Note: This document has been translated from a part of the Japanese original for reference purposes only. In theevent of any discrepancy between this translated document and the Japanese original, the original shall prevail. The
Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Securities Code: 7740
March 7, 2018
To Shareholders
Shiro Ajisaka
President & CEO
Tamron Co., Ltd.
1385 Hasunuma, Minuma-ku, Saitama,
Saitama Prefecture, JapanNOTICE OF CONVOCATION OF THE
71ST ORDINARY GENERAL MEETING OF SHEREHOLDERS
Tamron Co., Ltd. (the “Company”) hereby notifies you that the 71st Ordinary General Meeting of
Shareholders of the Company (the “Meeting”) will be held as follows. Your attendance isrespectfully requested.
If you do not expect to attend the Meeting, you may exercise your voting rights in writing or by the Internet, etc.
After reviewing the following Reference Documents for General Meeting of Shareholders, please exercise yourvoting rights according to the instructions described below by no later than 5:20 p.m. on Tuesday, March 27, 2018
(Japan time).
Date and Time 10 a.m. on Wednesday, March 28, 2018 (reception starts at 9 a.m.)
5th floor, Annex to the Head Office of Tamron Co., Ltd.
Place
1385 Hasunuma, Minuma-ku, Saitama, Saitama Prefecture, Japan(Please refer to the guide map provided at the end of this Notice of Convocation for directions.)
3. Agenda
1. Business Report for the 71st term (from January 1, 2017 to December 31, 2017),
Reports
consolidated financial statements for the 71st term, and results of audit on the consolidated
financial statements by Independent Auditors and the Audit & Supervisory Board
2.
Report on non-consolidated financial statements for the 71st term (from January 1, 2017
to December 31, 2017)
Resolutions
Appropriation of surplus
Proposal 1:
Election of twelve (12) directors
Proposal 2:
Amount and conditions of performance-linked stock compensation for directors and revision to
Proposal 3:amount of pecuniary compensation
4. Guide to Exercising Voting Rights(1) If you exercise your voting rights by mailPlease indicate your vote for or against the proposals on the enclosed Voting Rights Exercise Form and return it
so that it is received by 5:20 p.m. on Tuesday, March 27, 2018.
(2) If you exercise your voting rights by Internet, etc.
If you exercise your voting rights on the Internet or by any other similar means, please read “Guidance Notes on
the Exercise of Voting Rights via the Internet, etc.” on page 3 and exercise your voting rights by 5:20 p.m. on
Tuesday, March 27, 2018.
End
1.
2.

If you are attending the Meeting, the Company asks that you kindly submit the enclosed Voting Rights Exercise Formto the reception desk at the venue on the day of the General Meeting of Shareholders.
Notes to consolidated financial statements and notes to non-consolidated financial statements are published on theofficial website of the Company (http://www.tamron.co.jp, Japanese only) in accordance with the provisions of therelevant law and the Article 15 of its Articles of Incorporation. They are not stated in this Notice of Convocation.
Hence, the consolidated financial statements and non-consolidated financial statements audited by members of the
Audit & Supervisory Committee and Independent Auditors include the financial statements provided with thisConvocation Notice and notes to the financial statements published on the Company’s official website.
If and when the Company makes any correction to the Business Report, consolidated financial statements, nonconsolidated financial statements and the Reference Documents for the General Meeting of Shareholders provided
with this Notice of Convocation the Company will announce the correction on its official website(http://www.tamron.co.jp, Japanese only).

