Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.

Securities Code: 4540
June 6, 2019
To Our Shareholders:
Terukazu Kato
President and Representative Director
TSUMURA & CO.
17-11 Akasaka 2-chome, Minato-ku, Tokyo

Notice of the 83rd Ordinary General Meeting of Shareholders
You are cordially invited to attend the 83rd Ordinary General Meeting of Shareholders of TSUMURA &CO. (the “Company”), which will be held as indicated below.
If you are unable to attend the meeting in person, you may exercise your voting rights either of thefollowing ways. Please review the attached Reference Documents for General Meeting of Shareholders,and exercise your voting rights by 5:45 p.m. on Wednesday, June 26, 2019 (JST).
Exercise of voting rights in writing
Please indicate your approval or disapproval to each proposal on the enclosed voting card, and return it sothat it will be received by us no later than the above date and time.
Exercise of voting rights via the Internet
Please access the website for exercising voting rights (https://evote.tr.mufg.jp/), follow the directions on
the screen, and indicate your approval or disapproval to each proposal no later than the above date and time.

Internet Disclosure
Pursuant to the relevant laws and regulations and the Company’s Articles of Incorporation, the following
items of information are posted on the Company’s website instead of being included in the Reference
Documents for General Meeting of Shareholders.
i) “Consolidated Statement of Changes in Equity” and “Notes to Consolidated Financial Statements”
sections of Consolidated Financial Statementsii) “Non-consolidated Statement of Changes in Equity” and “Notes to Non-consolidated Financial
Statements” sections of Non-consolidated Financial Statements
https://www.tsumura.co.jp/zaimu/meeting/general/pdf/internet_083.pdf(in Japanese only)
The Consolidated Financial Statements and the Non-consolidated Financial Statements audited by the
Audit and Supervisory Committee and the Accounting Auditor include the documents attached to thisnotice and the Consolidated Statement of Changes in Equity, the Notes to Consolidated Financial
Statements, the Non-consolidated Statement of Changes in Equity and the Notes to Non-consolidated
Financial Statements posted on the Company’s website.

-1-1. Date and Time:Thursday, June 27, 2019, at 10:00 a.m.

2. Venue:“Ho’oh,” 1st floor, THE CAPITOL HOTEL TOKYU
10-3 Nagatacho 2-chome, Chiyoda-ku, Tokyo

3. Purpose of the Meeting
Matters to be reported
1. Business Report and Consolidated Financial Statements for the 83rd fiscal year
(from April 1, 2018 to March 31, 2019), and results of audits of the Consolidated
Financial Statements by the Accounting Auditor and the Audit and Supervisory
Committee
2. Non-consolidated Financial Statements for the 83rd fiscal year (from April 1,2018 to March 31, 2019)
Matters to be resolved
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Six (6) Directors (excluding Directors who are Audit andSupervisory Committee Members)
Proposal No. 3: Election of Three (3) Directors who are Audit and Supervisory Committee
Members
Proposal No. 4: Election of One (1) Substitute Director who is Audit and Supervisory Committee
Member
Proposal No. 5: Revision of Performance-Linked Stock Compensation Plan (Performance Share
Unit) for Directors (excluding Directors who are Audit and Supervisory
Committee Members and Non-executive Directors) and Executive Officers Who
Have Entered Into a Service Agreement with the Company

Other Matters Regarding the Exercise of Voting Rights
 If a voting card is received without giving any indication of approval or disapproval of any or all of the
proposals, it will be counted as a vote for the proposal concerned.
 If you vote multiple times via the Internet indicating different positions on the same proposal in eachvoting exercise, only your most recent vote will count as valid.
 If you exercise your voting rights both in writing and via the Internet, only the vote placed via the Internet
will be treated as valid.
 If you are unable to attend the general meeting of shareholders in person, you may appoint anothershareholder with voting rights in the Company to attend as your proxy. Please note, however, that it isnecessary to submit a document evidencing the authority of proxy.
If any changes are made to the Reference Documents for General Meeting of Shareholders, the Business
Report, the Consolidated Financial Statements or the Non-consolidated Financial Statements, such changes
will be posted on the Company’s website.
https://www.tsumura.co.jp/-2-Reference Documents for General Meeting of Shareholders
Proposal No. 1
Proposal No. 1: Appropriation of Surplus
The Company regards the return of profit to shareholders as its important policy. We will aim to achievesustained growth going forward while maintaining a policy to pay stable dividends, taking into considerationsuch matters as medium- and long-term levels of earnings and cash flows.
The Company will allocate funds from internal reserves for investment in the areas such as capital
expenditure and research and development that are deemed to boost the future corporate value of theCompany.
In line with the aforementioned policy, the Company proposes to pay year-end dividends for the current
fiscal year as follows:Year-end dividends
1)
2)

3)

Type of dividend property
Cash
Allotment of dividend property and their aggregate amountThe Company proposes to pay a dividend of ¥32 per common share of the Company.
The total dividends will be ¥2,446,647,392.
Effective date of payment of dividends of surplus
June 28, 2019-3-

Proposal No. 2
Proposal No. 2: Election of Six (6) Directors (excluding Directors who are Audit and Supervisory
Committee Members)
The terms of office of all six (6) Directors (excluding Directors who are Audit and Supervisory Committee
Members) will expire at the conclusion of this general meeting. Accordingly, the Company proposes to electsix (6) Directors (excluding Directors who are Audit and Supervisory Committee Members).
Following discussions by the Audit and Supervisory Committee based on deliberations of theNomination/Remuneration Advisory Committee attended by one (1) Audit and Supervisory Committee
Member, the Audit and Supervisory Committee believes that the nominating procedure was properly
followed and all candidates are adequate to serve as Directors of the Company.
The candidates for Directors (excluding Directors who are Audit and Supervisory Committee Members)
are as follows:
Candidate
No.

Name

1

Terukazu Kato

2

Susumu Adachi

3

Muneki Handa

4

Shigeru Sugimoto Outside Director

Reelection

OutsideIndependent

5

Kenichi Matsui

Outside Director

Reelection

OutsideIndependent

6

Hiroshi Miyake

Outside Director

Reelection

OutsideIndependent

Current Position in the Company
President and Representative
Reelection
Director
Director and Managing Executive
Reelection
Officer
New
AdvisorElection-4-

1

Terukazu Kato
Date of Birth(Age 55)

Current Position in the Company

President and Representative Director

August 26, 1963

Reelection
To our shareholders
The Tsumura Group is aiming to realize the Long-term business vision “Vision for 2021,” which is basedon the theme of “aiming to be a value-creation company that contributes to people’s health through its
Kampo business” which reflects our corporate philosophy and corporate mission, which make up our basic
philosophy. Through working to achieve the strategic challenges of our third medium-term management
plan, we will contribute to the health and medical care of the people while promoting awareness of the valueof Tsumura’s Kampo formulations.
Striving to create new value based on our basic direction of “Tradition and Innovation,” we will devote
our utmost energies in improving the corporate value in order to meet the expectations of our Shareholders
through taking appropriate business risks, such as new business ventures in China, while implementing
effective corporate governance.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1986
Aug. 2001
Jan. 2006
Apr. 2007
Jun. 2011
Jun. 2012
Jun. 2015

