This document is an unofficial English translation of a part of the Japanese original text of the Notice ofthe 100th Annual General Meeting of Shareholders of H2O RETAILING CORPORATION. The
Company provides this translation for reference and convenience purposes only and without any
warranty as to its accuracy or otherwise. In the event of any discrepancy between this English translationand the Japanese original, the latter shall prevail.

(Securities Code 8242)
May 29, 2019

Atsushi Suzuki
President and Representative Director
H2O RETAILING CORPORATION
8-7 Kakuda-cho, Kita-ku, Osaka
Dear shareholders:

Notice of the 100th Annual General Meeting of Shareholders
You are cordially invited to attend the 100th Annual General Meeting of Shareholders the detailsof which are given below.
If you are unable to attend the meeting, please exercise your voting rights by mail or via theInternet or similar means. You are kindly requested to read the “Information regarding Exercising
Voting Rights” (pp.3-4), and exercise your voting rights by 6:00 p.m. on Wednesday, June 19,
2019.

Basic Philosophyof the H2O RETAILING GROUP

To remain indispensable to the local communities
through our activities of providing a model of lifestyle
to local residents

1Details
1. Date and Time: Thursday, June 20, 2019, 10:00 a.m.
2. Venue: Main Hall, Umeda Arts Theater
19-1 Chayamachi, Kita-ku, Osaka
3. Agenda of the Meeting:
Matters to be Reported
1. Reports on the Business Report, Consolidated Financial Statements, and Financial
Statements for the 100th fiscal term (from April 1, 2018 to March 31, 2019)
2. Report on the audit results of the Consolidated Financial Statements by theaccounting auditor and the audit and supervisory committee
Matters to be Resolved
Proposal No. 1: Partial Changes to the Articles of Incorporation
Proposal No. 2: Election of Six (6) Directors (excluding Directors who are Audit
and Supervisory Committee Members)
Proposal No. 3: Payment of Bonuses to Directors
Proposal No. 4: Revision of Remuneration Amounts with regard to Stock
Options as Stock Remuneration for Directors (excluding
Directors who are Audit and Supervisory Committee
Members)
Proposal No. 5: Determination of Remuneration Amounts with regard to Stock
Options as Stock Remuneration for Directors who are Audit
and Supervisory Committee Members
4. Notes Regarding How to Exercise Voting Rights:
Please refer to the “Information regarding Exercising Voting Rights” (pp.3-4).
〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰
◎ When attending the meeting, please submit the enclosed voting card to a receptionist at
the venue of the meeting.
◎ “Matters concerning the Company’s stock options, etc.” in the business report, “notes toconsolidated financial statements” in the consolidated financial statements and “notes tofinancial statements” in the financial statements are posted on the Company’s website(http://www.h2o-retailing.co.jp/soukai/) based on the provisions of laws and regulations
and Article 16 of the Company’s articles of incorporation. Therefore, such information is
not included in the documents attached to this convocation notice. The business report,
the consolidated financial statements and the financial statements which are audited by
the audit and supervisory committee and the accounting auditor include the documents
mentioned in those attached to this convocation notice, and the matters stated in the
Company’s website as above.
◎ If necessity arises to amend the reference document for the shareholders meeting, thebusiness report, the consolidated financial statements, or the financial statements by the
day prior to the shareholders meeting, any matters amended will be posted on thefollowing website <http://www.h2o-retailing.co.jp/soukai/>.
◎ Since last year we have abolished the distribution of gifts to shareholders who
attend our Annual General Meeting of Shareholders. Your understanding would beappreciated.
2