Guidance Notes on the Exercise of Voting Rights via the Internet, etc.
If you exercise your voting rights on the Internet or by any other similar means, you must acknowledge thefollowing conditions.
1. Website for exercise of voting rights
You can exercise your voting rights on the Internet only by using the website for the exercise of voting rights
indicated below as designated by the Company.
Address of website for exercise of voting rights: https://www.web54.net
2. Treatment of exercise of voting rights(1) If you exercise your voting rights on the Internet, use the code for the exercise of voting rights and thepassword indicated on the enclosed form for the exercise of voting rights and enter your vote for or against the
proposals according to the instructions on the screen.
(2) The deadline for the exercise of voting rights is 5:20 p.m. on Tuesday, March 27, 2018.
⑶ If you exercise your voting rights both in writing and online, only the voting rights you exercise online will becounted. If you exercise your voting rights more than once online, only the voting rights you exercise last will
be counted.
(4) The shareholders are required to bear the fees and charges for providers and telecommunications carriers (suchas connection fees) upon using the website for the exercise of voting rights.
3. Treatment of the password and the code for the exercise of voting rights(1) The password is important information for confirming that the person casting a vote is the shareholder who has
the voting rights. The password must be carefully handled in the same way as the stamp for the seal andpersonal identification number.
(2) If you fail to enter the correct password a certain number of times, you will not be able to use this password. If
you need to request the reissue of the password, please follow the procedures according to the instructions on
the screen.
(3) The code for the exercise of voting rights that is stated on the form for the exercise of voting rights is effective
only for this general meeting of shareholders.
4. Contact information for inquiries about the method of operation of personal computers, etc.
(1) For questions about how to operate personal computers and other devices in the exercise of voting rights on thewebsite described above, please contact the following entity.
Sumitomo Mitsui Trust Bank, Limited, telephone number exclusively for custody service web support:[Phone] 0120 (652) 031 (Toll-free in Japan only)(Available 9:00 a.m. - 9:00 p.m.)(2) For any other inquiries, please contact the following entity.
(i) Shareholders with an account with a securities company
Shareholders with an account with a securities company are required to contact your securities company.
(ii) Shareholders without an account with a securities company (shareholders with a special account)
Securities Business Center of Sumitomo Mitsui Trust Bank, Limited[Phone] 0120 (782) 031 (Toll-free in Japan only)(Available 9:00 a.m. - 5.00 p.m. except for Saturdays, Sundays and holidays)
5. Use of the platform for the electronic exercise of voting rights (for institutional investors)
Institutional investors may exercise the voting rights for this general meeting of shareholders electronically via
the platform for the electronic exercise of voting rights operated by ICJ, Inc.

Reference Documents for the General Meeting of Shareholders
Proposal 1: Appropriation of Surplus
The basic policy of the Company is to continue the stable distribution of profits to shareholders with an emphasison continual dividends with a dividend payout ratio of around 35% according to the operating results, whileconsidering the necessity of strengthening the management structure and research and development and capital
investment for the launch of a new business from a long-term perspective, among other necessities.
The Company intends to pay a year-end dividend for the current period, which consists of the ordinary dividendof 25 yen per share.
As the Company paid an interim dividend of 25 yen per share in September 2017, the annual dividend will be 50
yen per share, with a dividend payout ratio of 45.7%.
(1)Type of dividend
Cash

(2)

Matters concerning allocation of dividend and its total amount25.00 yen per one common share of the Company(3)

Total amount of dividend 648,017,800 yen
Effective date of the dividend from surplus
March 29, 2018

Proposal 2: Election of twelve (12) directors
The terms of office of all of the fifteen (15) directors will expire at the end of this Meeting.
Accordingly, it is hereby proposed to appoint twelve (12) directors including two (2) outside directors; a decreaseof three (3) directors.
The candidates for the directors are as follows:

No.

Name
(Date of birth)

Shiro Ajisaka(July 17, 1954)

1

Brief career history, position and responsibility at Tamron Co., Ltd.
(State of concurrent holding of important positions)

Number of theCompany’s
shares held

April 1978
Joined Tamron Co., Ltd.
April 1990
President, TAMRON Europe GmbH.
January 2005 Executive Officer, General Manager, Overseas Sales& Marketing Unit, Tamron Co., Ltd.
January 2008 Senior Executive Officer, General Manager, Overseas
Imaging Products Business Unit, Tamron Co., Ltd.
March 2010
Director, Tamron Co., Ltd.
March 2013
Managing Director, Tamron Co., Ltd.
March 2014
Senior Managing Director, Tamron Co., Ltd.
March 2015
Corporate Vice President, Tamron Co., Ltd.
March 2016 President & CEO, Tamron Co., Ltd.
(current post)