Joined the Company
President and Representative Director, TSUMURA USA, INC.
Head of Public Relations Department, TSUMURA & CO.
General Manager, Head of Corporate Communications Department, TSUMURA &CO.
Director and Executive Officer, Head of Corporate Communications Department,
TSUMURA & CO.
President and Representative Director, TSUMURA & CO.
President and Representative Director and President and Executive Officer,
TSUMURA & CO. (incumbent)

 Number of theCompany’s
Shares Owned
19,500 Shares Status ofattendance to
Board ofDirectors
meeting:
17/17 (100%)
 Material
relationshipwith theCompanyNone Reasons for nominating Mr. Terukazu Kato as a candidate for Director
Since Mr. Terukazu Kato was appointed as President and Representative Director in 2012, he has provided appropriate
explanations of matters to be resolved and reported at the Board of Directors meetings and successfully carried out his
responsibilities in making important management decisions and supervising the execution of business as a chairman of theBoard of Directors. In addition, he has continuously led in further enhancing corporate governance system.
In order for the Company to further pursue the aim of achieving sustainable growth and enhancing its corporate value
while maintaining the philosophy-based management approach, realizing the Long-term business vision and achieving the
medium-term management plan, the Board of Directors believes that he is one of the most well-qualified candidates, andthus recommends his re-election.
If his election as a Director is approved, Mr. Kato will assume the position of President, Representative Director and CEOof the Company.

-5-

2

Susumu Adachi
Date of Birth(Age 56)

February 3, 1963

Current Position in the Company

Director and Managing Executive
Officer

Reelection
To our shareholders
The Tsumura Group has formulated “Creating New Value through Innovations in Kampo - Next Stage-,” the three-year medium-term management plan commencing in fiscal 2019. The main themes of our plan
are the sustainable expansion of the Kampo market in Japan and the establishment of its presence andconstruction of a business foundation in China where we have only just begun expansion.
I am confident that through achieving this plan, the Tsumura Group will be more certain to achieve
growth in future years and a foundation will be put in place that will enable further gigantic leaps in growth.
By devoting our utmost energies to achieving this plan, we are set to improve the corporate value of the
Tsumura Group and meet the expectations of our shareholders.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr.
Apr.
Apr.
Apr.
Apr.

1987
2013
2015
2016
2018

Jun. 2018

Joined the Company
Head of Corporate Planning Department, TSUMURA & CO.
General Manager, Head of Corporate Planning Department, TSUMURA & CO.
Executive Officer, Head of Corporate Planning Department, TSUMURA & CO.
Managing Executive Officer, Head of Corporate Planning Department, TSUMURA& CO.
Director and Managing Executive Officer, Head of Corporate Planning Department,
TSUMURA & CO. (incumbent)

 Number of theCompany’s
Shares Owned
6,100 Shares Status ofattendance to
Board ofDirectors
meeting:
13/13 (100%)
 Material
relationshipwith in the
CompanyNone Reasons for nominating Mr. Susumu Adachi as a candidate for Director
Mr. Susumu Adachi has experience as a member of senior management in our group company in China and extensive
experience and insight as an executive officer in charge of corporate planning, finance/accounting, public relation/IR,
information technology and product strategy at the Company. The Board of Directors has full confidence in his ability tocarry out his responsibilities including making important management decisions at the Board of Directors meetings andsupervising the execution of business. Therefore, the Board of Directors recommends his re-election as a Director.
If his election as a Director is approved, Mr. Adachi will assume the position of Director, Managing Executive Officer and
COO of the Company.

-6-

3

Muneki Handa
Date of Birth(Age 56)

Current Position in the Company

AdvisorJuly 7, 1962

New Election
To our shareholders
Kampo medicines are pharmaceuticals prescribed based on the practice of Kampo medicine, a form ofJapanese unique traditional medicine. Today, our Japanese society faces challenges — i.e., addressing aging
society issues, achieving a society in which all 100 million Japanese people can play active roles on thepremise of further women’s empowerment, and development of treatments for cancer, which is the mostcommon cause of death in Japan. The Company will contribute to solving all these challenges by
establishing the scientific evidence of Kampo medicine. Moreover, such social issues as aging population
are challenges not specific to Japan. Therefore, I will devote myself to fulfilling expectations of all of ourshareholders and the other stakeholders by helping the Company to be further accepted and needed bysociety through the expansion of such activities currently carried out in Japan on a global scale.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1985
Jun. 2015
Jun. 2016
May 2019

Joined The Mitsubishi Bank, Limited (currently MUFG Bank, Ltd.)
Deputy President, Mitsubishi UFJ Capital Co., Ltd.
President, Mitsubishi UFJ Capital Co., Ltd. (incumbent)(scheduled to retire on June 18, 2019)
Advisor, TSUMURA & CO. (incumbent)

 Number of theCompany’s
Shares Owned
0 Shares Status ofattendance to
Board ofDirectors
meeting:  Material
relationshipwith in the
CompanyNone Reasons for nominating Mr. Muneki Handa as a candidate for Director
Mr. Muneki Handa has years of experience working at the financial institutions and extensive experience and insight as acorporate manager at a venture capital firm. The Board of Directors has full confidence in his ability to carry out his
responsibilities including making important management decisions at the Board of Directors meetings and supervising theexecution of business. Therefore, the Board of Directors recommends his election.
If his election as a Director is approved, Mr. Handa will assume the position of Director, Managing Executive Officer and
CFO of the Company.

-7-

4

Shigeru Sugimoto
Date of Birth(Age 60)

Current Position in the Company

Outside Director

October 12, 1958

Reelection Outside Independent
To our shareholders
The Company has been not only striving to further cement its position in the Japanese market but also
making unflinching efforts to expand its business to global markets based on its corporate philosophy, “TheBest of Nature and Science.” While being rooted in the tradition of Kampo medicine, our business is tocontribute primarily to advanced medical care, which is of great social significance. I believe that my role
is to point out issues to be addressed in the early stages of business strategy development and contribute todecision-making on what risks we can take. To this end, I will do my best to advise on and supervise theexecution of business as an Outside Director from the viewpoint of stakeholders including shareholders,utilizing expertise as a certified public accountant, etc. and management experience, so as to contribute to
the Company’s sustainable growth.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1982

Joined Housing and Urban Development Corporation (currently Urban RenaissanceAgency (Incorporated Administrative Agency))
Oct. 1985
Joined Ohta Showa Audit Firm (currently Ernst & Young ShinNihon LLC)
Jun. 1987
Registered as a real estate appraiser
Jul. 1988
Representative, Sakura Horwath & Co. (currently Sakura & Co.) (incumbent)
Feb. 1989
Registered as a certified public accountant
Mar. 1992
Registered as a certified tax accountant
Dec. 1995
Representative, Sakura Horwath LLC (currently Sakura Horwath Audit
Corporation) (incumbent)
Jun. 2012
Outside Director, TSUMURA & CO. (incumbent)
Nov. 2013
Supervisory Officer, Hulic Reit, Inc. (incumbent) Tenure as an Outside Director
At the conclusion of this general meeting, Mr. Sugimoto will have served in the position for seven(7) years.