Information regarding Exercising Voting Rights
You can exercise your voting rights by any of the following means.
 Exercising voting rights by attending the Annual General Meeting of Shareholders
Please submit the enclosed Voting Card at a receptionist at the venue of the Meeting.
Please bring this convocation notice with you.
 Exercising voting rights by mailPlease return the enclosed Voting Card (with approval or disapproval indicated for each
proposal) to reach us before the exercise time limit. Any vote without approval ordisapproval indicated for a particular proposal will be counted as a vote for approval of thepertinent proposal.
Exercise time limit: 6:00 p.m. on Wednesday, June 19, 2019 Exercising voting rights via the Internet or similar means
Please access the voting website which is designated by the Company either by entering
the URL (https://evote.tr.mufg.jp/) or by scanning the QR code on the Voting Card withyour smartphone and exercise your voting rights before the exercise time limit. If you haveany questions, etc., please contact the Help Desk.
Exercise time limit: 6:00 p.m. on Wednesday, June 19, 2019
 Handling of multiple votes cast by the same shareholder(1) If a voting right is exercised both by mail and via the Internet or similar means, the vote cast
via the Internet will be considered to be the valid vote.
(2) If a voting right is exercised via the Internet twice or more, the last vote cast will beconsidered to be the valid vote. If a voting right is exercised via personal computer,smartphone, and/or mobile phone, the last vote cast will be considered to be the valid vote.
 Information regarding the Electronic Voting Platform
For nominee shareholders (including their standing proxies), such as trust banks or custodianbanks, the Electronic Voting Platform is also available if they sign up in advance. The platform
is operated by ICJ, Inc., a joint venture company established by Tokyo Stock Exchange, Inc.
and other companies.
◎ If you are able to attend the annual general meeting of shareholders, it is notnecessary to follow the procedures to exercise voting rights by mail or via theInternet or similar means.
◎ If you choose to exercise your voting rights by proxy, the proxy will be requested tosubmit a letter of proxy and a Voting Card to a receptionist at the venue of the
Meeting. Only a shareholder who has voting rights at the meeting can serve as aproxy.
 Exercising voting rights via the Internet or similar means
Scanning the QR code with your smartphone(1) Scan the QR code.
Use your smartphone to scan the login QR code found at the bottom right of the enclosed
Voting Card.

3

(2) Choose the method you wish to use to exercise your voting rights.
A screen asking you to choose how you wish to vote on proposals will be displayed. Choose
your desired method.
(3) Vote on each proposal.
Follow the instructions on the screen to vote on each proposal to complete the process.
You may scan the QR code to exercise your voting rights only once. If you attempt to log inagain, you will need to enter the login ID and temporary password as mentioned on the rightcolumn .

Entering your login ID and temporary password(1) Access the voting website.
https://evote.tr.mufg.jp/(2) Enter the login ID and temporary password found on the Voting Card.
(3) After entering a new password and then reentering the same password to confirm, follow
the instructions on the screen to vote for each proposal to complete the process.
*Costs arising from accessing the voting website (e.g. Internet connection fees, packet
charges) will be borne by shareholders who access the website.
*The voting website will not be available for use from 2:00 a.m. to 5:00 a.m. daily.

For inquiries about the system etc., please contact:
Securities Business Division (Help Desk), Mitsubishi UFJ Trust and Banking
Corporation
Tel. (toll-free): 0120-173-027 (available from 9:00 a.m. to 9:00 p.m.)4

Reference Document for the Shareholders Meeting
Proposals and reference matters
Matters related to director nomination and remuneration
With the aim of ensuring fairness and transparency in nominating the Company’s directors anddeciding directors’ remuneration and other matters, the Company has established, as avoluntary advisory committee for the board of directors, the nominating and remuneration
advisory committee which consist of several independent outside directors including audit andsupervisory committee members and the President. Proposals concerning the nomination of
director candidates and the remuneration for directors, etc. are examined and recommended tothe board of directors by the committee and then decided by the board, in view of the basic
principles stipulated by the Company.
The audit and supervisory committee reviewed the proposals on the remuneration referred tothis Meeting and confirmed the administration method, etc., of the nominating and remuneration
advisory committee and found nothing to point out in particular.
In accordance with the basic principles, the nomination standards for director candidates—the“concept of diversity and balance of the board of directors” and “standards of independence ofoutside directors”—have been defined as described below.
(For your reference)“Concept of diversity and balance of the board of directors”

Internal director candidates will be nominated among the persons in the Company’s group
who have appropriate capabilities, experience and knowledge concerning planning andexecution of the group’s management strategies, financing and accounting, and compliancematters and the persons who are representatives of main subsidiaries, while outside
director candidates will be nominated among persons experienced in the corporate
management in any industry, attorneys at law, and persons who have expertise useful for
the Company Group’s business, etc., so that the board of directors will maintain an
appropriate size to keep its diversity and balance as well as to enable rapid decision-making.
At least one director who is audit and supervisory committee member will be nominatedamong persons who have profound experience and extensive knowledge concerning
financing and accounting.
“Standards of independence of outside directors”
The Company’s outside directors will be determined to be independent, unless they fall under
any of the following items:
1. Any person who conducts transactions with the Company and its subsidiaries (hereinafter
the “Company Group”) as main clients (see Note 1), its executive director, executive officer
or equivalent, manager or other employee (hereinafter the “Executive Person”);
2. Any person who is a main client of the Company Group (see Note 2) or its Executive Person;
3. Professionals, including attorney at law, certified public accountant, tax accountant or
consultant, who receives money or other property benefits in excess of certain amount (seeNote 3), in addition to the remuneration as director or corporate auditor given by theCompany Group;
4. Any person who belongs to the audit corporation which is an accounting auditor of theCompany Group and actually performs the audit work;
5. The Company’s main shareholder (the person holding 10% or more of the voting rights,
including indirect holding) or its Executive Person;
6. Any Executive Person of a company of which the Company Group is a main shareholder;
7. In the case where the Company Group’s executive director, director who is a full-time audit
and supervisory committee member or full-time corporate auditor concurrently works as
outside director or outside corporate auditor of other company, any Executive Person of thecompany;

5

8.
9.