11,500 shares[Reason for nomination as director]
Mr. Shiro Ajisaka has properly supervised decisions on important business issues and directors’ executionof duties as chairman of the board of directors by making good use of the experience and knowledge he has
accumulated throughout his career and showing leadership in the center of the management team since 2016
when he took office as President & CEO of Tamron Co., Ltd.
Mr. Shiro Ajisaka is nominated as a director again because he is considered to be pivotal for achieving acontinual increase of corporate value in the future.
April 1981
January 2005
Shogo Sakuraba

January 2008

(April 1, 1958)

March 2014
March 2016
2

Joined Tamron Co., Ltd.
Executive Officer, General Manager, Optical Design& Engineering R & D Unit, Tamron Co., Ltd.
Senior Executive Officer, General Manager, Optical
Design & Engineering R & D Unit, Tamron Co.,Ltd.
Director, Tamron Co., Ltd.
Corporate Vice President, Tamron Co., Ltd.
(current post)

4,800 shares[Reason for nomination as director]
Mr. Shogo Sakuraba has been responsible for the management of the Company in charge of the Optical
Design & Engineering R&D Unit, the Integrated Core Technology R&D Unit and the Opto-Science R&D
Center by making good use of the experience and knowledge he has accumulated throughout his career
since 2014 when he took office as a director of Tamron Co., Ltd.
In addition, Mr. Sakuraba has properly supervised decisions on important business execution and directors’
execution of duties as a member of the board of directors. Mr. Shogo Sakuraba is nominated as a director
again because he is considered to be pivotal for achieving a continual increase of corporate value in the
future.

No.

Name(Date of birth)

Brief career history, position and responsibility at Tamron Co., Ltd.
(State of concurrent holding of important positions)
March 1971
August 1999
January 2005

Masayuki Abo(September 11, 1954)

January 2007
January 2008
January 20113

March 2014
March 2016

Joined Tamron Co., Ltd.
Managing Director, TAMRON OPTICAL(FOSHAN) CO., LTD.
Executive Officer, Assistant General Manager,
Production Management & Administration Unit,
Tamron Co., Ltd.
Executive Officer, General Manager, Industrial
Optics Business Unit, Tamron Co., Ltd.
Senior Executive Officer, General Manager,
Industrial Optics Business Unit, Tamron Co., Ltd.
Senior Executive Officer, General Manager, Process
Technology & Engineering Unit, Tamron Co., Ltd.
Director, Tamron Co., Ltd.
Senior Managing Director, Tamron Co., Ltd.
(current post)

Number of theCompany’s
shares held

8,200 shares[Reason for nomination as director]
Mr. Masayuki Abo has been responsible for the management of the Company and the overseas
manufacturing subsidiaries in charge of the Production Management & Administration Unit and the CoreTechnology & Engineering R&D Unit by making good use of the experience and knowledge he has
accumulated throughout his career since 2014 when he took office as a director of Tamron Co., Ltd.
In addition, Mr. Abo has properly supervised decisions on important business execution and directors’
execution of duties as a member of the board of directors. Mr. Masayuki Abo is nominated as a director
again because he is considered to be pivotal for achieving a continual increase of corporate value in the
future.
March 2000
January 2007
Hiroshi Kawanabe(April 29, 1953)

4

April 2010

March 2014
March 2015

Joined Tamron Co., Ltd.
Manager, General Affairs Dept., Tamron Co., Ltd.
Executive Officer, General Manager, Human
Resources & General Affairs Management Unit,
Tamron Co., Ltd.
Senior Executive Officer, General Manager, Human
Resources & General Affairs Management Unit,
Tamron Co., Ltd.
Director, Tamron Co., Ltd.
Managing Director, Tamron Co., Ltd.
(current post)

6,000 shares[Reason for nomination as director]
Mr. Hiroshi Kawanabe has been responsible for the management of the Company and compliance in chargeof the Human Resources & General Affairs Management Unit and the Mold & Tooling Technology Centerby making good use of the experience and knowledge he has accumulated throughout his career since 2014
when he took office as a director of Tamron Co., Ltd.
In addition, Mr. Kawanabe has properly supervised decisions on important business execution anddirectors’ execution of duties as a member of the board of directors. Mr. Hiroshi Kawanabe is nominated asa director again because he is considered to be pivotal for achieving a continual increase of corporate value
in the future.