 Number of theCompany’s
Shares Owned
6,300 Shares Status ofattendance to
Board ofDirectors
meeting:
17/17 (100%)
 Material
relationshipwith in the
CompanyNone Reasons for nominating Mr. Shigeru Sugimoto as a candidate for Outside Director
Mr. Shigeru Sugimoto has extensive experience and insight as a certified public accountant, a real estate appraiser, and acertified tax accountant. The Board of Directors has full confidence in his ability to carry out his responsibilities including
making important management decisions and supervising the execution of business for the Company. Therefore, the Boardof Directors recommends his reelection as an Outside Director.
 Degree of independence
Mr. Shigeru Sugimoto concurrently serves as Representative of Sakura & Co., Representative of Sakura Horwath Audit
Corporation, and a supervisory officer of Hulic Reit, Inc. In view of the fact that there is no business relationship between
the Company and any of these corporations, and Mr. Shigeru Sugimoto satisfies the standards for determination of
independence of Outside Directors, the Board of Directors believes Mr. Shigeru Sugimoto has a high degree of
independence.
The Company has submitted notification to Tokyo Stock Exchange, Inc. that Mr. Shigeru Sugimoto has been appointed as
an independent officer as provided for in Article 436-2 of the Securities Listing Regulations of the aforementioned
exchange.
 Summary of limited liability agreement with Mr. Shigeru Sugimoto
Pursuant to Article 427, paragraph 1 of the Companies Act and the Company’s Articles of Incorporation, the Company hasentered into an agreement with candidate for Outside Director Mr. Shigeru Sugimoto to limit his liability for damages
arising from neglecting his liability. The limit under the agreement is the amount provided for by the applicable laws andregulations. If Mr. Shigeru Sugimoto is reelected, the Company plans to renew the aforementioned limited liability
agreement.

-8-

5

Kenichi Matsui
Date of Birth(Age 69)

Current Position in the Company

Outside Director

July 5, 1949

Reelection Outside Independent
To our shareholders
During my four years of service as an Outside Director, I have been committed to achieving the Longterm business vision “Vision for 2021” from longer and more objective points of view with a focus on mymotto, “human-oriented business management,” while learning a lot from the Company’s employees.
Despite difficult circumstances, the Company has steadily been establishing a foundation of sustainablegrowth through initiatives such as growth expansion of the Kampo business and full-scale launch of theChinese business, as well as building a clear, trusted governance system. I will engage in setting new longterm goals and targets while supervising the realization of the “Vision for 2021.” What is important is to
identify changes in the uncertain environment caused by a variety of technological innovations from a broad
perspective and flexibly and promptly reflect such changes in the business besides the cultivation of
Tsumura’s human resources. To this end, I will make my best effort to establish a trusted management
system.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1972
Jun. 2001
Apr. 2003

Joined Idemitsu Kosan Co., Ltd.
General Manager of Accounting Department, Idemitsu Kosan Co., Ltd.
Executive Officer, General Manager of Accounting Department, Idemitsu Kosan
Co., Ltd.
Jun. 2004
Managing Executive Officer, General Manager of Accounting Department,
Idemitsu Kosan Co., Ltd.
Jun. 2005
Managing Director, Idemitsu Kosan Co., Ltd.
Jun. 2010
Executive Vice President, Representative Director, Idemitsu Kosan Co., Ltd.
Jun. 2014
Outside Director, The Mie Bank, Ltd.
Jun. 2015
Outside Director, TSUMURA & CO. (incumbent)
Apr. 2018
Outside Director (Audit and Supervisory Committee Member), The Mie Bank, Ltd.
(incumbent) Tenure as an Outside Director
At the conclusion of this general meeting, Mr. Matsui will have served in the position for four (4)years.

 Number of theCompany’s
Shares Owned
2,600 Shares Status ofattendance to
Board ofDirectors
meeting:
16/17 (94.1%)
 Material
relationshipwith in the
CompanyNone Reasons for nominating Mr. Kenichi Matsui as a candidate for Outside Director
Mr. Kenichi Matsui has extensive experience and insight as a corporate manager, developed over many years. The Boardof Directors has full confidence in his ability to carry out his responsibilities including making important management
decisions and supervising the execution of business for the Company. Therefore, the Board of Directors recommends his
reelection as an Outside Director.
 Degree of independence
Mr. Kenichi Matsui concurrently serves as an Outside Director (Audit and Supervisory Committee Member) of The Mie
Bank, Ltd. In view of the fact that there is no business relationship between the Company and the bank, and Mr. Kenichi
Matsui satisfies the standards for determination of independence of Outside Directors, the Board of Directors believes Mr.
Kenichi Matsui has a high degree of independence.
The Company has submitted notification to Tokyo Stock Exchange, Inc. that Mr. Kenichi Matsui has been appointed as anindependent officer as provided for in Article 436-2 of the Securities Listing Regulations of the aforementioned exchange.
 Summary of limited liability agreement with Mr. Kenichi Matsui
Pursuant to Article 427, paragraph 1 of the Companies Act and the Company’s Articles of Incorporation, the Company hasentered into an agreement with candidate for Outside Director Mr. Kenichi Matsui to limit his liability for damages arisingfrom neglecting his liability. The limit under the agreement is the amount provided for by the applicable laws andregulations. If Mr. Kenichi Matsui is reelected, the Company plans to renew the aforementioned limited liability
agreement.