Any Executive Person of the Hankyu Hanshin Toho Group (including the Company Group);
Any person who is granted donation by the Company Group in excess of certain amount(see Note 4), or in the case where any organization, including corporation and association,is granted such donation, its Executive Person;
10. Any person who has fallen under any of above items 1 through 9 during the past five years(in the case of the Company Group’s Executive Person in above item 8, during the past 10
years);
11. Any person whose spouse or relative within the second degree falls under any of above
items 1 through 10 (excluding items 3 and 4, limited to the Important Person (see Note 5));and
12. Any person for whom it is found that there are specific reasons to cause a conflict of interest
between the person and the Company.
Note 1: “Any person who conducts transactions with the Company Group as main clients” means theCompany Group’s client who provides products or services to the Company Group and theamount of the client’s transactions with the Company Group in the latest business year exceeds
100 million yen or 2% of the client’s consolidated annual sales, whichever is larger.
Note 2: “Any person as main client of the Company Group” means: (1) a client to whom the Company
Group provides products or services and the amount of the Company Group’s transactions withthe client in the latest business year exceeds 2% of the Company’s consolidated annual sales; or(2) a client to whom the Company Group owes debts and who loans more than 2% of theCompany Group’s consolidated total assets to the Company Group as of the end of the latest
business year.
Note 3: “Certain amount” means: (1) in the case where an individual personally provides the Company
Group with professional services and receives consideration (excluding remuneration as director
or corporate auditor) from the Company Group in the latest business year, 10 million yen a year;or (2) in the case where the individual belongs to the organization, including corporation andassociation, which provides the Company Group with services and receives consideration fromthe Company Group in the latest business year, 2% of the organization’s annual total revenues.
Note 4: “Certain amount” means 10 million yen a year in the latest business year.
Note 5: The “Important Person” means an executive person who is a director, executive officer of acompany with nominating committee, executive officer or general manager or higher ranking
position, or an executive person who has the authority equivalent to that of the foregoing persons.

6

Proposal No. 1: Partial Changes to the Articles of Incorporation
1. Reason for proposal
This proposal is made in order to add business purposes in order to accommodate thediversification of businesses of the Group and to remove provision related to the appointmentof adviser in order to enhance the transparency of corporate governance system.
2. Description of change
The proposed changes are described below, along with the corresponding text of theexisting Articles of Incorporation.
(Underlined text indicates changes.)
Proposed changes

Existing Articles of Incorporation
Chapter 1. General Provisions
Article 1. [Omitted]

Chapter 1. General Provisions
Article 1. [Unchanged]

Article 2. Purpose
Article 2. Purpose
The Company is established in order to The Company is established in order to
conduct the following businesses:
conduct the following businesses:(1) To control and manage the business(1) To control and manage the businessactivities of companies that conduct theactivities of companies that conduct thefollowing businesses as well as overseas
following businesses as well as overseas
companies that conduct equivalent
companies that conduct equivalentbusinesses through ownership of sharesbusinesses through ownership of sharesor equity:
or equity:
1. through 7. [Omitted]
1. through 7. [Unchanged]
8. Manufacture, processing, and sale of
8. Manufacture, processing, and sale offood products as well as the wholesale
food products; wholesale and retail ofand retail of alcoholic beverages
alcoholic beverages; and operation of
convenience stores
9. through 30. [Omitted]
9. through 30. [Unchanged](2) through (4) [Omitted](2) through (4) [Unchanged](New paragraph)(5) childcare service(5) [Omitted](6) [Unchanged]

Article 3 to Article 21 [Omitted]

Article 3 to Article 21 [Unchanged]

Article 22. Chairman of the Board of directors Article 22. Chairman of the Board of directors
and President, etc.
and President, etc.
(1) The Board of Directors may by resolution(1) The Board of Directors may by resolution
elect one chairman, one president and aelect one chairman, one president andsmall number of vice-presidents from its
a small number of vice-presidents frommember directors (excluding directors
its member directors (excluding directors
who are members of the audit andwho are members of the audit andsupervisory committee).
supervisory committee).
(2) The Board of Directors may by resolution[Deleted]
appoint one or more advisors.
Article 23 through Article 41 [Omitted]

Article 23 through Article 41 [Unchanged]

Additional Provisions [Omitted]

Additional Provisions [Unchanged]

7

Proposal No. 2: Election of Six (6) Directors (excluding directors who are Audit andSupervisory Committee Members)
The terms of office of all seven (7) directors (excluding directors who are audit and supervisorycommittee members; hereinafter the same in this proposal) will expire at the conclusion of thisAnnual General Meeting of Shareholders. It is hereby proposed that six (6) directors will beelected.
The director candidates are given below.