No.

Name
(Date of birth)

Brief career history, position and responsibility at Tamron Co., Ltd.
(State of concurrent holding of important positions)
April 1978
January 2012
April 2012

Koji Masunari(November 26, 1955)

April 2014
March 2015
March 2016

5

Joined Tamron Co., Ltd.
General Manager, Industrial Optics Business Unit,
Tamron Co., Ltd.
Executive Officer, General Manager, Industrial
Optics Business Unit, Tamron Co., Ltd.
Senior Executive Officer, General Manager,
Industrial Optics Business Unit, Tamron Co., Ltd.
Director, Tamron Co., Ltd.
Managing Director, Tamron Co., Ltd.
(current post)

Number of theCompany’s
shares held

2,400 shares[Reason for nomination as director]
Mr. Koji Masunari has been responsible for the management of the Company in charge of the Imaging
Products Business Unit by making good use of the experience and knowledge he has accumulated
throughout his career since 2015 when he took office as a director of Tamron Co., Ltd.
In addition, Mr. Masunari has properly supervised decisions on important business execution and directors’
execution of duties as a member of the board of directors. Mr. Koji Masunari is nominated as a director
again because he is considered to be pivotal for achieving a continual increase of corporate value in the
future.

Yasuki Kitazume(June 25, 1957)

6

November 2003 Joined Tamron Co., Ltd.
January 2005
General Manager, Accounting & Financial
Management Unit, Tamron Co., Ltd.
January 2007
Executive Officer, General Manager, Accounting& Financial Management Unit, Tamron Co., Ltd.
April 2010
Senior Executive Officer, General Manager,
Accounting & Financial Management Unit,
Tamron Co., Ltd.
March 2016
Director, Tamron Co., Ltd.
(current post)

2,500 shares[Reason for nomination as director]
Mr. Yasuki Kitazume has been responsible for the management of the Company and internal control incharge of the Accounting & Financial Management Unit by making good use of the experience andknowledge he has accumulated throughout his career since 2016 when he took office as a director of
Tamron Co., Ltd.
In addition, Mr. Kitazume has properly supervised decisions on important business execution and directors’
execution of duties as a member of the board of directors. Mr. Yasuki Kitazume is nominated as a director
again because he is considered to be pivotal for achieving a continual increase of corporate value in the
future.

No.

Name(Date of birth)

Brief career history, position and responsibility at Tamron Co., Ltd.
(State of concurrent holding of important positions)
June 2006
July 2007

Hiroshi Otsuka(November 11, 1959)

7

Joined Tamron Co., Ltd.
General Manager, IP Management Board, TamronCo., Ltd.
January 2010 General Manager, Technology Development
Strategic Planning Board, General Manager, Legal &IP Management Board, Tamron Co., Ltd.
April 2010
Executive Officer, General Manager, Technology
Development Strategic Planning Board, General
Manager, Legal & IP Management Board, TamronCo., Ltd.
January 2015 Executive Officer, General Manager, Corporate
Business Planning & Administration Board, TamronCo., Ltd.
April 2015
Senior Executive Officer, General Manager,
Corporate Business Planning & Administration
Board, Tamron Co., Ltd.
March 2016
Director, Tamron Co., Ltd.
(current post)