-9-

6

Hiroshi Miyake
Date of Birth(Age 69)

Current Position in the Company

Outside Director

August 4, 1949

Reelection Outside Independent
To our shareholders
Even in the new imperial era of Reiwa, I will strive to increase the corporate value based on our corporate
philosophy, “The Best of Nature and Science,” and actively perform my duties of supervision, check andsuggestion to management to earn trust from all the stakeholders. More specifically, I believe that achieving
the medium-term management plan, cultivating the next generation of corporate managers, and succeedingin the development of the Chinese business are the most crucial tasks. Therefore, I will work hard tocontribute to achieving the goals and targets by drawing on my knowledge cultivated in the past andenhancing the effectiveness of the Board of Directors as an Outside Director.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1973
Oct. 2000

Joined Mitsubishi Corporation
General Manager, Paper & Packaging Raw Materials Division, Mitsubishi
Corporation
Apr. 2001
Deputy Division COO, General Merchandise Division, Mitsubishi Corporation
Apr. 2003
Deputy General Manager, Kansai Branch, Mitsubishi Corporation
Apr. 2005
Senior Vice President, Mitsubishi Corporation
President, Mitsubishi International GmbH, and Deputy Regional CEO for Europe
May 2009
Advisor, Tokai Pulp & Paper Co., Ltd.
Jun. 2009Managing Executive Officer, Tokushu Tokai Holdings Co., Ltd.
Jun. 2010
Senior Managing Executive Officer, Tokushu Tokai Paper Co., Ltd.
Jun. 2014
Director, Executive Vice President, Tokushu Tokai Paper Co., Ltd.
Jun. 2015
Representative Director, Executive Vice President, Tokushu Tokai Paper Co., Ltd.
Jun. 2016
Advisor, Tokushu Tokai Paper Co., Ltd.
Oct. 2016
Advisor, Nippon Tokai Industrial Paper Supply Co., Ltd.
Jun. 2018
Outside Director, TSUMURA & CO. (incumbent) Tenure as an Outside Director
At the conclusion of this general meeting, Mr. Miyake will have served in the position for one (1)year.

 Number of theCompany’s
Shares Owned
300 Shares Status ofattendance to
Board ofDirectors
meeting:
13/13 (100%)
 Material
relationshipwith in the
CompanyNone Reasons for nominating Mr. Hiroshi Miyake as a candidate for Outside Director
Mr. Hiroshi Miyake has extensive experience and insight as a corporate manager developed over many years andtransactional experience in and outside Japan. The Board of Directors has full confidence in his ability to carry out his
responsibilities including making important management decisions and supervising the execution of business for theCompany. Therefore, the Board of Directors recommends his re-election as an Outside Director.
 Degree of independence
Since Mr. Hiroshi Miyake satisfies the standards for determination of independence of Outside Directors, the Board of
Directors believes Mr. Hiroshi Miyake has a high degree of independence.
The Company has submitted notification to Tokyo Stock Exchange, Inc. that Mr. Hiroshi Miyake has been appointed as
an independent officer as provided for in Article 436-2 of the Securities Listing Regulations of the aforementioned
exchange.
 Summary of limited liability agreement with Mr. Hiroshi Miyake
Pursuant to Article 427, paragraph 1 of the Companies Act and the Company’s Articles of Incorporation, the Company hasentered into an agreement with candidate for Outside Director Mr. Hiroshi Miyake to limit his liability for damages arisingfrom neglecting his liability. The limit under the agreement is the amount provided for by the applicable laws andregulations. If Mr. Hiroshi Miyake is reelected, the Company plans to renew the aforementioned limited liability
agreement.
(Note 1)
(Note 2)

The respective ages stated for each candidate are current as of June 27, 2019.
The status of attendance to the Board of Directors meeting stated for each candidate is based on data for fiscal
2019 (from April 1, 2018 to March 31, 2019). Since Mr. Susumu Adachi and Mr. Hiroshi Miyake assumed theposition of Director following the 82nd Ordinary General Meeting of Shareholders held on June 28, 2018, theirstatus of attendance to the Board of Directors meeting are based on data from June 28, 2018 to March 31, 2019.

- 10 -

Proposal No. 3
Proposal No. 3: Election of Three (3) Directors who are Audit and Supervisory Committee Members
The terms of office of all three (3) Directors who are Audit and Supervisory Committee Members will
expire at the conclusion of this general meeting. Accordingly, the Company proposes to elect three (3)Directors who are Audit and Supervisory Committee Members.
Prior to this proposal, the Company has already obtained the consent of the Audit and Supervisory
Committee.
The candidates for Directors who are Audit and Supervisory Committee Members are as follows:
Candidate
No.
1

2
3

Name

Current Position in the Company

Director (Full-time Audit andSupervisory Committee
Member)Outside Director (Audit and
Mitsutoshi Matsushita Supervisory Committee
Member)Kimikazu Okochi

Akemi Mochizuki- 11 -

Reelection

Reelection

OutsideIndependent

NewElection

OutsideIndependent

1

Kimikazu Okochi
Date of Birth(Age 60)

October 8, 1958

Current Position in the Company

Director (Full-time Audit andSupervisory Committee Member)

Reelection
To our shareholders
The Group aims to further enhance the corporate value, bearing in mind its corporate mission, “To
contribute to the unparalleled medical therapeutic power of the combination of Kampo medicine andWestern medicine.” I believe that there is no difference in roles between Audit and Supervisory Committee
Members and Executive Directors in that both “assume the responsibility of sustainably enhancing thecorporate value.”
Amid the trend of tighter corporate governance, roles and responsibilities of Audit and Supervisory
Committee Members have become more important than ever. Therefore, I will perform my duties as a Fulltime Audit and Supervisory Committee Member with a sense of ethics and conviction to judge through“society’s eyes” as well as strive to gather information and develop the audit environment bycommunicating with the internal auditing division and the Accounting Auditor.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr.
Apr.
Apr.
Apr.
Jun.

1981
2010
2014
2017
2017

Joined the Company
Head of Accounting Department, TSUMURA & CO.
General Manager, Head of Accounting Department, TSUMURA & CO.
General Manager, Audit & Supervisory Board Office, TSUMURA & CO.
Director (Full-time Audit and Supervisory Committee Member), TSUMURA &CO. (incumbent)

 Number of theCompany’s
Shares Owned
5,300 Shares Status ofattendance to
Board ofDirectors
meeting:
17/17 (100%)
 Status ofattendance to
the Audit andSupervisory
Committee:
21/21 (100%)
 Material
relationshipwith theCompanyNone Reasons for nominating Mr. Kimikazu Okochi as a candidate for Director who is Audit and Supervisory Committee
MemberMr. Kimikazu Okochi has extensive business experience primarily in the fields of finance and accounting, including his
work experience in China as a member of the Company. Since he assumed the position of Director who is Audit andSupervisory Committee Member in 2017, he has appropriately supervised the execution of business of the Company as a
Full-time Audit and Supervisory Committee Member. The Board of Directors has full confidence in his ability toappropriately execute his duties and recommends his reelection to ensure the soundness and appropriateness of decision
making associated with the Company’s management as well as enhancing its transparency.
 Summary of limited liability agreement with Mr. Kimikazu Okochi
Pursuant to Article 427, paragraph 1 of the Companies Act and the Company’s Articles of Incorporation, the Company hasentered into an agreement with Director who is Audit and Supervisory Committee Member Mr. Kimikazu Okochi to limit
his liability for damages arising from neglecting his liability. The limit under the agreement is the amount provided for by
the applicable laws and regulations. If Mr. Kimikazu Okochi is reelected, the Company plans to renew the aforementioned
limited liability agreement.

