Note: This document has been partially translated into English from the original Japanese text for reference purpose only. In
the event of any discrepancy between this document and the original Japanese text, the original Japanese text shallprevail. The Company assumes no responsibility for the accuracy of this translation.

Pigeon Corporation
Notice of the 62nd Ordinary
General Meeting of Shareholders

April 3, 2019
Dear Shareholders,
Pigeon Corporation (the “Company”) cordially invites you to attend the 62nd Ordinary General Meetingof Shareholders of Pigeon Corporation (the “Meeting”). The details of the Meeting are provided below.
If you are unable to attend in person, you may exercise your voting rights in writing or electronically (via
the Internet, etc.). After reviewing the Reference Documents for the General Meeting of Shareholders
provided herewith, please exercise your voting rights through either of the methods described in page 3
by 5:15 p.m., Wednesday, April 24, 2019 (JST).
Sincerely yours,
Shigeru Yamashita
President and COO
Pigeon Corporation
4-4, Nihonbashi-Hisamatsu-cho,
Chuo-ku, Tokyo–1–

Meeting Information
1.

Date and Time:Thursday, April 25, 2019, at 10:00 a.m. (JST)2.

Place:
Royal Park Hotel, 3F, Royal Hall
1-1, Nihonbashi-Kakigara-cho 2-chome, Chuo-ku, Tokyo

3.

Purpose of the Meeting
Matters to Be Reported:a. Business Report and Consolidated Financial Statements for the 62nd Fiscal Year (fromFebruary 1, 2018 to January 31, 2019), as well as the audit reports on the Consolidated
Financial Statements by the Accounting Auditor and the Audit & Supervisory Board
b. Non-Consolidated Financial Statements for the 62nd Fiscal Year (from February 1, 2018 toJanuary 31, 2019)
Matters to Be Resolved:
Proposal 1: Appropriation of Surplus
Proposal 2: Partial Amendments to Articles of Incorporation
Proposal 3: Election of Four (4) Audit & Supervisory Board Members
Proposal 4: Election of One (1) Substitute Audit & Supervisory Board Member
Proposal 5: Payment of Retirement Benefits to Retiring Director
Proposal 6: Final Payment Associated with Abolishment of the Retirement Benefits System
for Directors
Proposal 7: Revision of the Amount of Remuneration for Directors
Proposal 8: Determination of the Amount and Details of the Performance-linked StockRemuneration, etc. for Directors

4.

Exercise of Voting Rights
Please be informed that if voting rights are exercised both in writing and by the Internet, etc., thecontents of the votes by the Internet, etc. shall be deemed valid.
If voting rights are exercised multiple times via the Internet, etc., the final vote cast will beconsidered effective. (However, this is restricted to the votes cast before the deadline for the exercise of
voting rights.)

Notes:* You are kindly requested to submit the enclosed Voting Form to the receptionist when you attend the Meeting.
* If any changes have been made to items in the Reference Documents for the General Meeting of Shareholders, Business
Report, Consolidated Financial Statements, or Non-Consolidated Financial Statements, such changes will be posted on the
Company’s website (https://www.pigeon.co.jp/).
* Pursuant to the provisions of laws and regulations and the Company’s Articles of Incorporation, the following items areposted on the Company’s website (https://www.pigeon.co.jp/) and not contained in the documents provided with this notice;
however, those items were audited by the Audit & Supervisory Board Members and the Accounting Auditor in preparing theaudit reports in the same manner as the documents provided with this notice.
(1)(2)

Notes to consolidated financial statements
Notes to non-consolidated financial statements–2–

Guidance for Methods of Exercise of Voting Rights

In case you are attending the Meeting
Please submit the enclosed Voting Form to reception at the meeting venue.

Date and time:Thursday, April 25, 2019, at 10:00 a.m. (JST)(Reception starts at 9:00 a.m.)

Place:

Royal Park Hotel, 3F, Royal Hall

In case you are unable to attend the Meeting
Exercise of voting rights in writing
Please indicate your approval or disapproval for each of the proposals on the enclosed Voting Form and return it to
us by mail.
If you do not indicate your approval or disapproval for a proposal, you will be assumed to have approved the
proposal.

Exercise deadline: No later than 5:15 p.m. on Wednesday, April 24, 2019 (JST)Exercise of voting rights via the Internet, etc.
Please access https://evote.tr.mufg.jp/, log in using the Login ID and Temporary Password indicated on theenclosed Voting Form and indicate your approval or disapproval by following the instructions on the screen.
* For details, please contact the Help Desk provided below.

Exercise deadline: No later than 5:15 p.m. on Wednesday, April 24, 2019 (JST)* Please note that votes cannot be accepted from 2:00 a.m. to 5:00 a.m.

Inquiries related to systems, etc.
Mitsubishi UFJ Trust and Banking Corporation

Stock Transfer Agency Division (Help Desk)
Phone:

0120-173-027 (toll-free, within Japan)

Hours:

9:00 a.m. to 9:00 p.m.

–3–

Reference Documents for the General Meeting of Shareholders
Proposal 1:

Appropriation of Surplus

The Company hereby makes the following proposal on the appropriation of surplus:
Year-end dividends
The Company views the return of profits to shareholders as an important management priority. Our basic
policy is to proactively return profits to shareholders through distribution of dividends from surplus andother means, while reinforcing our financial position by taking into consideration the medium-termchanges in business conditions and the Pigeon Group’s business strategies. Pursuant to our Sixth
Medium-Term Business Plan (from the year ended January 31, 2018 through the year ending January 31,2020), we have listed “year-on-year increases in cash dividends in each fiscal period” and “a total
shareholder return ratio of 55% on a consolidated basis” as our goals.
Based on the above policy, we propose the appropriation of surplus for the current fiscal year as
described below.
1.

Type of dividend property:
Cash

2.

Dividend property allotment and total amount thereof
Dividend per common share of the Company:
Total amount of dividends:

3.

¥34¥4,071,866,588

Effective date of distribution of dividends from surplus:
April 26, 2019

<Reference>
Record date

Interim dividend

Dividend per share
Year-end dividend

Annual dividend

January 31, 2018¥31.00¥35.00¥66.00January 31, 2019¥34.00¥34.00¥68.00* The annual dividend per share for the year ended January 31, 2019 is ¥68, an increase of ¥2 comparedto the previous year.