Number of theCompany’s
shares held

5,700 shares[Reason for nomination as director]
Mr. Hiroshi Otsuka has been responsible for the management of the Company and IR in charge of the New
Business Development Group, Corporate Business Planning & Administration Board and Legal & IP
Management Board by making good use of the experience and knowledge he has accumulated throughout
his career since 2016 when he took office as a director of Tamron Co., Ltd.
In addition, Mr. Otsuka has properly supervised decisions on important business execution and directors’
execution of duties as a member of the board of directors. Mr. Hiroshi Otsuka is nominated as a director
again because he is considered to be pivotal for achieving a continual increase of corporate value in the
future.
January 1997
January 2006
April 2010
Shenghai Zhang(January 7, 1960)

8

April 2014

March 2016

Joined Tamron Co., Ltd.
Managing Director, TAMRON OPTICAL(FOSHAN) CO., LTD.
Executive Officer, Tamron Co., Ltd., Managing
Director, TAMRON OPTICAL (FOSHAN) CO.,LTD.
Senior Executive Officer, Tamron Co., Ltd.,Managing Director, TAMRON OPTICAL(FOSHAN) CO., LTD.
Director, Tamron Co., Ltd.
(current post)

4,000 shares[Reason for nomination as director]
Mr. Shenghai Zhang has been responsible for the management of the Company and overseas production bymaking good use of the experience and knowledge he has accumulated throughout his career since 2016
when he took office as a director of Tamron Co., Ltd.
In addition, Mr. Zhang has properly supervised decisions on important business execution and directors’
execution of duties as a member of the board of directors. Mr. Shenghai Zhang is nominated as a director
again because he is considered to be pivotal for achieving a continual increase of corporate value in the
future.

No.

Name(Date of birth)

Brief career history, position and responsibility at Tamron Co., Ltd.
(State of concurrent holding of important positions)
April 1984
April 2010
April 2012

Makoto Otani(January 17, 1962)

March 2015
April 2016*
9

Joined Tamron Co., Ltd.
General Manager, OEM Component Business Unit,
Tamron Co., Ltd.
Executive Officer, General Manager, OEM
Component Business Unit, Tamron Co., Ltd.
Executive Officer, General Manager, Industrial
Optics Business Unit, Tamron Co., Ltd.
Senior Executive Officer, General Manager Industrial
Optics Business Unit, Tamron Co., Ltd.
(current post)

200 shares[Reason for nomination as director]
Mr. Makoto Otani contributed to the development of the business while serving as the General Manager ofBusiness Unit after taking charge of controlling production engineering for compact digital camera lenses
and interchangeable lenses for single lens reflex cameras in the OEM field.
From 2015, Mr. Otani also contributed to the development of the business of the Industrial Optics Business
Unit dealing in lenses for CCTV cameras as the General Manager. He has comprehensive knowledge of awide range of the Company’s business operations.
Meanwhile, Mr. Otani properly executed the business as Executive Officer from 2012.
Mr. Makoto Otani is nominated as a director because he is considered to be pivotal for achieving acontinual increase of corporate value in the future, given his abilities to properly supervise decisions onimportant business execution and directors’ execution of duties as a member of the board of directors aswell as to properly execute the business.
December 2000 Joined Tamron Co., Ltd.
April 2011
General Manager, Product Development
Management & Administration Unit, Tamron Co.,Ltd.
April 2012
Executive Officer, General Manager, ProductDevelopment Management & Administration Unit,
Tomohide Okayasu
Tamron Co., Ltd.
(January 30, 1975)
January 2014 Executive Officer, General Manager, Imaging
Products Business Unit, Tamron Co., Ltd.
April 2016
Senior Executive Officer, Tamron Co., Ltd.
April 2017
Senior Executive Officer, Tamron Co., Ltd. Vice
Chairman, TAMRON USA, INC.
(current post)*
10

Number of theCompany’s
shares held

100 shares[Reason for nomination as director]
Mr. Tomohide Okayasu contributed to the reduction of costs and the period of the procurement of parts andcomponents on a company-wide basis as General Manager, Product Development Management &Administration Unit with the experience of OEM sales of compact digital cameras and single lens reflex
cameras.
Mr. Okayasu engaged in the business of the Imaging Products Business Unit dealing in interchangeable
lenses of the Company’s own brands as General Manager from 2014. In 2017, Mr. Okayasu served as Vice
Chairman of TAMRON USA, INC., the Company’s sales subsidiary. He has global perspectives andmanagement experience.
Meanwhile, Mr. Okayasu properly executed the business as Executive Officer from 2012.
Mr. Tomohide Okayasu is nominated as a director because he is considered to be pivotal for achieving acontinual increase of corporate value in the future, given his abilities to properly supervise decisions onimportant business execution and directors’ execution of duties as a member of the board of directors aswell as to properly execute the business

No.