Candidate
No.

Name

1

Atsushi Suzuki

President andRepresentative Director

Subject to re-election

2

Naoya Araki

Representative Director

Subject to re-election

3

Katsuhiro Hayashi

Representative Directorand Executive Vice
President

Subject to re-election

Present position in the Company

Subject to re-election

4

Makoto Yagi

Outside Director

Outside Director
Independent Officer

56Kazuo Sumi

Tadatsugu Mori

Director

Subject to re-election

Director
Managing Executive
Officer

Subject to re-election

8

CandidateNo.

1
Atsushi Suzuki(Date of birth: April 5, 1956)
Number of company shares
held by the candidate:

Subject to re-election

20,100Brief history of positions and duties
April 1980
October 2000
April 2003

Joined Hankyu Department Stores, Inc.
Executive Manager, SC Division, Hankyu Department Stores, Inc.
Representative Director and Senior Managing Executive Officer,
Hankyu Shopping Center Development Co., Ltd.
April 2006
Executive Officer, Hankyu Department Stores, Inc.
October 2008
Executive Officer, Hankyu Hanshin Department Stores, Inc.
April 2013
Director and Managing Executive Officer, Hankyu Hanshin Department Stores, Inc.
March 2014
Director, H2O RETAILING CORPORATION
April 2014
President and Representative Director, H2O RETAILING CORPORATION (present
position)
Reason that he is nominated as director candidate
Mr. Atsushi Suzuki has profound experience and broad knowledge as management executive. At present, heas president plays a leading role in implementing the Company’s group management strategy, and we havedetermined that he was appropriate for the sustainable improvement of the Group’s corporate value.
Therefore, he continues to be nominated as director candidate.
CandidateNo.

2
Naoya Araki(Date of birth: May 14, 1957)
Number of company shares
held by the candidate:

Subject to re-election

10,800Brief history of positions and duties
April 1981
April 2003
April 2004
October 2008
June 2010
March 2012

Joined Hankyu Department Stores, Inc.
General Manager, Suburban Store Development Office, Hankyu Department Stores, Inc.
Executive Officer, Hankyu Department Stores, Inc.
Executive Officer, Hankyu Hanshin Department Stores, Inc.
Director and Executive Officer, Hankyu Hanshin Department Stores, Inc.
President and Representative Director, Hankyu Hanshin Department Stores, Inc. (present
position)
June 2012
Representative Director, H2O RETAILING CORPORATION (present position)
June 2012
In charge of the Department Store Business, H2O RETAILING CORPORATION (present
position)
Status of concurrent important positions held
President and Representative Director, Hankyu Hanshin Department Stores, Inc.
Reason that he is nominated as director candidate
Mr. Naoya Araki is currently president, Hankyu Hanshin Department Stores, Inc. as core company of theCompany Group, and we have determined that he was appropriate for the sustainable improvement of theGroup’s corporate value based on his abundant experience, track record, and insight. Therefore, he continues
to be nominated as director candidate.

9

CandidateNo.

3
Katsuhiro Hayashi
Subject to re-election(Date of birth: January 20, 1958)
Number of company shares
held by the candidate:

11,200Brief history of positions and duties
April 1982
April 2002
April 2005
June 2009
June 2009
April 2012
April 2014
April 2014
April 2015

Joined Hankyu Department Stores, Inc.
General Manager, Public Relations Office, Hankyu Department Stores, Inc.
General Manager, Compliance Office, Hankyu Department Stores, Inc.
Director and Executive Officer, H2O RETAILING CORPORATION
Executive Officer, Hankyu Hanshin Department Stores, Inc.
Director and Executive Officer, Hankyu Hanshin Department Stores, Inc.
Director and Managing Executive Officer, H2O RETAILING CORPORATION
Director and Managing Executive Officer, Hankyu Hanshin Department Stores, Inc.
Representative Director and Senior Managing Executive Officer, H2O RETAILINGCORPORATION
April 2015
In charge of the General Affairs and Human Resources Office, and the Public Relations
Office, H2O RETAILING CORPORATION (present position)
April 2015
Representative Director and Senior Managing Executive Officer, Hankyu Hanshin
Department Stores, Inc. (present position)
April 2017
Representative Director and Executive Vice President, H2O RETAILING CORPORATION(present position)
Status of concurrent important positions held
Representative Director and Senior Managing Executive Officer, Hankyu Hanshin Department Stores, Inc.
Reason that he is nominated as director candidate
Mr. Katsuhiro Hayashi has achieved excellent results in business administration and has good capabilities andknowledge concerning planning and implementation of compliance matters, and we have determined that he
was appropriate for the sustainable improvement of the Group’s corporate value based on his abundant
experience, track record, and insight. Therefore, he continues to be nominated as director candidate.
CandidateNo.

