain approval for officer remuneration related to the introduction of the Plan byresolution at this Ordinary General Shareholders’ Meeting.
2) At a meeting of the Board of Directors, the Company will formulate the Share Delivery Regulations inrelation to the content of the Plan.
3) The Company will entrust money within the range approved by resolution at this Ordinary General2

Shareholders’ Meeting, as described in item 1), and establish a trust (the Trust) with Directors, etc.,
who fulfill the beneficiary requirements as beneficiaries.
4) In accordance with the instructions of the trust administrator, the Trust will acquire the Company’s
shares from the stock market, using the money entrusted in the above item 3) as funds. The numberof shares acquired by the Trust will be within the range approved by resolution at this Ordinary
General Shareholders’ Meeting, as described in item 1).
5) Dividends for the Company’s shares in the Trust will be paid in the same way as with other shares of
the Company.
6) Voting rights of the Company’s shares in the Trust will not be exercised during the trust period.
7) In accordance with the Share Delivery Regulations of the Company, Directors, etc., who have been
granted a certain number of points during the trust period and who fulfill the beneficiary
requirements will receive delivery of the Company’s shares corresponding to a certain ratio of thenumber of points, and receive cash equivalent to the conversion amount of the Company’s shares,
after conversion within the Trust, corresponding to the number of remaining points, in accordancewith the provisions of the trust agreement.
8) Any residual shares generated by the failure to achieve business performance targets during the Plan
Period (as defined in the below item (1)), etc., when the trust period expires will be subject to delivery
or payment to Directors, etc., if the Trust continues to be used under the Plan or a similar share-based
remuneration plan, through changes to the trust agreement and additional entrustments. If the Trust
will end upon the expiration of the trust period, the Trust shall transfer these residual shares gratis to
the Company, and the Company shall cancel them by resolution of the Board of Directors, as ameasure for shareholder returns.
9) Any residual dividends pertaining to the Company’s shares in the Trust when the trust period expires
will be utilized as acquisition funds for shares if the Trust continues to be used, but if the Trust ends
upon the expiration of the trust period, they will revert to the Company within the range of thereserve fund for trust expenses after deducting share acquisition funds from the trust money, and any
amount that exceeds the reserve fund for trust expenses will be donated to an organization with nospecial interests with the Company or Directors, etc.

* If there is a possibility that the number of shares in the Trust will be insufficient for the number of theCompany’s shares corresponding to the Number of Share Conversion Points (as defined in the below item(5); hereinafter the same applies) specified for Directors, etc., during the trust period, or if there is apossibility that the money in the trust assets will be insufficient for the payment of the trust fees and trust
expenses, then the Company may entrust additional money to the Trust, within the range of the total
maximum amount of trust money set forth in the below item (7).

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(1) Overview of the Plan
The Plan is a scheme under which the Company’s shares, etc., will be delivered or paid as officer
remuneration in accordance with the rank of Directors, etc., the level of achievement of businessperformance targets in the Medium-Term Management Plan, and other factors, over the three fiscal
years covered by the Medium-Term Management Plan set forth by the Company, from the fiscal year
ending March 31, 2019 until the fiscal year ending March 31, 2021 (hereinafter “the Plan Period”).
Furthermore, if the Trust is continued (as defined in item (4) b. below; hereinafter the same applies),
the fiscal years corresponding to subsequent medium-term management plans shall each be Plan
Periods.
(2) Resolution at this Ordinary General Shareholders’ Meeting relating to the introduction of the PlanAt this Ordinary General Shareholders’ Meeting, a resolution shall be made regarding the total maximum
amount of trust money to be contributed to the Trust, the total maximum number of the Company’s
shares, etc., to be delivered or paid from the Trust, and other necessary matters. Furthermore, if
continuing the Trust, the Company shall decide to change the trust agreement when the trust period
expires and make additional contributions to the Trust, by resolution of the Board of Directors andwithin the range approved at this Ordinary General Shareholders’ Meeting.
(3) Persons eligible for the Plan (beneficiary requirements)
After completing the prescribed beneficiary vesting procedures, Directors, etc., may receive the delivery
or payment from the Trust of a number of the Company’s shares, etc., corresponding to the Number of
Share Conversion Points, paid they satisfy the following beneficiary requirements.
The beneficiary requirements are as follows.
(i)

He or she must have been in office as a Director, etc., during the Plan Period (includes persons
newly appointed as Directors, etc., during the Plan Period);(ii)

He or she must be a resident of Japan;(iii)

He or she must not be someone who has retired owing to personal circumstances, dismissal, etc.,
or someone who has performed certain illegal actions during his or her time in office;(iv)

The Number of Share Conversion Points must have been determined;(v)

He or she must meet other criteria deemed necessary for achieving the objectives of theperformance-linked share-based remuneration plan.