Name
(Date of birth)

Brief career history, position and responsibility at Tamron Co., Ltd.
(State of concurrent holding of important positions)
April 1978

Yuichi Sato
(January 2, 1950)

Joined Tokyo Shibaura Electric Co., Ltd. (nowToshiba Corporation)
January 1980 Assistant, School of Engineering, Tokyo Institute ofTechnology
April 1983
Assistant Professor, Faculty of Engineering, Saitama
University
April 1994
Professor, Faculty of Engineering, Saitama University

Number of theCompany’s
shares held

April 2010
April 2013
April 2014*11

- shares

Dean, Faculty of Engineering, Saitama University
Dean, Graduate School of Science and Engineering,
Saitama University
Executive Director, Vice President, Saitama
University National University Corporation(current post)[Reasons for nomination as outside director]
Mr. Yuichi Sato is nominated as an outside director because he is expected to make good use of theexperience and expertise he has accumulated through his career as a university professor, executive director
and vice president of Saitama University National University Corporation (current post) for the managementof the Company.
In particular, Mr. Sato is expected to provide advice on technologies in relation to technological innovationthat is essential for the Company’s sustainable growth and contribute to collaboration between industry andacademia, specifically universities and colleges, among other projects and initiatives.
We judge and expect that Mr. Sato should be able to properly perform the duties of outside director for thereasons described above, although he has never engaged in management other than the administration of thenational university corporation.

Harumi Katagiri(December 29, 1968)*
12

November 1993 Joined Asahi & Co. (now KPMG AZSA LLC)
April 1998
Registered as a certified public accountant in Japan
March 2000
Joined Century Audit Corporation (now Ernst &Young ShinNihon LLC)
July 2009
Member of Ernst & Young ShinNihon LLC
July 2017
Opened the Harumi Katagiri certified public
accountants’ office(current post)- shares[Reasons for nomination as outside director]
Ms. Harumi Katagiri is nominated as an outside director because she is expected to make good use of theexpertise and knowledge she has accumulated through her career as a certified public accountant for the
management of the Company. Ms. Katagiri, as the Company’s first female director, is expected to contributeto diversity management, such as the active roles of female employees that the Company will increase
further, from the perspective of women as well as experts.
We judge and expect that Ms. Katagiri should be able to properly perform the duties of outside director forthe reasons described above, although she has never engaged in corporate management other than theadministration of the certified public accountants’ office.

(Notes)1. The * mark shows the candidates for directors to be newly appointed.
2. None of the candidates for directors have any special interest in the Company.
3. The responsibilities of the incumbent directors are as set forth in the document provided (page 13).
4. Mr. Yuichi Sato and Ms. Harumi Katagiri are candidates for outside directors.
5. Upon the approval of the appointment of Mr. Yuichi Sato and Ms. Harumi Katagiri as outside directors, the Company will executean agreement for the limitation of liability as set forth in Paragraph 1, Article 423 of the Companies Act with Mr. Sato and Ms.
Katagiri respectively according to the provisions of Paragraph 1, Article 427 of the Companies Act. In addition, the amount of thelimitation of liability under the said agreement shall be the amount of the minimum liability as set forth in Paragraph 1, Article
425 of the Companies Act.
6. As Mr. Yuichi Sato and Ms. Harumi Katagiri meet the requirements for independent directors under the Company’s standards forthe judgment of independence and the rules of Tokyo Stock Exchange, Inc., upon the approval of the appointment of Mr. Sato and
Ms. Katagiri as outside directors, they will be appointed as independent directors.

