July 21, 2017
Company name: SUBARU CORPORATION
Representative: YasuyukiYoshinaga, Presidentand CEO
Code number: 7270 (First Section of Tokyo Stock Exchange)
Contact for inquiries: Katsuo Saito
Corporate Vice President and General Manager of Administration Department,
Corporate Administration Division
Phone: +81-3-6447-8825

Notice Regarding Disposal of Own Shares as Restricted Stock Compensation

Subaru Corporation (the “Company”) hereby announces that its Board of Directors, at the meeting held on July
21,2017, resolved to dispose of its own shares asstock compensation as follows (the “Disposal of Own Shares”).
1. Overview of Disposal(1) Disposal dateAugust 10, 2017(2) Class and number of shares to be disposed

37,926 shares of common stock of the Company(3) Disposal price¥3,931 per share(4) Total value of share disposal¥149,087,106(5) Method of offer or disposal

Grant of restricted stocks(6) Method of contribution

In-kind contribution of monetary compensation claim(7)Granteesof sharesand number thereof;

The Company’s Directors (excluding Outside Directors)

number of shares to be granted

6 persons, 12,654 shares
Corporate vice presidents
19persons, 25,272 shares(8) Other

The Disposal of Own Shares is conditioned on theSecurities Registration Statement taking effect inaccordance

withtheFinancialInstruments

andExchange Act.
2. Purpose and Reasons for Disposal
As the Company announced in the “Notice regarding introduction of a Restricted Stock Compensation
Plan”dated April 28, 2017, its Board of Directors, at the meeting held on April 28,2017, resolved to introduce aRestricted Stock Compensation Plan (the “Plan”) as a new compensation plan for the Company’s Directors otherthan the OutsideDirectors and corporate vice presidents (collectively,the “Eligible Officers”) with the purpose ofraising awareness of their contribution to the sustained improvement of the corporate value of the Company bylinking compensation for the Eligible Officers with stock value of the Company and sharing the improvement of
the corporate value resulting from the rise in share price as well as the risk of drop in share price between theEligible Officers and the shareholders of the Company. Furthermore, at the 86th Annual General Meeting ofShareholders held on June 23, 2017, it was approved by the shareholders that under the Plan, the compensation
for the grantingof restricted stockswill beprovided to the Eligible Officers.
13. Overview of the PlanThe Eligible Officers will pay in all the monetary compensation claim provided by the Company under the Plan
as in-kind contribution to the Company, and receivethe issuance or disposal of the common stock of theCompany.In addition, among the common stock of the Company which is issued or disposed of by the Company
to the Eligible Officersunder the Plan, the total number of thatin relation to the Company’s Directors shall not
exceed 100,000 shares per year (In the event where the Company, on or after July 21, 2017, engages in anyaction which possibly has impact on the stock valueper share, such as share split or consolidation of shares, themaximum total number of the common stock of the Companyto be issued or disposed of may be reasonably
adjusted in consideration of the ratio of the sharesplitting or the consolidation of shares).
The amount to be paid in per share for the above common stock shall be determined by the Board of Directors,
by taking into account the average closingprice of the common stock of the Company on the Tokyo Stock
Exchange over the one-month period immediatelypreceding the Board resolution, and within the scope which
will not be particularly favorable to the Eligible Officerswho subscribe the common stock of the Company.
In addition, in the case of issuing or disposing of the common stock of the Company under the Plan, a contract
regarding thegrant of the restricted stock (the “Contract Regarding the Grant”) shall be executed between theCompany and the respectiveEligible Officers, which substantially setsforth provisions including:(i) the Eligible
Officers shall be prohibited, for a certain period (the “Transfer Restriction Period”), from transferring, setting
collateralrights for, or otherwise disposing of the common stock of the Company that are granted to them;and(ii) in the case of occurrence of specified events the Company shall acquire the said common stock at nocost.
This time, after the consideration of the purpose of the Plan, the Company’s business performance, the scopeand nature of the performance of duties of each of the Eligible Officers, and various circumstances, theCompany decided to pay a total amount of ¥149,087,106 inthe monetary compensation claim and grant 37,926
shares of the common stock of the Company by way of in-kind contribution of the said monetary compensation
claimto 6Eligible Directorsand 19 corporate vice presidents. Furthermore, since the purpose of the Plan is toprovide the management with incentives to achieve sustained improvement of the corporate value of theCompany and to share more of that value with the Company's shareholders, the Transfer Restriction Period has
been set at 3 years.
For the Disposal of Own Shares, the Eligible Officers to whom the stock is scheduled to be granted will pay inall the said monetary compensation claim as property contributed in kind, and receive the common stock of theCompany to be disposed of by the Company.
4. Overview of the Contract Regarding the Grant
The Company and each of the Eligible Officers will execute the Contract Regarding the Grant individually,
which is summarized as follows:(1)