- 12 -

2

Mitsutoshi Matsushita
Date of Birth(Age 48)

October 3, 1970

Current Position in the Company

Outside Director (Audit andSupervisory Committee Member)

Reelection Outside Independent
To our shareholders
This year marks the first year of the third medium-term management plan, the final step of the mediumterm plan toward the Company’s “Vision for 2021.” The environment surrounding the pharmaceuticalindustry has grown more severe. In order to expand the Chinese business while strengthening the domestic
business foundation and achieve the goals and targets of the medium-term management plan amid suchcircumstances, the Company is required to have a swift, valiant, and agile management system. On the other
hand, it is also important to manage risks associated with challenges in an appropriate way.
As an Outside Director and Audit and Supervisory Committee Member, I will do my best to establish amanagement system balanced between challenges and risk management, utilizing my experience inengaging in corporate legal affairs as a lawyer.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1997

Registered as an attorney at law
Joined Kajitani Law Offices (incumbent)
Jun. 2016
Outside Audit & Supervisory Board Member, PACIFIC SYSTEMSCORPORATION (incumbent)
Jun. 2017
Outside Director (Audit and Supervisory Committee Member), TSUMURA & CO.
(incumbent) Tenure as an Outside Director
At the conclusion of this general meeting, Mr. Matsushita will have served in the position for two (2)years.

 Number of theCompany’s
Shares Owned
500 Shares Status ofattendance to
Board ofDirectors
meeting:
17/17 (100%)
 Status ofattendance to
the Audit andSupervisory
Committee:
21/21 (100%)
 Material
relationshipwith theCompanyNone Reasons for nominating Mr. Mitsutoshi Matsushita as a candidate for Outside Director who is Audit and Supervisory
Committee Member
Mr. Mitsutoshi Matsushita has extensive experience and excellent insights as an attorney at law that is well versed incorporate legal affairs, is involved in the company management and has sufficient knowledge to oversee management.
Thus, the Board of Directors has full confidence in his ability to appropriately execute his duties as an Outside Director
who is Audit and Supervisory Committee Member of the Company, and recommends his reelection to ensure the soundness
and appropriateness of decision making associated with the Company’s management as well as enhancing its transparency.
 Degree of independence
Mr. Mitsutoshi Matsushita concurrently serves as an Outside Audit & Supervisory Board Member of PACIFIC SYSTEMSCORPORATION. In view of the fact that there is no trading relationship between the Company and the corporation, theBoard of Directors believes Mr. Mitsutoshi Matsushita has a high degree of independence.
The Company has submitted notification to Tokyo Stock Exchange, Inc. that Mr. Mitsutoshi Matsushita has been appointed
as an independent officer as provided for in Article 436-2 of the Securities Listing Regulations of the aforementioned
exchange.
 Summary of limited liability agreement with Mr. Mitsutoshi Matsushita
Pursuant to Article 427, paragraph 1 of the Companies Act and the Company’s Articles of Incorporation, the Company hasentered into an agreement with Director who is Audit and Supervisory Committee Member Mr. Mitsutoshi Matsushita tolimit his liability for damages arising from neglecting his liability. The limit under the agreement is the amount provided
for by the applicable laws and regulations. If Mr. Mitsutoshi Matsushita is reelected, the Company plans to renew the
aforementioned limited liability agreement.

- 13 -

3

Akemi Mochizuki
Date of Birth(Age 65)

Current Position in the Company

June 10, 1954

New Election Outside Independent
To our shareholders
Amid the recent revival of attention to long-established Kampo, the Tsumura Group contributes topeople’s health through its Kampo and crude drug business and engages in the business that can be said tobe one of a kind in the world based on its mission to contribute to the unparalleled medical therapeutic
power of the combination of Kampo medicine and Western medicine. It is crucially important for societythat the Group sustainably develops its business and continues to contribute to people’s health and society.
Moreover, in order to continue to deliver value to society, it is vital for the Group to remain what a business
entity should be. I will do my best to play a role in the Group’s governance as an Outside Director so thatit can continue to deliver value that society needs.
 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Oct. 1984
Mar. 1988
Aug. 1996
Jun. 2001
Jul. 2018
Jul. 2018

Joined Aoyama Audit Corporation
Registered as a certified public accountant
Joined Tohmatsu & Co. (currently Deloitte Touche Tohmatsu LLC)
Partner, Tohmatsu & Co. (currently Deloitte Touche Tohmatsu LLC)
Independent Director, Audit Committee Member, NSK Ltd. (incumbent)
Partner, AKAHOSHI AUDIT CORPORATION (incumbent)

 Number of theCompany’s
Shares Owned
0 Shares Status ofattendance to
Board ofDirectors
meeting:  Status ofattendance to
the Audit andSupervisory
Committee:  Material
relationshipwith theCompanyNone Reasons for nominating Ms. Akemi Mochizuki as a candidate for Outside Director who is Audit and Supervisory
Committee Member
Ms. Akemi Mochizuki has extensive experience and excellent insights as a certified public accountant that is well versed
in finance and accounting, is involved in the company management and has sufficient knowledge to oversee management.
Thus, the Board of Directors has full confidence in her ability to appropriately execute her duties as an Outside Director
who is Audit and Supervisory Committee Member of the Company, and recommends her election to ensure the soundness
and appropriateness of decision making associated with the Company’s management as well as enhancing its transparency.
 Degree of independence
Ms. Akemi Mochizuki concurrently serves as an Independent Director, Audit Committee Member of NSK Ltd. and Partnerof AKAHOSHI AUDIT CORPORATION. In view of the fact that there is no trading relationship between the Company
and the corporations, the Board of Directors believes Ms. Akemi Mochizuki has a high degree of independence.
The Company plans to submit notification to Tokyo Stock Exchange, Inc. that Ms. Akemi Mochizuki has been appointed
as an independent officer as provided for in Article 436-2 of the Securities Listing Regulations of the aforementioned
exchange.
 Summary of limited liability agreement with Ms. Akemi Mochizuki
Conditional upon the approval and adoption of this proposal and pursuant to Article 427, paragraph 1 of the Companies
Act and the Company’s Articles of Incorporation, the Company plans to enter into an agreement with Ms. Akemi
Mochizuki to limit her liability for damages under Article 423, paragraph 1 of the Companies Act. The limit of liability
for damages under this agreement is the minimum liability amount provided for under the relevant laws and regulations.
(Note 1)
(Note 2)

The respective ages stated for each candidate are current as of June 27, 2019.
The status of attendance to the Board of Directors meeting and that to Audit and Supervisory Committee
meeting stated for each candidate are based on data for fiscal 2019 (from April 1, 2018 to March 31, 2019).