4

Outside Director

Makoto Yagi
Subject to re-election

Independent Officer(Date of birth: October 13, 1949)
Number of company shares
held by the candidate:

2,300

Brief history of positions and duties
April 1972
June 2005
June 2006
June 2009
June 2010
June 2015
June 2016

Joined The Kansai Electric Power Company, Inc.
Director, The Kansai Electric Power Company, Inc.
Managing Director, The Kansai Electric Power Company, Inc.
Vice President and Representative Director, The Kansai Electric Power Company, Inc.
President and Representative Director, The Kansai Electric Power Company, Inc.
Director, H2O RETAILING CORPORATION (present position)
Chairman and Representative Director, The Kansai Electric Power Company, Inc. (present
position)
July 2017
Outside Director, Nippon Life Insurance Company (present position)
Status of concurrent important positions held
Chairman and Representative Director, The Kansai Electric Power Company, Inc.
Outside Director, Nippon Life Insurance Company
Reason that he is nominated as outside director candidate
Mr. Makoto Yagi actively delivers opinions, recommendations, etc. at the board of directors, etc. from theviewpoint of the Company’s outside director based on his profound experience and broad-based knowledge
concerning business administration as chairman of The Kansai Electric Power Company, Inc. We havedetermined that he would be able to contribute to a rise in the Group’s corporate value by utilizing his
experience, etc. in the supervision of the Company Group’s management. Therefore, he continues to be
nominated as director (outside director) candidate. Meanwhile, we regard him as independent officer because
he satisfies the requirements specified in the “the standards of independence of outside directors.”

10

CandidateNo.

5
Kazuo Sumi
Subject to re-election(Date of birth: April 19, 1949)
Number of company shares
held by the candidate:

22,200Brief history of positions and duties
April 1973
June 2000
June 2002
June 2003
October 2007
June 2017

Joined Hankyu Corporation (currently Hankyu Hanshin Holdings, Inc.)
Director, Hankyu Corporation
Managing Director, Hankyu Corporation
President and Representative Director, Hankyu Corporation
Director, H2O RETAILING CORPORATION (present position)
Chairman and Representative Director, Group CEO, Hankyu Hanshin Holdings, Inc.
(present position)
Status of concurrent important positions held
Chairman and Representative Director, Group CEO, Hankyu Hanshin Holdings, Inc.
Chairman and Representative Director, Hankyu Corporation
Outside Director, ASICS Corporation
Reason that he is nominated as director candidate

Mr. Kazuo Sumi has profound experience as Chairman and Group CEO of Hankyu Hanshin
Holdings, Inc., and currently delivers various opinions, recommendations, etc., from theviewpoint of management strategy of the Hankyu Hanshin Toho Group. Therefore, hecontinues to be nominated as director (non-executive director) candidate so that his
capabilities, experience, etc. will be utilized in the management of the Company Group.

11Candidate
No.

6
Tadatsugu Mori
Subject to re-election(Date of birth: September 22, 1963)
Number of company shares
held by the candidate:

6,400

Brief history of positions and duties
April 1987
April 2004
April 2006
June 2006
October 2007
October 2007
October 2007

Joined Hankyu Department Stores, Inc.
General Manager, Management Policy Office, Hankyu Department Stores, Inc.
Executive Officer, Hankyu Department Stores, Inc.
Director and Executive Officer, Hankyu Department Stores, Inc.
Director, Hankyu Department Stores, Inc.
Director and Executive Officer, H2O RETAILING CORPORATION
General Manager, Management Planning Office, in charge of System Planning Office, H2O
RETAILING CORPORATION (present position)
March 2012
Director and Managing Executive Officer, H2O RETAILING CORPORATION (present
position)
June 2013
Executive Officer, Hankyu Hanshin Department Stores, Inc. (present position)
April 2014
In charge of Finance Office, H2O RETAILING CORPORATION (present position)
Status of concurrent important positions held
Executive Officer, Hankyu Hanshin Department Stores, Inc.
Outside Director (Audit and Supervisory Committee Member), Umenohana Co., Ltd.
Reason that he is nominated as director candidate
Mr. Tadatsugu Mori has achieved excellent results in management planning division, etc. and has good
capabilities and knowledge concerning group management strategy, and we have determined that he wasappropriate for the sustainable improvement of the Group’s corporate value based on his abundant
experience, track record, and insight. Therefore, he continues to be nominated as director candidate.