–4–

Proposal 2:

Partial Amendments to Articles of Incorporation

1. Reasons for the Proposal(1) The Company’s fiscal year has heretofore been from February 1 of each year to January 31 of thefollowing year. However, by making the Company’s accounting period consistent with its
overseas consolidated subsidiaries, the Company seeks to promote global business management
and enhance the transparency of management information. In order to respond to unification of theaccounting periods of consolidated companies, as stipulated in the International Financial
Reporting Standards (IFRS), of which the Company is considering for future application, theCompany proposes to change its fiscal year to the period from January 1 to December 31 of eachyear, and to make necessary amendments to Articles 12 (Convocation), 13 (Record Date for
Ordinary General Meeting of Shareholders), 36 (Fiscal Year), 37 (Record Date for Distribution of
Dividends from Surplus), and 38 (Interim Dividends) of the current Articles of Incorporation. In
addition, in conjunction with this change, as the 63rd fiscal year will be the 11-month period fromFebruary 1, 2019 to December 31, 2019, Articles 1 to 3 of the Supplementary Provisions will bealso established as a transitional measure.
(2)

As the “Act Partially Amending the Companies Act” (Act No. 90 of 2014) came into effect on
May 1, 2015, the Company proposes to make necessary amendments to paragraph 3 of Article 30(Term of Office of Audit & Supervisory Board Members) of the current Articles of Incorporation.

2. Details of Amendments
Details of the amendments are stated below.

Current Articles of Incorporation
CHAPTER 3. GENERAL MEETING OF
SHAREHOLDERS
Article 12. (Convocation)
An Ordinary General Meeting of Shareholders of
the Company shall be convened in April of eachyear, and an Extraordinary General Meeting of
Shareholders shall be convened from time to time,
whenever necessary.

(Amendments underlined)
Proposed Amendments
CHAPTER 3. GENERAL MEETING OF
SHAREHOLDERS
Article 12. (Convocation)
An Ordinary General Meeting of Shareholders of
the Company shall be convened in March of eachyear, and an Extraordinary General Meeting of
Shareholders shall be convened from time to time,
whenever necessary.

Article 13. (Record Date for Ordinary General
Meeting of Shareholders)
The record date for voting rights for Ordinary
General Meeting of Shareholders of the Company
shall be January 31 of each year.

Article 13. (Record Date for Ordinary General
Meeting of Shareholders)
The record date for voting rights for Ordinary
General Meeting of Shareholders of the Company
shall be December 31 of each year.

CHAPTER 5. AUDIT & SUPERVISORY
BOARD MEMBERS AND AUDIT &SUPERVISORY BOARD
Article 30. (Term of Office of Audit &Supervisory Board Members)
1. and 2. (Omitted)

CHAPTER 5. AUDIT & SUPERVISORY
BOARD MEMBERS AND AUDIT &SUPERVISORY BOARD
Article 30. (Term of Office of Audit &Supervisory Board Members)
1. and 2. (No change)–5–Current Articles of Incorporation
3. A resolution for the election of any substitute
Audit & Supervisory Board Member, electedpursuant to Paragraph 2, Article 329 of theCompanies Act, shall be effective until thecommencement of the Ordinary General
Meeting of Shareholders to be held for the last
fiscal year ending within four (4) years after theelection of the substitute Audit & Supervisor
Board Member.
4. (Omitted)

Proposed Amendments
3. A resolution for the election of any substitute
Audit & Supervisory Board Member, electedpursuant to Paragraph 3, Article 329 of theCompanies Act, shall be effective until thecommencement of the Ordinary General
Meeting of Shareholders to be held for the last
fiscal year ending within four (4) years after theelection of the substitute Audit & Supervisor
Board Member.
4. (No change)

CHAPTER 6. ACCOUNTS
Article 36. (Fiscal Year)The fiscal year of the Company shall be the one (1)year period from February 1 of each year to
January 31 of the following year.

CHAPTER 6. ACCOUNTS
Article 36. (Fiscal Year)The fiscal year of the Company shall be the one (1)year period from January 1 to December 31 ofeach year.

Article 37. (Record Date for Distribution of
Dividends from Surplus)
The record date for the distribution of year-end
dividends of the Company shall be January 31 ofeach year.

Article 37. (Record Date for Distribution of
Dividends from Surplus)
The record date for the distribution of year-end
dividends of the Company shall be December 31
of each year.

Article 38. (Interim Dividends)
The Company may distribute interim dividends
with a record date of July 31 of each year, by aresolution of the Board of Directors.

Article 38. (Interim Dividends)
The Company may distribute interim dividends
with a record date of June 30 of each year, by aresolution of the Board of Directors.

(Newly established)

Supplementary Provisions(Newly established)

Article 1.
Notwithstanding the provision of Article 36.
(Fiscal Year), the 63rd fiscal year shall be for 11
months from February 1, 2019 to December 31,
2019.

(Newly established)

Article 2.
Notwithstanding the provision of Article 38.
(Interim Dividends), in the event that the Company
distributes interim dividends in the 63rd fiscal
year, the record date shall be July 31, 2019.

(Newly established)

Article 3.
The preceding two articles, as well as this article
shall be deleted from the Articles of Incorporation
at the conclusion of the 63rd fiscal year.

–6–

Proposal 3: Election of Four (4) Audit & Supervisory Board Members
The terms of office of all four (4) existing Audit & Supervisory Board Members will expire as of theconclusion of the Meeting. Accordingly, the Company hereby proposes the election of four (4) Audit &Supervisory Board Members.
With respect to this proposal, the Company has obtained the consent of the Audit & Supervisory Board.
The candidates for Audit & Supervisory Board Members are as follows:
No.

Name
(Date of Birth)

Reappointment
1

Kazuhisa Amari(November 11,
1959)

Career Summary, Position and Responsibility in the Company
March

1983

Joined the Company

January

2004

General Manager of Product Strategy Dept.,
Marketing Div.

January

2006

Managing Officer and Division Manager of Research& Development Div.