- 14 -

Proposal No. 4
Proposal No. 4: Election of One (1) Substitute Director who is Audit and Supervisory Committee Member
The effective term of substitute Director who is Audit and Supervisory Committee Member Ms. Seiko
Noda, who was elected at the 81st Ordinary General Meeting of Shareholders held on June 29, 2017, will
expire at the beginning of this General Meeting of Shareholders. In preparation for lacking the number of
Directors who are Audit and Supervisory Committee Members stipulated by laws and regulations, theCompany proposes to elect one (1) substitute Director who is Audit and Supervisory Committee Member.
Note that the effectiveness of election of the substitute Director who is Audit and Supervisory Committee
Member may be rescinded by a resolution of the Board of Directors if the consent of the Audit andSupervisory Committee has been obtained, only before the assumption of office.
Prior to this proposal, the Company has already obtained the consent of the Audit and Supervisory
Committee.
The candidate for substitute Director who is Audit and Supervisory Committee Member is as follows:

Seiko Noda
Date of Birth(Age 55)

Current Position in the Company

February 17, 1964

 Career summary, position and responsibility in the Company, and major positions held outside theCompany
Apr. 1986
Apr. 1999
Jun. 2007

Joined The Awa Bank, Ltd.
Registered as an attorney at law
Joined NAGASAWA LAW OFFICES (incumbent)
Outside Audit & Supervisory Board Member, TSUMURA & CO.

 Number of theCompany’s
Shares Owned
2,700 Shares Status ofattendance to
Board ofDirectors
meeting:  Status ofattendance to
the Audit andSupervisory
Committee:  Material
relationshipwith theCompanyNone Reasons for nominating Ms. Seiko Noda as a candidate for substitute Director who is Audit and Supervisory Committee
MemberMs. Seiko Noda is well versed in corporate legal affairs as an attorney at law, has sufficient knowledge to oversee
corporate management, and used to be involved in the management as an Outside Audit & Supervisory Board Memberof the Company. Therefore, the Board of Directors has full confidence in her ability to appropriately execute her duties
as a Director who is Audit and Supervisory Committee Member of the Company, and recommends her reelection.
 Summary of limited liability agreement with Ms. Seiko Noda
If this proposal is approved and adopted, and if Ms. Seiko Noda assumes the office of Director who is Audit andSupervisory Committee Member, pursuant to Article 427, paragraph 1 of the Companies Act and the Company’s Articles
of Incorporation, the Company plans to enter into an agreement with her to limit her liability for damages under Article
423, paragraph 1 of the Companies Act. The limit of liability for damages under this agreement is the minimum liability
amount provided for under the relevant laws and regulations.
(Note 1)
(Note 2)

The age stated for the candidate is current as of June 27, 2019.
The status of attendance to the Board of Directors meeting and that to Audit and Supervisory Committee
meeting stated for each candidate are based on data for fiscal 2019 (from April 1, 2018 to March 31, 2019).

- 15 -

(Reference)
Standards for Determination of Independence of Outside Directors
Of the Company’s Outside Directors, outside officers who do not fall under any of the following items shallbe determined to have independence.
1. Person who is or was in the past ten (10) years an Executive Director, Executive Officer (Shikkoyaku),
Executive Officer (Shikkoyakuin), Manager, General Manager, employee, etc. (hereinafter referred toas “executives”) of the Company or its consolidated subsidiaries
2. Person or executives of a legal entity holding, whether directly or indirectly, 10% or more of the total
number of voting rights of the Company
3. Party for whom the Company or its consolidated subsidiaries (*1) is a major business partner or
executives of such party*1. Party is defined as a “party for whom the Company or its consolidated subsidiaries is a major
business partner” if payment from the Company or its consolidated subsidiaries which such party
receives is 2% or more of its annual transaction value (non-consolidated) in the most recent fiscal
year, or if monetary finance from the Company or its consolidated subsidiaries which such party
is receiving is 2% or more of its consolidated total assets in the most recent fiscal year.
4. Major business partner of the Company or its consolidated subsidiaries (*2) or the executives of suchbusiness partner*2. Business partner is defined as a “major business partner of the Company or its consolidated
subsidiaries” if payment from such business partner which the Company or its consolidated
subsidiaries receives is 2% or more of its annual consolidated transaction value in the most recent
fiscal year, or if monetary finance from such business partner which the Company or its
consolidated subsidiaries is receiving is 2% or more of the Company’s consolidated total assets inthe most recent fiscal year.
5. Audit corporation that serves as Accounting Auditor of the Company or its consolidated subsidiaries,
or partners and others of the audit corporation
6. Consultant, attorney, certified public accountant and others who provide professional services andobtain monetary and other financial benefits exceeding a cumulative amount of ¥10 million in themost recent fiscal year from the Company, excluding officer compensation (if such financial benefits
are obtained by an organization including a legal entity and a partnership, etc. this shall apply to theperson belonging to such organization.)
7. Person or executives of a legal entity receiving donations, grants and others in the amount exceeding¥10 million from the Company or its consolidated subsidiaries in the most recent fiscal year
8. Person to whom items 2 through 7 apply during the past three (3) years
9. Person who is or was recently a spouse or within a second degree of consanguinity of executives in an
important position of the Company or its consolidated subsidiaries (hereinafter referred to as “close
relative”)
10. Close relative of a person to whom any of the items 2 through 7 apply (excluding people who are notin an important position)- 16 -