Notes:
1. Mr.Kazuo Sumi (a candidate to be a director) holds a concurrent position as theRepresentative Director and Chairman of Hankyu Corporation. The Company has real estatelease contracts with Hankyu Corporation.
2. The Company has no special interest with other candidates.
3. Matters related to candidates to be outside directors:(1) The number of years of service after having assumed the position of the Company’s
outside director
The number of years of service after Mr. Makoto Yagi assumed the position of outside
director until the conclusion of this Annual General Meeting of Shareholders is four years.
(2) Outline of the liability limiting agreement
The Company has concluded with Mr. Makoto Yagi an agreement which limits his
liabilities as specified in paragraph 1 of Article 423 of the Companies Act to the amountspecified in laws and regulations. If this Proposal No. 2 is approved and he is reelected,
the agreement will be renewed.
4. On October 1, 2007, our trade name changed from Hankyu Department Stores, Inc. to H 2O
RETAILING CORPORATION in line with the transition to a holding company structure (basedon the management integration with The Hanshin Department Store, Ltd.). At the same time,
a company split was conducted to have the Department Store Business succeeded to a newly
established company (Hankyu Department Stores, Inc.).
On October 1, 2008, Hankyu Department Stores, Inc. acquired The Hanshin Department
Store, Ltd. through an absorption-type merger, and the trade name changed to Hankyu
Hanshin Department Stores, Inc.

12

Proposal No. 3: Payment of Bonuses to Directors
It is hereby proposed that in consideration of the business performance for the current period,
conventional bonuses to directors and other circumstances, a bonus in the total amount of 37.15
million yen will be paid to five (5) directors at the end of the current period (Atsushi Suzuki,
Naoya Araki, Katsuhiro Hayashi, Haruya Shijo, and Tadatsugu Mori), and that the amount paid
to each director will be left to the discretion of the board of directors.

Reference Material
Matters common to Proposal No. 4 and Proposal No. 5
Review of the stock remuneration plan
In order to provide incentives to enhance short, medium-, and long-term performance, theremuneration of the Company’s executive directors and executive officers (“executive directors”)
combine monthly basic salary with annual bonus that reflects the performance of the Company
over the last fiscal and stock remuneration that is based to the Company’s share price, and the
remuneration of outside directors and directors who are Audit and Supervisory Committee
Members (“non-executive directors”) is monthly basic salary only. We are taking advantage ofthe formulation of a new mid-term plan that starts in FY2019 to review the stock remuneration
plan and its recipients based on the following policies:The plan should contribute to the sustainable growth and to the enhancement of
medium- and long-term corporate value of the Company’s Group.
The plan should motivate the directors and officers who execute operations to achieve
the objectives of the mid-term management plan.
The plan should help the Company secure human resources who are capable ofcarrying out the Group’s mission and of achieving sustainable growth.
The plan should facilitate shared awareness with shareholders as well as an outlookthat gives weight to the shareholder.

<Overview of the stock remuneration plan>
The Company will introduce two new types of stock remuneration: the continuous service-based
stock options (continuous service SOs), which are granted according to positions and which canbe exercised after retiring from office, only when the term of office is expired or another reason
is recognized by the Company, and the performance-based stock options (performance SOs),of which number that can be exercised will be determined according to the level of achievementof the Company’s performance targets. The specific nature of these stock options is described
below. Following the introduction of this stock remuneration plan, we anticipate that the
remuneration of the executive directors will consist of the following components: (1) monthly
basic salary (approximately 50%) and (2) annual bonus, continuous service SOs, andperformance SOs (approximately 50%).
Continuous service SOs: To grant the object persons the share options according their positions. The holder can exercise them only after retiring from office of all the
positions as director or officer such as director of the Company andits subsidiaries (including the director who is a member of Audit andSupervisory Committee), company auditor, executive officers (whenthe term of office is expired or another reason is recognized by theCompany).
Performance SOs:

To grant the executive directors the share options, the number of13which can be exercised will be determined in the range of 0 ～100 %of the options granted, according to the level of achievement for the
final year of the mid-term plan of the Company’s indicators such as
the management indicators shown in the plan or other targets set inadvance by the Board of Directors (for example, consolidated sales,
profit at each stage, ROE or ROIC).
<Overview of the components of executive remuneration (for executive directors)>*The above figure has been simplified so as to depict executive remuneration in an easy-tounderstand manner. The size of each segment is not intended to indicate the relative scale ofeach remuneration component.
<Eligibility>
Although current remuneration of non-executive directors is monthly basic salary only, we will
introduce continuous service SOs as stock remuneration for non-executive directors as well inorder to facilitate shared awareness with shareholders and an outlook that gives weight to theshareholders.