April

2009

Director, Division Manager of Research &Development Div. and Supervision of Logistics Div.

January2010

Director and Supervision of Research &Development Div. and Customer Service Center

April

2012

Director, Junior Managing Executive Officer andSupervision of Research & Development Div. andCustomer Service Center

January2013

Director, Junior Managing Executive Officer,
Division Manager of Logistics Div. and Supervisionof Research & Development Div., Quality Control
Div. and Customer Service Center

April

2013

Director, Junior Managing Executive Officer,
Division Manager of Logistics Div. and Supervisionof Quality Control Div. and Customer Service Center

January

2015

Director, Junior Managing Executive Officer andDivision Manager of Logistics Div.

January

2016

Director, Junior Managing Executive Officer andSupervision of Logistics Div.

April

2016

Standing Audit & Supervisory Board Member(current position)
Notable Concurrent Positions
None.
Reasons for Nominating Him as a Candidate for Audit &Supervisory Board Member
Since assuming the position of Standing Audit & Supervisory Board
Member in April 2016, the candidate has contributed to revitalizing theBoard of Directors by expressing opinions from diverse perspectives
while capitalizing on many years of extensive management experienceduring his terms as an executive and a Director of the Company. This
enabled the Company to ensure sound management, and he has played arole in enhancing the Company’s corporate governance. In light of theabove, the Company continues to deem that he has adequate talent toperform the role of Audit & Supervisory Board Member.
Note: There is no business relationship between the candidate and the Company.

–7–

Number of theCompany’s
CommonShares Held

44,600No.

Name(Date of Birth)

Career Summary, Position and Responsibility in the Company
April

Reappointment
2

NobuyukiHashimoto(January 30, 1959)

Joined Hirakata KINTETSU Department Store(currently known as KINTETSU Department Store)
November 1984 Joined Gakusei Kikaku Center Co., Ltd.
July
1985 Joined the Company
January 2006 Block Manager of West Japan Block, Domestic
Sales Div.
January 2008 General Manager of West Japan Sales Dept. ofDomestic Baby & Mother Care Business Div.
January 2010 General Manager of East Japan Sales Dept. ofDomestic Baby & Mother Care Business Div.
January 2013 Managing Officer and Deputy Division Manager ofDomestic Baby & Mother Care Business Div.
April
2013 Managing Officer and Division Manager ofDomestic Baby & Mother Care Business Div.
March2017 Senior Managing Officer and Division Manager ofDomestic Baby & Mother Care Business Div.
April
2018 Standing Audit & Supervisory Board Member(current position)
Notable Concurrent Positions
None.

Number of theCompany’s
CommonShares Held1983

Reasons for Nominating Him as a Candidate for Audit &Supervisory Board Member
Since assuming the position of Standing Audit & Supervisory Board
Member in April 2018, the candidate has contributed to revitalizing theBoard of Directors by expressing opinions with a holistic view of theCompany while capitalizing on many years of extensive experienceduring his term as an executive in the Company. This enabled theCompany to ensure management soundness, and he has played a role inenhancing the Company’s corporate governance. In light of the above,
the Company continues to deem that he has adequate talent to performthe role of Audit & Supervisory Board Member.
Note: There is no business relationship between the candidate and the Company.

–8–

4,000

No.

Name
(Date of Birth)

Career Summary
April

1989

Joined The Fuji Bank, Limited (currently known as
Mizuho Bank, Ltd.)

July

1995

Joined Barclays de Zoete Wedd Securities Japan
Limited (currently known as Barclays Securities
Japan Limited)

September 1996

New appointment
OutsideIndependent
3*Candidate for
Independent Auditor
based on provisions of
the Tokyo Stock
Exchange

Koichi Otsu
(May 26, 1966)

Joined GLOBIS CORPORATION

April

1999

Joined Entrepia Japan

July

2003

Established Otsu Koichi Office, Head of Otsu
Koichi Office

April

2004

Reorganized Otsu Koichi Office to Otsu
International, Inc., President of Otsu International,
Inc. (current position)

April

2015

Visiting Professor at Waseda Business School(Graduate School of Business and Finance)

April

2015

Visiting Professor at Tama Graduate School ofManagement and Information Sciences (current
position)

AugustNumber of theCompany’s
CommonShares Held

0

2015

Outside Director and Audit & Supervisory
Committee Member of Sprix, Ltd. (current
position)
Notable Concurrent Positions
President of Otsu International, Inc.
Visiting Professor at Tama Graduate School of Management andInformation Sciences
Outside Director and Audit & Supervisory Committee Member of
Sprix, Ltd.
Reasons for Nominating Him as a Candidate for Outside Audit &Supervisory Board Member
The candidate has professional expertise and deep foresight in therealm of accounting and finance. He is sufficiently experienced inproviding recommendations and proposals regarding management froma broad perspective and teaching corporate finance at a variety ofeducational institutions. The Company considers that he can utilize hishands-on management experience to provide advice and proposals, inaddition to the insights in his areas of expertise. In light of the above,
the Company deems that he is capable of performing duties as an
Outside Audit & Supervisory Board Member.

Notes: 1. There is no business relationship, including donations of any kind, between the candidate, Otsu International, Inc., Tama University,
Sprix, Ltd., and the Company.
2. The candidate is a part-time lecturer at Waseda Business School (Graduate School of Business and Finance), which is not stated in the
Career Summary above because the Company does not consider it a notable concurrent position. The Company has donated the annual
amount of two million yen to the university (for the year ended January 31, 2019). Given that the amount is insignificant, it has beenconcluded that there is no risk of conflict of interest between the candidate and our general shareholders.
3. Mr. Koichi Otsu is a candidate for Outside Audit & Supervisory Board Member. If this proposal is approved, and the candidate takes
office as Outside Audit & Supervisory Board Member, he will be designated as independent director/auditor as specified in Rule 436-2of the Securities Listing Regulations of the Tokyo Stock Exchange (TSE), and the Company plans to notify the TSE to that effect.
4. To appoint appropriate personnel with high independence as Outside Audit & Supervisory Board Member, current Articles ofIncorporation of the Company provide that the Company may enter into a limited liability contract with an Outside Audit & Supervisory
Board Member which limits the Outside Audit & Supervisory Board Member’s liability for damages prescribed in Article 423,
Paragraph 1 of the Companies Act, pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act. Pursuant to suchprovision, if this proposal is approved, and the candidate takes office as Outside Audit & Supervisory Board Member, the Company
plans to enter into the limited liability contract with him. The limit of liability for damages pursuant to the limited liability contract isthe aggregate sum of the amounts prescribed in each item in Article 425, Paragraph 1 of the Companies Act.