Proposal No. 5
Proposal No. 5: Revision of Performance-Linked Stock Compensation Plan (Performance Share Unit) for
Directors (excluding Directors who are Audit and Supervisory Committee Members andNon-executive Directors) and Executive Officers who have entered into a Service
Agreement with the Company
In the 81st Ordinary General Meeting of Shareholders held on June 29, 2017, the Company was given
approval of the performance-linked stock compensation plan (Performance Share Unit) for Directors(excluding Directors who are Audit and Supervisory Committee Members and non-executive Directors) and
Executive Officers (Shikkoyakuin) who have entered into a service agreement with the Company (hereinaftercollectively referred to as “Directors, etc.”) upon the transition to a company with an Audit and Supervisory
Committee.
The Company seeks approval for changing its performance-based compensation in association with thestock compensation plan from the actual grant of the Company’s common shares to the actual grant of theCompany’s common shares and the payment of cash (hereinafter referred to as the “Plan”).
If Proposal No. 2: “Election of Six (6) Directors (excluding Directors who are Audit and Supervisory
Committee Members)” is adopted as originally proposed at this General Meeting of Shareholders, the number
of Directors, etc. who are eligible for the Plan will be a total of 11, comprising three (3) Directors (excluding
Directors who are Audit and Supervisory Committee Members and non-executive Directors) and eight (8)Executive Officers (Shikkoyakuin); provided, however, the number of eligible persons for the Plan may varydepending on their appointment and retirement from office as Directors, etc. during the Plan period.
Amount and other details of the compensation, etc. of the Plan
(1) Outline of the Plan
The Plan shall be a performance-linked stock compensation plan by which the Company’s commonshares will be granted and cash will be paid to Directors, etc., based on their roles, duties and positions
and according to the achievement ratio of the Company’s numerical performance targets of the mediumterm management plan which covers the Plan period, which is three years from the fiscal year ending
March 31, 2020 to the fiscal year ending March 31, 2022 (from April 1, 2019 to March 31, 2022). The
actual grant of the Company’s common shares and the payment of cash will be made to Directors, etc.
after the Plan period has terminated. Also, the Company’s Board of Directors has formulated, inassociation with the Plan, the Stock Compensation Rules for Directors, etc. Given the nature of the Plan
where the action of actual granting of the Company’s common shares and payment of cash is contingent
upon the degree of achievement of the set targets, the Company is unable to determine in advancewhether actual grant of its shares and payment of cash will take place or the names of the recipient
Directors, etc., number of shares and amount of cash to be delivered, if any. In addition, after thetermination of the initial Plan period above, the Board of Directors of the Company may approve, within
the scope approved by this General Meeting of Shareholders, the continuation of the Plan in the threeconsecutive fiscal years, starting from the next fiscal year of the final fiscal year of the previous Plan
period, after respective numerical targets and other items are updated every time a medium-term
management plan is developed.
(2) Maximum amount of compensation, etc.
The Company will provide Directors, etc. with monetary compensation claims, based on their roles,
duties and positions and according to the achievement ratio of the Company’s final-year numericalperformance targets of the medium-term management plan. Meanwhile, Directors, etc. will receive theCompany’s common shares, the number of which will be determined by (3) and (4) below, by making
an in-kind contribution of the relevant monetary compensation claims at the time of the Company’s
issuance of shares or disposal of treasury shares. The amount of the monetary compensation claims will
be determined by the Board of Directors to the extent that it is not unduly favorable to Directors, etc.
who subscribe for the Company’s common shares. The Company will also pay Directors, etc. cash
which will be determined by (3) and (4) below, taking into account the amount of income taxes to beborne by Directors, etc. when they receive the Company’s common shares. The maximum total amount- 17 -

of monetary compensation claims and cash provided to Directors, etc. based on the Plan will be set at¥450 million for each Plan period linked with the medium-term management plan. The table below
shows the maximum amount of the monetary compensation claims and cash provided to individual
Directors, etc. based on their roles, duties and positions.
Class

Maximum amount of monetary compensation claims
and cash to be provided

Representative Director¥72 million

Executive Director¥60 million

Senior Executive Officer¥48 million

Executive Officer¥24 million(3) Calculation method and maximum limit of the number of the Company’s shares to be granted
and the amount of cash to be paid to Directors, etc.
Based on the following “formulas for calculating the number of shares to be granted and the amountof cash to be paid,” the Company calculates the number of shares to be granted, and the amount of cash
to be paid, to individual Directors, etc. Specifically, the number of shares to be granted to individual
Directors, etc. is determined by multiplying the number of reference deliverable shares (determinedaccording to the compensation standards based on roles, duties and positions of individual Directors,etc.); the achievement ratios for the consolidated net sales, consolidated operating profit andconsolidated ROE that are the numerical targets for the final year of the Plan period announced in themedium-term management plan; and the allocation ratios corresponding to the numerical targets above.
The amount of cash to be paid to individual Director, etc. shall be determined by multiplying the numberof shares to be granted as calculated above and the share price at time of grant. It should be noted that
if the number of shares to be granted thus calculated has fractional shares less than one unit, thosefractional shares will be discarded, and that if the amount of cash to be paid has values in the hundreds
place and less, those values will be rounded down to the thousand.
[Formulas for calculating the number of shares to be granted and the amount of cash to be paid]◎ Reference deliverable shares= Amount determined according to compensation criteria based on roles, duties and positions forindividual Directors, etc. / Reference share price* × 3 (fiscal years)*Reference share price = Closing price of ordinary transactions of common shares of the Company on March 29,
2019 (= ¥3,365)◎ Methods for calculating the number of shares to be granted and the amount of cash to be paid toeach Director, etc.
The number of shares to be granted and the amount of cash to be paid to each Director, etc. shallbe determined by the following methods:(i) Number of shares to be granted= Reference deliverable shares × (Sum of (Each achievement ratio of respective numerical targets
for the final year of the Plan period in the medium-term management plan × Applicable numericaltarget allocation ratio)) × 50%*“Achievement ratio of numerical target” is determined depending on the achieved degree, within
the range of 0% to 120%, with the level corresponding to the numerical target set at 100%. If
figures in the financial statements for the final year of the Plan period are below zero, theachievement ratio of the numerical target shall be 0%.
Achievement ratio of the numerical target= Figures in the financial statements for the final year of the Plan period / Numerical targets forthe final year of the Plan period in the medium-term management plan
*The table below shows respective numerical targets for the final year of the Plan period in themedium-term management plan and allocation ratios.
- 18 -

Numerical target

Allocation ratio

Consolidated net sales

Item¥135 billion

40%

Consolidated operating profit¥19 billion

30%

6%

30%

Consolidated ROE(ii) Amount of cash to be paid
= Number of shares to be granted calculated in (i) above × Share price at time of grant**Closing price of the Company’s shares at Tokyo Stock Exchange, Inc. on the business day
immediately prior to the date of the relevant resolution made at a meeting of the Company’s Boardof Directors to be held within two months after the close of the first Ordinary General Meeting of
Shareholders after the termination of the Plan period (In case of no trading on the business day,the closing price shall be the price on the most recent trading day prior to the business day).
The maximum number of the total of the Company’s common shares to be granted to Directors, etc.
shall be the number equivalent to 60,000 shares during the Plan period. The table below shows the
maximum number of the Company’s common shares to be granted to individual Directors, etc. basedon their roles, duties and positions.
Class