(Reference information)
If Proposal No. 4 and Proposal No. 5 are approved, besides the share options issued as
stock remuneration for the directors of the Company approved in each proposal, we plan toissue, by the resolution of the board of directors under the provisions of the Companies Act,the share options as stock remuneration for executive officers who are not directors of theCompany as well as directors, company auditors and executive officers of Hankyu Hanshin
Department Stores, Inc, which is a subsidiary of the Company, in the same manner as we
14

issue them to the directors of the Company (company auditors are treated as same asdirectors who are members of the audit and supervisory committee).

Proposal No. 4: Revision of Remuneration Amounts with regard to Stock Options as
Stock Remuneration for Directors (excluding Directors who are Audit andSupervisory Committee Members)
The upper limit of the amount for stock options as stock remuneration for the Company’s
directors (excluding directors who are members of the audit and supervisory committee), asdistinct from the limit for basic salaries, was set at ¥120 million per year at the 97th Annual
General Meeting of Shareholders, which was held on June 22, 2016. Under the revamped
executive remuneration plan, the upper limit will be set at ¥129 million per year (including ¥9million for outside directors), as distinct from the limit for basic salaries, among which ¥93 million
per year for continuous service SOs (including ¥9 million for outside directors) and ¥36 million
per year for performance SOs.
In allocating share options as stock remuneration, we plan to grant remuneration credit of thesame amount as one to be paid determined on the fair value to eligible directors. Instead of
actual payment of the amount to be paid, the payment will be made by the offset between the
remuneration credits and the payment obligation.
In the event Proposal No. 2 is approved as written, the Company will have six directors(excluding directors who are members of the audit and supervisory committee and including one
outside director). Conditional on the approval of this proposal as written by the Annual General
Meeting of Shareholders, stock option remuneration based on previous conditions governing
the exercise of those options will be abandoned, although rights already granted will not beaffected.

 Continuous service-based stock options
The details of the share options granted as continuous service-based stock options to directors(excluding directors who are members of the audit and supervisory committee) is provided below.
(1) Total number of share options
The total number of share options issued during each business year shall not exceed 310.
(2) Type and number of shares for which share options are to be issued
One share option shall be issued for common shares which number is 100 (“number ofshares granted”). However, in the event the number of shares granted needs to be adjusted,
for example if the Company carries out merger, corporate split, share exchange, or sharetransfer, or if the Company carries out share split (including gratis allocation of shares ) or
consolidation of shares of the common stocks, the Company will make such adjustments
as it deems necessary. The number of shares that may be granted due to exercise of shareoptions issued during each business year shall not exceed 31,000, and in the event the
number of shares granted is adjusted, the maximum number of shares that may be granted
during each business year will be determined by multiplying the adjusted number of shares
granted by the total number of share options listed in (1) above.
(3) Value of assets expended in order to exercise share options
The value of assets expended in order to exercise share options will be calculated bymultiplying the number of shares granted by a pay-in amount of ¥1 per share to be granted
through the exercise of each share option.
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(4) Period for exercise of share options
The period for exercise of share options shall be determined by the Board of Directors of
the company and shall not exceed 30 years from the next day of the allocation of the shareoptions.
(5) Conditions governing the exercise of share options
The holder can exercise its share options, in the period stated in above (4), after retiringfrom office of all the positions such as director (including the director who is a member ofAudit and Supervisory Committee), company auditor, executive officers of the Company
and its subsidiaries (only when the term of office is expired or another reason is recognizedby the Company). Other conditions governing the exercise of share options will be
determined by the Company’s Board of Directors.
(6) Restriction on the acquisition of share options through transfers
Acquisitions of share options through transfers will require the approval of the Company’s
Board of Directors.
(7) Other details of share options
Other details of share options will be determined by the Company’s Board of Directors.