–9–

No.

Name
(Date of Birth)

New appointment
OutsideIndependent
4*Candidate who meetsthe independence
criteria for Independent
Auditor stipulated by
the Tokyo Stock
Exchange

Atsuko Taishido(July 3, 1975)

Career Summary
October

2001

Registered as Attorney (Tokyo Bar Association)

October

2001

Joined Mori Sogo (currently known as Mori
Hamada & Matsumoto)January

2010

Partner of Mori Hamada & Matsumoto (current
position)

June

2015

Outside Audit & Supervisory Board Member ofKanda Holdings Co., Ltd. (current position)

June

2018

Outside Audit & Supervisory Board Member of
Jupiter Telecommunications Co., Ltd. (current
position)
Notable Concurrent Positions
Partner of Mori Hamada & Matsumoto
Outside Audit & Supervisory Board Member of Kanda Holdings Co.,Ltd.
Outside Audit & Supervisory Board Member of Jupiter
Telecommunications Co., Ltd.

Number of theCompany’s
CommonShares Held0

Reasons for Nominating Her as a Candidate for Outside Audit &Supervisory Board Member
The candidate has professional expertise as an attorney and high-levelinsight regarding various risks in global corporate management. She
possesses experience particularly in providing professional advice andproposals to the management in the realm of corporate governance andinternal control. Although she has never been involved in corporate
management other than serving as an outside auditor, the Company
considers that she will utilize her experience in solving corporate
management problems of many companies as an attorney to provide
advice and recommendations from a range of viewpoints. In light of
the above, the Company deems that she is capable of performing
duties as an Outside Audit & Supervisory Board Member.

Notes: 1. There is no business relationship between the candidate, Mori Hamada & Matsumoto, Kanda Holdings Co., Ltd., and Jupiter
Telecommunications Co., Ltd., and the Company.
2. Ms. Atsuko Taishido is a candidate for Outside Audit & Supervisory Board Member. The candidate fulfills all of the requirements forindependent director/auditor as specified in Rule 436-2 of the Securities Listing Regulations of the Tokyo Stock Exchange (TSE).
Therefore, it has been concluded that there is no risk of conflict of interests between the candidate and our general shareholders.
However, in accordance with the rules set by Mori Hamada & Matsumoto to which the candidate belongs, the Company will notdesignate or register her as independent director/auditor.
3. To appoint appropriate personnel with high independence as Outside Audit & Supervisory Board Member, current Articles ofIncorporation of the Company provide that the Company may enter into a limited liability contract with an Outside Audit & Supervisory
Board Member which limits the Outside Audit & Supervisory Board Member’s liability for damages prescribed in Article 423,
Paragraph 1 of the Companies Act, pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act. Pursuant to suchprovision, if this proposal is approved, and the candidate takes office as Outside Audit & Supervisory Board Member, the Company
plans to enter into the limited liability contract with her. The limit of liability for damages pursuant to the limited liability contract is theaggregate sum of the amounts prescribed in each item in Article 425, Paragraph 1 of the Companies Act.

– 10 –

Proposal 4:

Election of One (1) Substitute Audit & Supervisory Board Member

The validity of election of Ms. Tokiko Maruno, who was elected as substitute Audit & Supervisory
Board Member at the 58th Ordinary General Meeting of Shareholders held on April 28, 2015, will expire
as of commencement of the Meeting. Accordingly, in order to prepare for a possible situation in which
the number of Audit & Supervisory Board Members falls below the number required by laws andregulations, the Company proposes the election of one (1) substitute Audit & Supervisory Board Member.
With respect to this proposal, the Company has obtained the consent of the Audit & Supervisory Board.
The candidate for substitute Audit & Supervisory Board Member is as follows:
Name(Date of Birth)

OutsideIndependent*Candidate who meetsthe independence
criteria for Independent
Auditor stipulated by
the Tokyo Stock
Exchange

Sachiko Omuro(April 25, 1980)

Career Summary
October

2004 Registered as Attorney (Daini Tokyo Bar Association)

October

2004 Joined Mori Hamada & Matsumoto

Number of theCompany’s
CommonShares Held

January
2018 Partner of Mori Hamada & Matsumoto (current position)
Notable Concurrent Positions
Partner of Mori Hamada & Matsumoto
Reasons for Nominating Her as a Candidate for Substitute Outside Audit& Supervisory Board Member
The candidate has professional expertise and high-level insight as an attorney.
Although she has never been involved in corporate management, the Company
considers that she is capable of providing wide-ranging advice and proposals in
her areas of expertise based on the experience as an attorney in solving
corporate management problems. In light of the above, the Company deems
that she is capable of performing duties as an Outside Audit & Supervisory
Board Member.

0

Notes: 1. There is no business relationship between the candidate, Mori Hamada & Matsumoto, and the Company.
2. Ms. Sachiko Omuro is a candidate for substitute Outside Audit & Supervisory Board Member. The candidate fulfills all of therequirements for independent director/auditor as specified in Rule 436-2 of the Securities Listing Regulations of the Tokyo Stock
Exchange (TSE). Therefore, it has been concluded that there is no risk of conflict of interests between the candidate and our generalshareholders. However, in accordance with the rules set by Mori Hamada & Matsumoto to which the candidate belongs, if thecandidate takes office as Audit & Supervisory Board Member, the Company does not plan to designate or register her as independent
director/auditor.
3. To appoint appropriate personnel with high independence as Outside Audit & Supervisory Board Member, current Articles ofIncorporation of the Company provide that the Company may enter into a limited liability contract with an Outside Audit &Supervisory Board Member which limits the Outside Audit & Supervisory Board Member’s liability for damages prescribed in Article
423, Paragraph 1 of the Companies Act, pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act. In the event thatthe candidate takes office as Audit & Supervisory Board Member, the Company plans to enter into such limited liability contract withher. The limit of liability for damages pursuant to the limited liability contract is the aggregate sum of the amounts prescribed in each
item in Article 425, Paragraph 1 of the Companies Act.