Maximum number of shares

Representative Director

6,000 shares

Executive Director

5,000 shares

Senior Executive Officer

4,000 shares

Executive Officer

2,000 shares

Provided, however, that, if the total number of issued shares of the Company increases or decreases
as a result of stock consolidations, stock splits, gratis allotments of shares, etc., such maximum number
and the number of the Company’s shares to be granted to Directors, etc. shall be reasonably adjusted
according to the consolidation ratio, split ratio, allotment ratio, etc. pertaining to the Company’s shares.
Furthermore, if there arises a likelihood that the number of the Company’s common shares to be
granted or the amount of cash to be paid as specified in (3) above will exceed the total of the maximum
number of shares or the maximum amount of monetary compensation claims and cash specified in (2)above, the number of shares to be granted and the amount of cash to be paid to individual Directors, etc.
will be reduced proportionally or by other reasonable methods within the extent capped by suchmaximum amount or number.
(4) Requirements for granting the Company’s shares and paying cash to Directors, etc.
Under the Plan, after the termination of the Plan period and on condition that the requirements
described below are satisfied, the Company shall grant its common shares and pay cash to Directors,
etc. Grant of the Company’s common shares shall be made by way of issuance of new shares or disposalof treasury shares by the Company. In addition, specific Directors, etc. to whom the Company’scommon shares are granted, the number of shares to be granted and the amount of cash to be paid will
be determined by the Board of Directors at a meeting to be held after the expiration of the Plan period.
(i) The person was in office as a Director, etc. during the Plan period.
(ii) The person has committed neither wrongful nor illegal conduct.
(iii) The person meets other conditions set by the Company that are deemed consistent with the purposesof the Plan.
Directors, etc. who retire from office during the Plan period will receive the Company’s commonshares and cash whose number and amount are prorated to the number of years they have held office
up to the time of retirement from office. In addition, Directors, etc. who are newly appointed during
the Plan period will receive the Company’s common shares and cash whose number and amountare prorated to the number of years in office. It should be noted that in cases where a Director, etc.
retires from office due to death during the Plan period or where certain reorganization and otherchanges within the Company are approved at the Company’s General Meeting of Shareholders orother meetings, a successor of the Director, etc. or the Director, etc. will receive the amount of cash
- 19 -

obtained by multiplying the market price of the Company’s common shares at the point of theretirement from office or at the point of the approval by the number of reference deliverable sharesprorated to the number of years in office, regardless of the achievement ratio of numerical targetsof the Director, etc.
(Reference)
Subject to approval of this proposal, the officer compensation system will be implemented as follows:
1) Basic idea behind the officer compensation system
The Company’s basic policy is to pay compensation to officers that will contribute to their motivation to
pursue the sustained growth of the Company and enhanced corporate value over the medium to long term
through the improvement of performance. The compensation standards and composition of compensation
paid are designed to ensure an appropriate level of compensation given the roles, duties and positions of each
officer. Based on the compensation standards of roles, duties and positions, compensation for Representative
Director and other Executive Directors among Directors (excluding Directors who are Audit and Supervisory
Committee Members) is comprised of (i) basic compensation reflecting short-term performance such as theCompany’s business results for each fiscal year (the achievement ratios of respective actual consolidated net
sales and consolidated operating profit to those forecast in the section of projections of consolidated businessresults in the summary of consolidated financial statements) and the degree of achievement of performancegoals set by each of Executive Directors for each year and (ii) the performance-linked stock compensationreflecting the medium- to long-term performance. Employee salaries paid to Directors who also serve as
employees of the Company are determined considering the salary levels of the Company’s employees.
Outside Directors and other non-executive Directors among Directors (excluding Directors who are Audit
and Supervisory Committee Members) receive only a fixed amount of basic compensation in view of theirroles of supervising operational execution. Directors who are Audit and Supervisory Committee Members
receive only a fixed amount of basic compensation in consideration of their roles and duties.
2) Compensation level
Given the business environment surrounding the Company, the Company makes a comparison ofcompensation levels between the Company and industry peers or other companies of the same size as that of
the Company in an objective manner by utilizing survey data from third-party specialists and considering thesalary levels of the Company’s employees, and sets compensation levels consistent with their roles, duties
and positions.
3) Process for determining compensation
The Nomination/Remuneration Advisory Committee has been established to improve the transparency andimpartiality of decisions related to compensation or the like by involving Outside Directors who have been
designated as independent directors and incorporating their input. The Company’s officer compensation isdetermined by the Board of Directors based on deliberations in and reports from theNomination/Remuneration Advisory Committee. The introduction of the Plan is placed on the agenda for this
General Meeting of Shareholders after being deliberated in the Nomination/Remuneration Advisory
Committee.
In addition, compensation for Directors who are Audit and Supervisory Committee Members is determinedbased on mutual discussion by Directors who are Audit and Supervisory Committee Members.
4) Composition of compensation
Composition of compensation is as follows:○ Representative Director and other Executive Directors among Directors (excluding Directors who are Audit
and Supervisory Committee Members)
Fixed portion[60%]

Portion linked to short-term performance[30%]

Basic compensation (cash)

Portion linked to medium- to long-term
performance[10%]

Stock compensation* The proportion of composition follows the standard amount of compensation based on their roles, duties andpositions.
* Allocation ratios of each of the performance-linked proportions are as follows:- 20 -

· Proportion linked to short-term performance
Item· Proportion linked to medium- to long-term performance

Allocation ratio

Item

Allocation ratio

Consolidated net sales

20%

Consolidated net sales

40%

Consolidated operating profit

20%

Consolidated operating profit

30%

Degree of achievement of
performance goals set byeach of Executive Directors

60%

Consolidated ROE

30%* Compensation for Executive Officers (Shikkoyakuin) who have entered into a service agreement with theCompany is the same as compensation for Representative Director and other Executive Directors in terms of
the basic idea behind officer compensation, compensation levels, the process for determining compensationand the composition of compensation.

◎ Outside Directors and other non-executive Directors (excluding Directors who are Audit andSupervisory Committee Members)◎ Directors who are Audit and Supervisory Committee Members
Basic compensation (fixed amount and cash)[100%]

5) Officer compensation framework (after the introduction of the Plan)[Basic compensation (monetary compensation)]・Directors (excluding Directors who are Audit and Supervisory Committee Members)
Not more than ¥600 million per annum(Based on the resolution of the 81st Ordinary General Meeting of Shareholders held on June 29, 2017. The
above amount includes the amount of compensation for Outside Director; provided, however, that does notinclude employee salaries.)
・Directors who are Audit and Supervisory Committee Members
Not more than ¥72 million per annum(Based on the resolution of the 81st Ordinary General Meeting of Shareholders held on June 29, 2017.)[Stock compensation (subject to approval of this proposal)]・Monetary compensation claims and cash to be provided to Directors, etc.
¥450 million during the Plan period
The table below shows the maximum amount of monetary compensation claims and cash to be provided
to individual Directors, etc. based on their roles, duties and positions.
Class

Maximum amount of monetary compensation claims andcash to be provided

Representative Director¥72 million

Executive Director¥60 million

Senior Executive Officer¥48 million

Executive Officer¥24 million

・Total number of the Company’s common shares to be granted to Directors, etc.
The upper limit is equivalent to 60,000 shares during the Plan period.
The table below shows the maximum number of the Company’s common shares granted to individual
Directors, etc. based on their roles, duties and positions.
Class

Maximum number of shares

Representative Director

6,000 shares

Executive Director

5,000 shares

Senior Executive Officer

4,000 shares

Executive Officer

2,000 shares* Directors, etc. refer to Directors (excluding Directors who are Audit and Supervisory Committee Members
and non-executive Directors) and Executive Officers (Shikkoyakuin) who have entered into a service
agreement with the Company.
* The Plan period refers to the period from the fiscal year ending March 31, 2020 to the fiscal year ending
March 31, 2022 (from April 1, 2019 to March 31, 2022).

- 21 -