(4) Trust Perioda. Initial Trust Period
The initial trust period will be the period of approximately three (3) years from August 2018 (planned)
to August 2021 (planned).

4b. Continuation of the Trust
When the trust period expires, the Company may continue the Trust by amending the trust agreement
and making additional entrustments. In this case, a number of years corresponding to themedium-term management plan formulated by the Company at that time shall be the new Plan Period,
the trust period of the Trust will be extended by the same length of period as the new Plan Period, andthe Company will make additional contributions within the range of the total maximum amount oftrust money to be contributed to the Trust, as approved by resolution at this Ordinary General
Shareholders’ Meeting, and continue granting points to Directors, etc., during the extended trust
period. However, when making these additional contributions, if there are shares in the Company(excluding shares in the Company corresponding to points granted to Directors, etc., whose delivery
or payment is incomplete) and money remaining in the trust assets on the final day of the trust periodprior to extension (hereinafter “Remaining Shares, etc.”), the total amount of the monetary amount of
the Remaining Shares, etc., and any trust money additionally contributed shall be within the range ofthe maximum amount of trust money to be contributed to the Trust in the new Plan Period, as
approved by resolution at this Ordinary General Shareholders’ Meeting. Such extensions of the trust
period shall not be limited to one time only, and the trust period may subsequently be similarly
reextended.
(5) The Company’s shares to be delivered to Directors, etc.
At a certain time every year during the trust period, points calculated based on the following calculation
formula (hereinafter “Base Points”) shall be granted to Directors, etc., in accordance with their rank, andat a certain time immediately following the final day of the final fiscal year in the Plan Period (scheduled
for June 2021 for the initial Plan Period), the number of the Company’s shares to be delivered or paid
shall be determined based on the number of points (hereinafter “Number of Share Conversion Points”)
calculated by multiplying the Base Points accumulated during the trust period (hereinafter “Accumulated
Number of Points”) by the performance-linked coefficient.
The performance-linked coefficient shall be determined with the range of 0 to 200%, based on the levelof achievement of business performance targets using consolidated operating profit and otherachievements in the final fiscal year of the Plan Period (the fiscal year ending March 31, 2021).
<<Calculation formula for Base Points>>
Base amount of share-based remuneration determined by rank ÷ Average closing price of theCompany’s shares on the Tokyo Stock Exchange during the month before the first month of the Plan
Period (for the first Plan Period, the month preceding the month of the date when the trust
agreement is executed) (any fractions less than one shall be discarded)

One (1) point shall equal one (1) share in the Company, and fractions less than one point shall bediscarded. However, if a share split, share consolidation, etc., of the Company’s shares is conducted5

during the trust period, the number of the Company’s shares per point and the total maximum numberof the Company’s shares to be delivered from the Trust (as defined in the below item (7)) shall be
adjusted in accordance with the split ratio, consolidation ratio, etc., of the Company’s shares.
Furthermore, if a Director, etc., retires or dies, or is transferred overseas, during the trust period, thenumber of shares to be delivered or paid shall be determined with the number of points accumulated up
to that time as the Number of Share Conversion Points.
(6) Method and timing of delivery or payment of the Company’s shares, etc., to Directors, etc.
Directors, etc., who fulfill the beneficiary requirements shall receive delivery from the Trust of a numberof the Company’s shares corresponding to 70% of the Number of Share Conversion Points (shares lessthan one unit will be discarded) around July immediately following the final day of the final fiscal year of
the Plan Period (around July 2021 for the initial Plan Period; however, if a Director, etc., retires during
the trust period, it shall be at that time), and shall receive payment of cash equivalent to the conversion
amount of the number of the Company’s shares corresponding to the remaining Number of Share
Conversion Points, after conversion in the Trust. In the event that a Director, etc., dies during the trust
period, his or her heir shall receive payment from the Trust of cash equivalent to the conversion amountof the number of the Company’s shares corresponding to the Number of Share Conversion Points
calculated at that point, after conversion in the Trust.
In addition, if a Director, etc., is transferred overseas during the trust period, he or she shall receive
payment from the Trust by the date or his or her transfer overseas of cash equivalent to the conversion
amount of the number of the Company’s shares corresponding to the Number of Share Conversion
Points calculated at that point, after conversion in the Trust.
(7) Total maximum amount of trust money to be contributed to the Trust and total maximum number of
the Company’s shares to be delivered from the Trust
The total maximum amount of trust money to be contributed to the Trust during the trust period andthe total maximum number of the Company’s Shares to be delivered from the Trust shall be within thefollowing limits, subject to resolution at this Ordinary General Shareholders’ Meeting.
Total maximum amount of trust money to be contributed to the Trust in the initial trust period
360 million yen (*1)
However, if the Trust is continued as described in the above item (4) b., the total maximum amount oftrust money to be contributed to the Trust shall be an amount equivalent to 120 million yen multipliedby the number of years in the new Plan Period.
(*1) This shall be the total amount, including funds for the acquisition of shares by the Trust during thetrust period, and trust fees and trust expenses.