– 11 –

Standards for the Independence ofOutside Directors and Outside Audit & Supervisory Board Members
The Company stipulates the standards for the independence of its Outside Directors and Outside Audit &Supervisory Board Members (“outside officers”) as follows.
1.

Relationships with the Company and its subsidiaries (hereinafter collectively referred to as “PigeonGroup”)
An outside officer shall not be currently acting and shall not have acted in the past ten (10) years as
a director, auditor or employee of Pigeon Group.

2.

Relationships with business partners
An outside officer shall not be currently acting and shall not have acted in the past three (3) years as
either of the following:(1) A major business partner of Pigeon Group (or in cases where the major business partner is a
corporation, a director, auditor or employee thereof)(2) A business partner who has major transactions with Pigeon Group (or in cases where the party
is a corporation, a director, auditor or employee thereof)

3.

Relationships with shareholders
An outside officer shall not currently be or shall not have been in the past three (3) years a major
shareholder of the Company (or in cases where the major shareholder is a corporation, a director,
auditor or employee thereof).

4.

Relationships with advisors and consultants
An outside officer shall not be currently acting and shall not have acted in the past three (3) years as
either of the following:(1) A member, partner or other employee of Pigeon Group’s Independent Auditor or a member,
partner or other employee of a certified public accountant or an audit firm that provides advice
to Pigeon Group on accounting matters(2) A person who does not fall under any of the above, but is a certified public accountant, tax
accountant, attorney or other consultant (or in cases where the person is a corporation,
association or other entity, a member, partner or other employee thereof) and who gains from
Pigeon Group a substantial amount of cash or other assets other than remuneration for Directors
and Audit & Supervisory Board Members

5.

Relationships with donation recipients
An outside officer shall not be currently acting and shall not have acted in the past three (3) years as
director, auditor or employee of a corporation or other entity that receives substantial donations from
Pigeon Group.

6.

Relationships involving close relatives
An outside officer shall not be a close relative of any person mentioned in 1 to 5 above (excluding
immaterial person).

Notes:
1. A “major business partner of Pigeon Group” refers to a business partner with respect to which the PigeonGroup’s business transactions with such business partner in the most recent fiscal year amount to 2% ormore of annual consolidated net sales of Pigeon Group.
2. A “business partner who has major transactions with Pigeon Group” refers to a business partner withrespect to which such business partner’s business transactions with Pigeon Group in the most recent
fiscal year amount to 2% or more of annual consolidated net sales of the business partner.
3. A “major shareholder” refers to a shareholder who holds 10% or more of the voting rights in the
Company (including indirect shareholdings).
4. A “substantial amount of cash” refers to an amount of cash over the past three (3) years averaging ¥10
million or more per year in the case of an individual, or averaging 2% or more of consolidated net sales
or total revenues in the case of an entity.
5. “Substantial donations” refers to average donations over the past three (3) years of ¥10 million or moreannually, or exceeding 2% of an entity’s consolidated net sales or its total revenues, whichever is higher.
6. A “close relative” refers to a spouse or a relative who is within the second degree of kinship.

– 12 –

Proposal 5:

Payment of Retirement Benefits to Retiring Director

The Company hereby proposes the payment of retirement benefits to Mr. Akio Okoshi, who will retire as
Director as of the conclusion of the Meeting, in order to reward him for his service while in office, in
accordance with the Company’s “Rules on Retirement Benefits for Directors.”
Having joined the Company in 1969, Mr. Okoshi has built his career as an executive by serving both inJapan and overseas, and assumed the position of President and COO in 2007. During his term as a
President and COO, he contributed to the enhancement of the Group’s corporate value by proactively
carrying out initiatives in domestic and overseas IR, raising the Company’s presence, and building a basein the stock market, along with other efforts. Furthermore, he also contributed to building the Company’s
future human capital by focusing on the thorough implementation of the “New Human Resources
System,” which he established during his term as an executive manager in the human resources andgeneral affairs department. In addition, during his 12-year term as a Representative Director, he built
growth foundations for overseas businesses through the formulation and implementation of global
marketing strategies and accelerated the expansion of both domestic and overseas businesses, thereby
contributing to the sustained growth of the Company.
Accordingly, in recognition of his achievement, the Company proposes to pay retirement benefits to Mr.
Okoshi, along with an additional special service bonus.
The Company also proposes the decision on the details of payment such as timing and method of
payment be delegated to the Board of Directors.
The specific amount of payment and career summary of the retiring Director are as follows:
Name
Akio Okoshi

Amount(¥ thousand)
170,428

Career Summary
April
April
April
April

2004
2006
2007
2013

Director of the Company
Managing Director
President and COO
Chairman of the Board and CEO (current position)– 13 –

Proposal 6:

Final Payment Associated with Abolishment of the Retirement Benefits System for
Directors

