June 10, 2020

Company name:

MCJ Co., Ltd.

Representative:

Yuji Takashima, Chairman & CEO

Stock code:

6670 TSE Second Section

Inquiries:

PR & IR Supervisor,
Management Planning Office
ir-otoiawase@mcj.jp

Supplementary Explanation Regarding a Proposal to Be Presented at the 22nd Annual
General Meeting of Shareholders
Institutional Shareholder Services, Inc. (hereinafter referred to as “ISS”) has issued a recommendation toshareholders to vote against Proposal 3: “Introduction of a Performance-linked Stock Remuneration Plan forDirectors,” to be presented at the Company’s 22nd Annual General Meeting of Shareholders (hereinafter“this General Meeting”).
MCJ Co., Ltd. (hereinafter “the Company”) would like to take this opportunity to present its view regarding
this recommendation by ISS.
All shareholders are requested to confirm the supplementary explanation below, and give their fullconsideration to the proposal in question.
1. Details of the negative recommendation by ISS
ISS has recommended to vote against Proposal 3: “Introduction of a Performance-linked StockRemuneration Plan for Directors,” to be presented at this General Meeting. The reasons given for thisrecommendation are the absence of a clear indication of specific performance hurdles for the grant ofperformance-linked remuneration, and the fact that shares will be transferred to eligible officers (excludingofficers intending to retire) in less than three years after this General Meeting, even in the absence of any
disclosure regarding specific performance hurdles.
2. The opinion of the Company
Because this General Meeting will be held in the second fiscal year of the current Mid-term ManagementPlan, the “initial” period of the stock remuneration plan will be the remaining two fiscal years, comprising
the fiscal year ending on March 31, 2021, and the fiscal year ending on March 31, 2022. Thus, as ISS
points out, shares will be transferred in less than three years. However, for periods commencing after theinitial plan period has elapsed, each plan period will be three fiscal years, and the transfer of shares will
also occur at three year intervals, in accordance with the original purpose of linking stock remuneration tomedium to long term results; in other words, to the results and term of each Mid-term Management Plan.
Only the initial plan period has been set at two fiscal years, to coincide with the remaining term of thecurrent Mid-term Management Plan. This is because the consolidated operating profit growth ratio andconsolidated ROE targeted in the Mid-term Management Plan are used to calculate the results evaluation
coefficient, as described below.
Under the Performance-linked Stock Remuneration Plan, shares of the Company will be granted
according to factors such as growth in corporate value and shareholder value during the initial plan period

and each subsequent plan period. The evaluation indices, mechanisms, and methods used to calculate thenumber of shares of the Company to be granted are shown below. Details of the Company’s approach toallocating points for each rank, and the specific calculation method to be used for each index, will beprovided in the Company’s annual securities report, to be disclosed after the conclusion of this General
Meeting.
• The number of shares to be granted will be calculated by multiplying a standard number of points
based on rank, by the results evaluation coefficient.
• The results evaluation coefficient will be calculated from three evaluation indices: the consolidated
operating profit growth ratio, consolidated ROE, and TSR (total shareholder return) against theTOPIX.
In this way, the proposal is aimed at increasing eligible officers’ awareness of enhancing performancein the medium to long term and contributing to growing corporate value, by clarifying the link between
eligible officers’ remuneration and the Company’s performance and share price, and allowing them toshare with all shareholders in both the merits of increases in share price, and the risks of share price declines.
The Company considers the intention and details of the proposal are appropriate in view of this aim, andrequests shareholders’ understanding in this matter.