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Total maximum number of the Company’s shares to be delivered from the Trust during the initial trust
period120,000 shares (*2)
However, if the Trust is continued as described in the above item (4) b., the total maximum number of
the Company’s shares to be delivered from the Trust during the extended trust period shall be a numberof shares equivalent to 40,000 shares multiplied by the number of years in the new Plan Period.
(*2) The total maximum number of the Company’s shares to be delivered shall be established based on
the above total maximum amount of trust money, taking into consideration the current share price,etc.
(8) Method of acquisition of the Company’s shares by the Trust
The Company intends for the Trust to acquire the Company’s shares in the initial acquisition from thestock market, within the range of the funds for the acquisition of shares and the total maximum numberof the Company’s shares to be delivered from the Trust described in the above item (7).
Furthermore, if there is a possibility that the number of shares in the Trust will be insufficient for thenumber of shares corresponding to the Number of Share Conversion Points granted to Directors, etc.,
during the trust period, owing to an increase in the number of Directors, etc., during the trust period orother factors, the Company may contribute additional money to the Trust, and the Trust may acquire
additional shares in the Company, within the range of the total maximum amount of trust money to becontributed to the Trust and the total maximum number of the Company’s shares to be delivered fromthe Trust as described in the above item (7).

(9) Exercise of voting rights of the Company’s shares in the Trust
In order to ensure neutrality toward management, voting rights of the Company’s shares in the Trust (i.e.
the Company’s shares prior to their delivery to Directors, etc., as described in the above item (6)) will
not be exercised during the trust period.
(10) Treatment of dividends of the Company’s shares in the Trust
Dividends from the Company’s shares in the Trust shall be received by the Trust and used for the trust
fees and trust expenses of the Trust.
(11) Treatment at the expiration of the trust period
Any residual shares generated at the expiration of the trust period owing to the failure to achievebusiness performance targets during the Plan Period, etc., shall be subject to delivery to Directors, etc., if
the Trust continues to be used under the Plan or a similar share-based remuneration plan. If the Trust
will end upon the expiration of the trust period, the Trust shall transfer these residual shares gratis to the7Company, and the Company shall cancel them by resolution of the Board of Directors, as a measure forshareholder returns.
In addition, any residual dividends pertaining to the Company’s shares in the Trust when the trust period
expires will be utilized as acquisition funds for shares if the Trust continues to be used, but if the Trust
ends upon the expiration of the trust period, they will revert to the Company within the range of thereserve fund for trust expenses after deducting share acquisition funds from the trust money, and any
amount that exceeds the reserve fund for trust expenses will be donated to an organization with nospecial interests with the Company or Directors, etc.

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(Reference)[Trust Agreement Content]
1)Type of trust

Trust of money other than money trust (third-party benefit
trust)

2)

Trust objective

To provide incentive to Directors, etc.

3)

Settlor

The Company

4)

Trustee

Mitsubishi UFJ Trust and Banking Corporation (planned)(Joint trustee: The Master Trust Bank of Japan, Ltd. (planned))5)

Beneficiaries

Directors, etc., who fulfill the beneficiary requirements

6)

Trust administrator

Third party with no special interests with the Company(Certified Public Accountant)

7)

Date of trust agreement

August, 2018 (planned)

8)

Trust period

August, 2018 (planned) to August, 2021 (planned)

9)Start of the Plan

August, 2018 (planned)10) Exercise of voting rights

Voting rights will not be exercised11) Class of shares to be acquired Common shares of the Company
12) Upper limit of trust money

360 million yen (planned) (including trust fees and trust
expenses)

13) Timing of share acquisition

August 8, 2018 (planned) to August 20, 2018 (planned)14) Method of share acquisition

Acquisition from the stock market

15) Rights holder

The Company

16) Residual assets

Residual assets that may be received by the Company, the rights
holder, shall be within the range of the reserve fund for trust
expenses after deducting share acquisition funds from the trust
money.

[Details of Administrative Tasks Related to the Trust and Shares]
1)

Administrative tasks related to the trust
Mitsubishi UFJ Trust and Banking Corporation and The Master
Trust Bank of Japan, Ltd. are to become the trustees of the
BIP trust and perform administrative tasks related to the trust.

2)

Administrative tasks related to shares
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. is toperform administrative tasks related to delivering theCompany’s shares to beneficiaries based on an administration
entrustment agreement.

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