As part of efforts to review its executive remuneration system, at the meeting of the Board of Directors
held on March 11, 2019, the Company resolved to abolish the retirement benefits system for Directors at
the conclusion of the Meeting.
In conjunction with this change, the Company proposes to make the final payment associated withabolishment of the retirement benefits system for Directors to Messrs. Yoichi Nakata, Shigeru Yamashita,
Norimasa Kitazawa, Eiji Akamatsu, Tadashi Itakura, and Yasunori Kurachi, in order to reward them fortheir service during their terms of office until the conclusion of the Meeting, in accordance with theCompany’s “Rules on Retirement Benefits for Directors.”
Mr. Yoichi Nakata led operations as a Representative Director for 30 years, from 1977 to 2007. Heproactively engaged in the formulation of the Corporate Philosophy and Credo, the adoption of the CI(Corporate Identity), the public offering of stock, and the establishment of overseas Group companies,
etc., promoted the Company’s management reforms, and thereby laid the foundation as a global company.
He also devised the “Newborn Baby Commemorative Tree-Planting Campaign,” and built the foundationfor our current CSR activities. Furthermore, he established the Joso Laboratory (now the Central
Laboratory), which is the core of the Group’s basic research and R&D, and established the fundamentalsof the Group’s R&D process.
Since assuming the position of Representative Director in 2013, Mr. Shigeru Yamashita has establishedthe “Pigeon Way,” which is the cornerstone of all the actions of the Group’s employees, by newly adding
its Mission, Values, Action Principles, and Vision to the Corporate Philosophy and Credo. By personallytaking an active role in promoting the penetration of the “Pigeon Way” within the Group, he hasenhanced the cohesiveness of the entire Pigeon Group. Furthermore, based on the belief that corporate
value consists of both social and economic value, he promoted improvement of management quality, andintroduced unique Pigeon Value Added (PVA) benchmark. Along with the effort to improve PVA, hemade a tremendous contribution to the enhancement of the Group’s corporate value, while at the sametime proactively promoting information disclosure. As a result of these efforts, the Company received the
Excellence Award (2014) and the Grand Prix (2015) of the Corporate Value Improvement Awards
presented by the Tokyo Stock Exchange, as well as the IR Special Award (2015) and the Best IR Award(2018) presented by the Japan Investor Relations Association, and the Porter Prize (2016).
Accordingly, in recognition of their achievements, the Company proposes to pay retirement benefits to
Messrs. Yoichi Nakata and Shigeru Yamashita, along with an additional special service bonus.
The Company also proposes that the payment date be at the retirement of each Director, while themethod of payment and other matters shall be delegated to the Board of Directors.
The specific amounts of the final payments associated with the abolishment of the retirement benefits
system, along with a career summary of each Director, are as follows.

– 14 –Name

Yoichi Nakata

Amount(¥ thousand)

343,451

Shigeru Yamashita

126,598

Norimasa Kitazawa

38,103

Eiji Akamatsu

43,494

Tadashi Itakura

20,845

Yasunori Kurachi

27,276Career Summary
March
May
May
April
April

1969
1977
1983
2000
2007

April
April
April
April
April
April
April
March
April
April
April
April

2009
2011
2012
2013
2012
2013
2014
2016
2011
2012
2013
2014

April
March
April
April

2014
2017
2013
2018

Vice President and Director of the Company
Vice President and Representative Director
President and COO
Chairman and CEO
Executive Advisor and Member of the Board (current
position)
Director of the Company
Managing Director
Director and Managing Executive Officer
President and COO (current position)
Director, Junior Managing Executive Officer of the Company
Director, Managing Executive Officer
Director, Senior Managing Executive Officer
Vice President and Director (current position)
Director of the Company
Director, Junior Managing Executive Officer
Director, Managing Executive Officer
Director, Senior Managing Executive Officer (current
position)
Director, Junior Managing Executive Officer of the Company
Director, Managing Executive Officer (current position)
Director, Junior Managing Executive Officer of the Company
Director, Managing Executive Officer (current position)

Note: The above payment amounts total to ¥599,767 thousand. Regarding remuneration for Outside Directors, a retirement
benefits system has never been established for these Directors. Furthermore, the retirement benefits system for Audit &Supervisory Board Members was abolished at the conclusion of the 56th Ordinary General Meeting of Shareholders held on
April 25, 2013.

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Proposal 7:

Revision of the Remuneration Amount for Directors

The current remuneration amount for Directors was approved at the 52nd Ordinary General Meeting of
Shareholders held on April 28, 2009, at “a maximum of ¥500 million per year (excluding the salary
portion for employees),” and has remained unchanged since that time. However, in order to raise themotivation and morale of Directors towards improving the Company’s performance through appropriate
corporate management, by linking their remuneration more closely to the performance, the Company
proposes, in accordance with the Company’s Executive Remuneration Policy (see page 22 below), torevise the remuneration amount for Directors to “a maximum of ¥800 million per year (including amaximum of ¥100 million for Outside Directors).” Furthermore, the Company proposes to pay Directors(excluding Outside Directors) a bonus linked to performance for each fiscal year, in addition to basic
fixed remuneration within the remuneration amount.
The number of Directors shall be ten (10) (including three (3) Outside Directors). The remuneration
amount for Directors shall not include the employee salary portion for those Directors who serve
concurrently as employees, in a conventional manner.
Furthermore, the Company proposes to introduce a performance-linked stock remuneration system for
Directors (excluding Outside Directors), which is separate from the remuneration amount indicatedabove, in Proposal 8.

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Proposal 8:

Determination of the Amount and Details of the Performance-linked StockRemuneration System, etc. for Directors

1. Reasons for the proposal and reasons for which such remuneration is justified
In accordance with the Company’s Executive Remuneration Policy (see page 22 below), the Company
asks for approval to abolish the retirement benefits system for Directors and to introduce a new
performance-linked stock remuneration system (the “System”), which will deliver shares of theCompany to Directors (excluding Outside Directors; hereinafter the same shall apply) according to theirposition, the achievement level of performance targets, and other factors.
The Company believes that the introduction of the System for Directors is justified, as it aims to further
clarify the link between remuneration for Directors and the Company’s performance as well asshareholder value, and to enhance the awareness of Directors toward contributing to the improvement of
the Company’s medium- to long-term performance and corporate value improvement.
The Company has submitted this proposal for approval, after taking into consideration the results ofdeliberation regarding the introduction of the System by the Remuneration Committee.
This proposal asks for approval to pay stock remuneration to Directors separately from the remuneration
amount for Directors (a maximum of ¥800 million per year (including a maximum of ¥100 million for
Outside Directors); however, this amount does not include the employee salary portion for those
Directors who serve concurrently as employees), which is being proposed in Proposal 7 “Revision of theRemuneration Amount for Directors.”
The number of Directors who are eligible for the System shall be seven (7).
2. Amount and other details of the remuneration, etc. of the System(1) Outline of the System
Under the System, shares of the Company will be acquired through a trust, using the remuneration
amount for Directors contributed by the Company as funds. Then the shares of the Company andmoney equivalent to the converted value of the shares of the Company (the “Company’s Shares,etc.”) will be delivered or paid (the “Grant”) to Directors. The System shall comprise a “FixedPortion,” which delivers shares of the Company according to a Director’s position, and a“Performance-linked Portion,” which delivers shares of the Company according to the achievementlevel of the performance targets (See (2) and further for details, as stated below).
1)