Transfer Restriction Period: August 10, 2017 through August 10, 2020(2)

Conditions for Cancellation of the transfer restrictions
The transfer restrictions for all of the grantedshares held by the Eligible Officerswill be cancelled at theexpiration of the Transfer Restriction Period.Additionally, in caseswhere any one of the Eligible Officers
loses all of his/her status as a director, officer, corporate vice president or employee of the Company or
any of its subsidiaries during the Transfer Restriction Period, due to death, completion of his/her term ofoffice or reaching of his/her retirement age, or any other legitimate reasons approved by the Board of
Directors of the Company, the transfer restrictions on all the shares granted to the said one of the Eligible
Officers shall be cancelled immediately after such his/her status is lost.

2

(3)

The Company’s acquisition of the shares at no cost
In caseswhereany one of the Eligible Officers losesall of his/her status as a director, officer, corporate
vice president or employee of the Company or any of its subsidiaries during the Transfer Restriction
Period, the Company shall naturally acquire at no cost all of the granted shares held by the said one of theEligible Officersat the time of such lost. However, this shall not apply to cases where such losing of
his/her status occurs due to death, completion of his/her term of office or reaching of his/her retirementage, or other legitimate reasons approved by the Board of Directors of the Company.

(4)

Administration of shares
To prevent the Eligible Officers from transferring, setting collateralrights for, or otherwise disposing of
the granted shares during the Transfer Restriction Period, each of the Eligible Officers opens adedicatedaccount with Mizuho Securities Co., Ltd. for administration of the granted shares. To enforce the transfer
restrictions, etc. on the granted shares, the Company enters into a contract with Mizuho Securities Co.,
Ltd. for theadministration of the accounts of the granted shares held by the Eligible Officers. In addition,
the Company has obtained consent from the Eligible Officersas to the details of the said transfer
restrictions, etc.

(5)

Treatment in the event of organizational restructuring, etc.
Prior to the expiration of the Transfer Restriction Period, if the General Meeting of Shareholders of theCompany approves of any matters with regard to a mergercontract under which the Company will
become a dissolving company; an absorption-type split agreement or incorporation-type company split
plan under which the Company will be a split company (but only if the Company, on the effective date of
the company split, delivers to the Company’s shareholdersa whole or part of the consideration for the said
company split that it acquired); a shareexchange agreement or share transfer plan under which theCompany will become the wholly owned subsidiary; or any other organizational restructuring, etc. set
forth in the Contract Regarding the Grant (or, in cases wheretheapproval atthe General Meeting of
Shareholders of the Company for the said organizational restructuring, etc. is not necessary, if the Boardof Directors of the Company approves),based on a resolution of the Board of Directors, the transfer
restrictions shall be cancelled immediately before the business day immediately prior to the effective dateof the said organizational restructuring, etc., regarding the number of the granted shares that is reasonably
calculated considering the period from the beginning of theTransfer Restriction Periodto the approval dateof the said organizational restructuring, etc.

5. Basis of calculating the amount to be paid in for the granted shares and other specific details
The Disposal of Own Shares shall be funded by the monetary compensation claim provided as a restricted stockcompensation by the Company and any of its subsidiaries under the Plan. To eliminate arbitrariness in thedisposal price, the average closing price ofthe Company’s common stock onthe Tokyo Stock Exchange over theone-month period up to the day immediately preceding July 21, 2017 (from June 21, 2017 through July 20,2017) of ¥3,931 (with amounts less than ¥1 truncated here and elsewhere) was used as the disposal price, which
is believed to be reasonable as the market price.
Note that the divergence ratio from the closing price on the Tokyo Stock Exchange of ¥4,044 on the day
immediately preceding the date of the resolution by the Board of Directors was (2.79 %) (Divergence figures
have been rounded up at the three-digit level below the decimal here and elsewhere) .The divergence ratio fromthe simpleaverage value of ¥3,910 of the closing prices for the three-month period (from April 21, 2017 to July20, 2017)was 0.54 %, and the divergence ratio from the simple average value of ¥4,099 of the closing price forthe six-monthperiod (from January 21, 2017 to July 20, 2017) was (4.10 %). Accordingly, the price is believed
not to be particularly favorable to the share recipients.
End of document3