－

10 －

Proposal 3: Amount and conditions of performance-linked stock compensation for directors and revision toamount of pecuniary compensation
1. Reasons for the proposal and reasons for the judgment of the appropriateness of the said compensation and revision
to the amount of pecuniary compensation
Compensation for directors consists of the base pay and the bonus. With regard to the base pay, a certain monthly
compensation for full-time directors should be compensation for the acquisition of treasury stock in order for it tohave the nature of long-term performance-based compensation, and the compensation should be appropriated fortreasury stock purchase through the directors’ shareholding society.
The aim of this proposal is to request approval of the following: abolition of the compensation and bonus for the
purpose of the acquisition of treasury stock upon a review of the compensation system for directors and theintroduction of performance-linked cash compensation in accordance with the performance for a single fiscal year
and the system for performance-linked stock compensation under which the shares of the Company will be
additionally issued to directors of the Company (other than outside directors) according to position and performance,
among other conditions (hereinafter referred to as the “System”). We also request approval of the authority of theboard of directors to decide on the specifics of the System within the limit described in 2. below.
As a result, the compensation for directors will consist of the base pay, fixed compensation and short-term incentive
compensation, which is performance-linked cash compensation in accordance with the performance for a single year,
and medium- and long-term incentive compensation, which is performance-linked stock compensation via the System.
The purpose of the System is to increase awareness of contributing to the improvement of medium- to long-term
performance and the further increase of corporate value through the directors’ sharing of the interests and risk arisingfrom fluctuations in the stock price together with the shareholders, as well as more definite linkage between
compensation for directors and the Company’s stock value. We consider that the System is appropriate.
In addition, the aim of this proposal is to request approval of the following: change of the amount of compensation
for directors from no more than 700 million yen for a year (excluding salary for employees), which was approved at
the 64th Ordinary General Meeting of Shareholders held on March 30, 2011, to no more than 550 million yen for ayear (including no more than 30 million yen for outside directors) upon the introduction of the System (suchcompensation shall be hereinafter referred to as the “Pecuniary Compensation”) and the additional payment of the
new performance-linked stock compensation to directors (other than outside directors) who are in office for three
years from the day immediately following the day when this general meeting of shareholders is held to the day when
the ordinary general meeting of shareholders held in March 2021 is concluded (hereinafter referred to as the“Payment Period”). The amount of compensation for directors will not include the salary for employees, as before.
The compensation limit, including the Pecuniary Compensation and the stock compensation under the System, willbe the same as the current compensation limit.
Upon the approval of Proposal 2, “Appointment of twelve (12) directors” as originally proposed, the Pecuniary
Compensation will be paid to twelve (12) directors (including two (2) outside directors), and ten (10) directors will be
eligible for the System (for information purposes, there are currently fifteen (15) directors (including two (2) outside
directors)).
2. Amount and conditions of compensation under the System(1) Overview of the structure of the System
The System is performance-linked stock compensation with the issue of the Company’s shares to the respective
directors (other than outside directors; the same shall apply hereinafter) through the trust that the Company
establishes by contributing funds (hereinafter referred to as the “Trust”), which acquires the shares of the Company.
The number of shares of the Company is equivalent to the points that the Company awards to the respective directors.
The timing for the issue of the Company’s shares to the directors is generally the time when the directors retire.

－

11 －

(i)

Directors eligible for the System

Directors of the Company (other thanoutside directors)(ii)

Initial trust period

About 3 years(iii)

Upper limit of funds that the Company contributes as thefunds to acquire the shares of the Company for the initial
trust period described in (ii)

450 million yen in total(iv)

Method of acquisition of the shares of the Company

Through the exchange market (including
off-floor trading) or by undertaking thedisposal of treasury stock(v)

Upper limit of the total points awarded to the directors
described in (i)240,000 points for the trust period(vi)Standards for awarding points

Awarding of points according to positionand performance, among other conditions(vii)