 Directors of the Company (excluding Outside
Directors)

Persons eligible for the Grant of theCompany Shares, etc. under the System

2)

Impact of shares of the Company subject to the System on the total number of issued shares of
the Company
Maximum amount of money to be contributed ¥600 million for three (3) fiscal years
by the Company (as stated in (2) below)
 However, for the initial target period of the
System starting from the current fiscal year,¥200 million for one (1) fiscal year

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Method of acquisition of shares of the Company(as stated in (2) below) and the maximum
number of shares of the Company to be Granted
to Directors (as stated in (3) below)

 As shares of the Company will be acquired
from the stock market, dilution will notoccur.
 The maximum number of points to beprovided to Directors in a single fiscal year
shall be 41,000 points (equivalent to 41,000
shares).
 The ratio of the number of shares equivalent
to the maximum number of points to beprovided to Directors in a single fiscal year to
the total number of issued shares (as ofJanuary 31, 2019; excluding treasury stock)shall be approximately 0.03%.

3)

Details of conditions for performanceachievement (as stated in (3) below)

In principle, varies within a range from 0% to
150%, according to the achievement level of thetargets, including performance indicators in theMedium-Term Business Plan (e.g., CAGR of
consolidated net sales, EPS growth rate, andROE) and non-financial indicators (e.g.,
mitigation of climate change and diversified
employment promotion).

4)

Timing of the Grant of the Company’s
Shares, etc. (as stated in (4) below)

Upon the retirement of Directors(2) Maximum amount of money to be contributed by the Company
The System will cover the three (3) consecutive fiscal years corresponding to the period of theCompany’s Medium-Term Business Plan (the “Target Period”). However, the initial Target Periodof the System, starting from the current fiscal year shall be the single fiscal year of the fiscal year
ending December 31, 2019 (if Proposal 2 “Partial Amendments to Articles of Incorporation” isapproved), which is the remaining period of the current Medium-Term Business Plan (the “Initial
Target Period”). In the event that the trust period is extended, as described in the fourth paragraph ofthis item (2), the Target Period shall be the subsequent consecutive three (3) fiscal years.
The Company shall contribute an amount of money every Target Period, at a maximum of ¥600
million (¥200 million for the Initial Target Period) as remuneration for Directors of the Company. In
addition, it will also establish a trust (the “Trust”) with a trust period of three (3) years (one (1) year
for the Initial Target Period) (including the extension of the trust period, as stated in the fourthparagraph of this item (2); hereinafter the same shall apply), which covers Directors who satisfy thebeneficiary requirements as beneficiaries.
The Trust will acquire shares of the Company from the stock market, using the entrusted amountmoney as funds, in accordance with the instructions of the trust administrators. The Company will
provide points (as described in (3) below) to Directors during the trust period, and the Trust will
Grant the Company’s Shares, etc.
At the expiration of the trust period of the Trust, the Trust may be continued by making amendments
to the trust agreement and additional entrustments, in lieu of establishment of a new Trust. In thiscase, the trust period of the Trust shall be extended by three (3) years, and the Target Period shall be
the three (3) fiscal years following the extension of the trust period. For each extended trust period,
the Company shall make additional contributions within ¥600 million, and shall continue providing
points to Directors during the extended trust period, while the Trust shall continue to Grant theCompany’s Shares, etc. during the extended trust period.

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However, when such additional contributions are made, if there are shares of the Company(excluding shares of the Company equivalent to the points provided to Directors that have not been
Granted) and money remaining in the trust assets on the final day of the trust period prior to theextension (“Residual Shares, etc.”), the sum of the amount of Residual Shares, etc. and the money tobe additionally contributed by the Company shall be within ¥600 million.
If amendments to the trust agreement or additional entrustments are not made at the expiration of thetrust period of the Trust, new points shall not subsequently be provided to Directors. However, if
there are Directors in office at this time who may satisfy the beneficiary requirements, the trust
period of the Trust may be extended for a maximum of ten (10) years, until the Directors retire fromtheir office and the Grant of the Company’s Shares, etc. to the Directors is complete.
(3) Method of calculating the number of shares of the Company to be Granted to Directors and the
maximum number thereof
The number of shares of the Company to be Granted to Directors shall be calculated according to
the number of points provided to the Directors each year.
On March 1 of each year during the Target Period, for the “Fixed Portion,” Directors will be
provided with “fixed points” corresponding to their position, and for the “Performance-linked
Portion,” Directors will be granted “basic performance points.” On March 1, immediately following
the expiration of the Target Period, the “performance-linked points” will be calculated bymultiplying the “basic performance points” accumulated during the Target Period by a performancelinked coefficient corresponding to the achievement level of the performance targets, etc. of theMedium-Term Business Plan during the Target Period (equations for each portion are as statedbelow).
The Company’s Shares, etc. shall be Granted to Directors at the time of their retirement, according
to the accumulated number of “fixed points” and “performance-linked points” (or basic performancepoints, if performance-linked points have not been calculated) that the Directors have received.
1)

Fixed Portion(Fixed points)
Basic stock remuneration amount x 40% ÷ Average acquisition unit price of theCompany’s shares *1

2)

Performance-linked Portion(Basic performance points)
Basic stock remuneration amount x 60% ÷ Average acquisition unit price of theCompany’s shares *1(Performance-linked points)
Accumulated basic performance points x Performance-linked coefficient *2*1 The average acquisition unit price of shares of the Company by the Trust. If the trust period of
the Trust is extended by making amendments to the trust agreement and additional entrustments,
it will be the average acquisition unit price of shares of the Company acquired by the Trust after
the extension.
*2 In principle, the “Performance-linked coefficient” will vary within a range from 0% to 150%,
according to the achievement level of the targets, including performance indicators in theMedium-Term Business Plan (e.g., CAGR of consolidated net sales, EPS growth rate, and ROE)
and non-financial indicators (e.g., mitigation of climate change and diversified employment
promotion). In the Initial Target Period, this coefficient will vary within the range from 0% to150% according to the achievement level of the targets for consolidated performance (net sales,
operating income, and PVA).