 Performance-based stock options
The details of the share options granted as performance-based stock options to executive
directors is provided below.
(1) Total number of share options
The total number of share options issued during each business year shall not exceed 120.
(2) Type and number of shares for which share options are to be issued
One share option shall be issued for common shares which number is 100 (“number ofshares granted”). However, in the event the number of shares granted needs to be adjusted,
for example if the Company carries out merger, corporate split, share exchange, or sharetransfer, or if the Company carries out share split (including gratis allocation of shares ) or
consolidation of shares of the common stocks, the Company will make such adjustments
as it deems necessary. The number of shares that may be granted due to exercise of shareoptions issued during each business year shall not exceed 12,000, and in the event the
number of shares granted is adjusted, the maximum number of shares that may be granted
during each business year will be determined by multiplying the adjusted number of shares
granted by the total number of share options listed in (1) above.
(3) Value of assets expended in order to exercise share options
The value of assets expended in order to exercise share options will be calculated bymultiplying the number of shares granted by a pay-in amount of ¥1 per share to be granted
through the exercise of each share option.

(4) Period for exercise of share options
The period for exercise of share options shall be determined by the Board of Directors of
the company and shall not exceed 30 years from the next day of the allocation of the shareoptions.
(5) Conditions governing the exercise of share options
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The number of which can be exercised will be determined in the range of 0 ～100 % of theoptions granted, according to the level of achievement for the final year of the mid-term planof the Company’s indicators such as the management indicators shown in the plan or othertargets set in advance by the Board of Directors. The holder can exercise its share options,in the period stated in above (4), after retiring from office of all the positions such as director(including the director who is a member of Audit and Supervisory Committee), company
auditor, executive officers of the Company and its subsidiaries. Other conditions governing
the exercise of share options will be determined by the Company’s Board of Directors.
(6) Restriction on the acquisition of share options through transfers
Acquisitions of share options through transfers will require the approval of the Company’s
Board of Directors.
(7) Other details of share options
Other details of share options will be determined by the Company’s Board of Directors.

Proposal No. 5: Setting of Remuneration Amounts with regard to Stock Options as
Stock Remuneration for Directors who are Audit and Supervisory
Committee Members
The upper limit of the amount of remuneration for the directors who are members of the audit
and supervisory committee was set at ¥90 million per year at the 97th Annual General Meetingof Shareholders, which was held on June 22, 2016. Under the revamped executive remuneration
plan, the upper limit of the amount of stock options as stock remuneration for directors who aremembers of the audit and supervisory committee will be set at ¥22.5 million per year, as distinct
from the limit for the above remuneration.
In allocating share options as stock remuneration, we plan to grant remuneration credit of thesame amount as one to be paid determined on the fair value to eligible directors. Instead of
actual payment of the amount to be paid, the payment will be made by the offset between the
remuneration credits and the payment obligation. The number of directors who are members of
the audit and supervisory committee is 4.
 Continuous service-based stock options
More information about share options granted as continuous service-based stock options to
directors who are members of the audit and supervisory committee is provided below.

 Continuous service-based stock options
The details of the share options granted as continuous service-based stock options to directors
who are members of the audit and supervisory committee is provided below.
(1) Total number of share options
The total number of share options issued during each business year shall not exceed 75.
(2) Type and number of shares for which share options are to be issued
One share option shall be issued for common shares which number is 100 (“number ofshares granted”). However, in the event the number of shares granted needs to be adjusted,
for example if the Company carries out merger, corporate split, share exchange, or sharetransfer, or if the Company carries out share split (including gratis allocation of shares ) or17

consolidation of shares of the common stocks, the Company will make such adjustments
as it deems necessary. The number of shares that may be granted due to exercise of shareoptions issued during each business year shall not exceed 7,500, and in the event the
number of shares granted is adjusted, the maximum number of shares that may be granted
during each business year will be determined by multiplying the adjusted number of shares
granted by the total number of share options listed in (1) above.
(3)

Value of assets expended in order to exercise share options
The value of assets expended in order to exercise share options will be calculated bymultiplying the number of shares granted by a pay-in amount of ¥1 per share to be granted
through the exercise of each share option.

(4) Period for exercise of share options
The period for exercise of share options shall be determined by the Board of Directors of
the company and shall not exceed 30 years from the next day of the allocation of the shareoptions.
(5) Conditions governing the exercise of share options
The holder can exercise its share options, in the period stated in above (4), after retiringfrom office of all the positions such as director (including the director who is a member ofAudit and Supervisory Committee), company auditor, executive officers of the Company
and its subsidiaries (only when the term of office is expired or another reason is recognizedby the Company). Other conditions governing the exercise of share options will be
determined by the Company’s Board of Directors.
(6) Restriction on the acquisition of share options through transfers
Acquisitions of share options through transfers will require the approval of the Company’s
Board of Directors.
(7) Other details of share options
Other details of share options will be determined by the Company’s Board of Directors.

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