Timing for the issue of the Company’s shares to thedirectors described in (i)When the directors retire, in principle(2) Upper limit of funds contributed by the Company
The initial trust period of the Trust is about three (3) years from May 2018 (scheduled) to May 2021 (scheduled).
The Company establishes the Trust by contributing the funds necessary for the acquisition of the Company’s sharesthat are necessary for the issue thereof to the directors in office for the Payment Period under the System up to thetotal amount of 450 million yen as compensation for those directors during the said trust period with the directors
who meet certain requirements as beneficiaries. The Trust will acquire the shares of the Company with the funds that
the Company places in trust through the exchange market (including off-floor trading) or by undertaking the disposalof treasury stock.
Note: In addition to the abovementioned funds for acquiring the Company’s stock, the money the Company actuallyholds in the Trust includes the expected necessary costs such as trust remuneration, administrator
remuneration, etc.
Upon the expiration of the trust period (when the trust period is extended and the System continues according to thefollowing procedure, upon the expiration of the trust period after extension), the trust period may be extended every
three years by resolution of the board of directors of the Company at all such times (including where the trust period
can be extended by transferring the trust assets of the Trust to a trust with the same purpose as the Trust establishedby the Company; hereinafter the same shall apply), and the System may continue.
When the trust period is extended, the Company shall additionally hold in trust money with an upper limit of 450
million yen every time the trust period is extended as additional funds for acquiring the Company’s stock that needs
to be delivered to the directors. In this case, the Payment Period shall be extended in accordance with the continuanceof the System and the extension of the trust period. The points awarded in (3)(i) below and the issuance of theCompany’s stock in (3)(iii) below shall continue in the extended trust period.
In addition, if the awarding of points is not continued as described above, the trust period of the Trust may be
extended until the completion of the issue of the shares of the Company to the directors awarded the points who do
not retire upon the expiry of the trust period when the said directors retire.

－

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(3) Method of calculation of number of shares of the Company to be issued to directors and upper limit thereof(i) Method of awarding points to directors and upper limit thereof
The Company shall award points (*) in accordance with position and performance to individual directors on a pointawarding day stipulated in the stock issuance provisions during the trust period based on the stock issuanceprovisions determined by the board of directors of the Company, provided that the upper limit of the total number ofpoints awarded to directors is 240,000 points during the trust period.
*: Points in accordance with performance are set based on the level of the achievement of the performance targets ineach fiscal year and mid-term management plan during the applicable period.
(ii) Issue of shares of the Company according to number of points awarded
Directors shall be provided with the Company’s stock based on the number of points awarded stated in (i) above
according to the procedure described in (iii) below.
One point equals one share of the Company’s stock. When an event that is considered to be reasonable for adjusting
the number of the Company shares to be issued including stock split/reverse stock split occurs, a reasonableadjustment shall be made in accordance with the split ratio/reverse split ratio.
(iii) Issuing of shares of the Company to individual directors
The Trust will issue the shares of the Company to the respective directors as described in (ii) above when therespective directors follow the designated procedures for the identification of the beneficiary upon their retirement.
However, in order for the Company to collect funds for the payment of taxes including withholding income tax, acertain ratio of the Company’s stock shall be sold and converted into money within the Trust, and then the money
shall be delivered instead of the Company’s stock.
Moreover, when the Company’s stock within the Trust is converted into money such as settlement by a tender offer,money may be delivered instead of the Company’s stock.
(4) Exercise of voting rights
The voting rights of the Company’s stock within the Trust shall not be exercised uniformly based on the instructionsof a trust administrator who is independent from the Company and the Company directors. Regarding the exercise of
voting rights of the Company’s stock within the Trust, this method will allow the Company to ensure the neutrality ofthe management of the Company.
(5) Handling of dividends
Dividends related to the Company’s stock within the Trust shall be received by the Trust, and they shall beappropriated for the acquisition price of the Company’s stock or trust compensation for a beneficiary related to theTrust.
[Reference]
For a summary of the System, please refer to the Notice Regarding Introduction of Performance-Linked Stock
Compensation System dated February 13, 2018.
End.

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