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One (1) point shall equal one (1) share of the Company. However, in the event that circumstancesarise during the trust period whereby an adjustment to the points is deemed to be fair, such as ashare split or consolidation of shares of the Company, the number of shares of the Company per
point shall be adjusted according to the ratio of the split or consolidation, etc.
The maximum number of points to be provided to Directors in a single fiscal year (the sum of thetotal number of fixed points for the fiscal year and the basic performance points for the fiscal year
multiplied by the maximum performance-linked coefficient) shall be 41,000 points. This maximum
number has been determined by taking into consideration the maximum amount of money to becontributed by the Company in the above item (2), and with reference to historical share prices, etc.
The maximum number of shares of the Company to be Granted to Directors during the Target
Period shall be the number of shares equivalent to the maximum number of points for a single fiscal
year multiplied by three (3), or the number of years in the Target Period (total of 123,000 shares;
however, in the Initial Target Period, it shall be 41,000 shares, which is equivalent to the maximum
number of points multiplied by one (1), or the number of years). In the event that the points areadjusted as described above, the maximum number of shares of the Company to be Granted to
Directors shall also be adjusted accordingly.
(4) Timing and method of the Grant of the Company’s Shares, etc. to Directors
The Grant of the Company’s Shares, etc. shall be made to Directors at the time of their retirement.
At this time, the Directors will receive the delivery of shares of the Company equivalent to 50% of
the points provided to them until the time of their retirement (shares of less than one unit will be
rounded up). The rest of the points will be translated by the Trust into money equivalent to theconverted value of the Company’s shares, and paid out to the Directors.
In the event that a Director dies during the trust period, his or her heir shall receive payment ofmoney equivalent to the converted value of all shares of the Company corresponding to the points
provided until that time, after conversion within the Trust.
In addition, if a Director becomes a resident of a foreign country during the trust period, he or she
may receive payment of money equivalent to the converted value of all shares of the Company
corresponding to the points provided until that time, after conversion within the Trust.
(5) Voting rights for shares of the Company
To ensure neutrality toward management, the voting rights for shares of the Company held within
the Trust shall not be exercised during the trust period.
(6) Other details of the System
Other details of the System shall be determined by the Board of Directors when the Trust isestablished, and each time amendments to the trust agreement and additional contributions to theTrust are made.
For details of the System, please refer to the press release, “Notice Regarding Abolishment of the
Retirement Benefits System for Directors and Introduction of a Performance-linked Stock Remuneration
System,” dated March 11, 2019.

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[Reference]
Executive Remuneration Policy(1) Basic policy for corporate governance
The Company has developed the “Pigeon Way,” as described below, comprising its Mission, Values,
Action Principles and Vision, under its Corporate Philosophy of “Love” and its Credo of “Only love canbeget love,” as the basis of its spirit and actions to be shared by all Pigeon Group employees, both inJapan and abroad.
The Company believes that having all employees become strongly aware of the “Pigeon Way” andputting it into action will inevitably improve corporate value. It also believes that its corporate value
encompasses both social and economic value. We are aiming to achieve the goal of improving social
value mainly by becoming an indispensable part of society, while delivering joy and happiness to ourtarget customers, by providing solutions and new value. The Company will establish the following six
priority issues or materialities to be addressed in terms of Sustainable Development Goals (SDGs) and
Environmental, Social, and Governance (ESG); 1) enhancement of business competitiveness anddevelopment capabilities; 2) continuous reduction of environmental impact, 3) enhancement of
stakeholder support capability, 4) improvement of the quality of human resources, 5) creation of
comfortable working environment, and 6) development of a solid management base, all of which will beincorporated into our business strategies from the next fiscal year onwards. Meanwhile, we are aiming toachieve the goal of improving economic value mainly by increasing free cash flow consistently,
efficiently, and strategically, as we move into the future.
Based on this approach, the Company defines corporate governance as “the system that pays due respect
to the views of our shareholders, customers, employees, business partners and local communities, andthat ensures transparent and fair as well as prompt and bold decision-making” and the purpose of
corporate governance as the means to achieving “the Company’s sustained growth and the improvementof corporate value in the medium- to long-term.”
The Company will continue to further strengthen this system in accordance with the above definition andmake efforts to continuously enhance its corporate governance in pursuit of further improving its
corporate value.

■Vision■Mission─ The goal Pigeon Group aims to achieve─ Our purpose of working and what we promise toachieve for consumers

To be the baby product manufacturer mosttrusted by the world’s babies and families,
i.e. “Global Number One”

We will bring joy, happiness andinspiration to babies and families aroundthe world by providing them with products
and services that embody love.

■Action Principles
─ The basic guideline for driving all of our actions■Values●Agility●Keep sight of consumers●Global collaboration among competent
individuals●Leadership and logical working style●Willingness to change─ Important attributes for all Pigeon employees●Integrity●Communication, Consent, Trust●Passion– 21 –

(2) Basic policy on executive remuneration
The Company’s basic policy on remuneration for Directors (the “executive remuneration”) shall be as
follows, in accordance with the Company’s basic policy regarding corporate governance:
1) It should contribute to “management that improves the corporate value” of the Group over the medium
to long-term;
2) It should contribute to the hiring of talented managers toward the achievement of “Global Number
One,” based on the “Pigeon Way”; and
3) The remuneration system should be highly independent, objective, and transparent, and accountable tostakeholders.
(3) Remuneration levels
The Company determines levels of executive remuneration in accordance with the aforementioned basic
policy on executive remuneration, after surveying and analyzing its business environment and the
remuneration levels in its peer group of companies in the same industry (manufacturing) and of the same
size, through external databases, etc.
(4) Remuneration mix
The remuneration for the Company’s Directors (excluding Outside Directors; hereinafter the same shallapply) consists of “basic remuneration” commensurate with position, “bonuses” provided as short-term
incentives, and “stock remuneration” provided as a medium- to long-term incentive. The remuneration
for Outside Directors and Audit & Supervisory Board Members consists of “basic remuneration” only.
1) Outline of the remunerations<Basic remuneration>
The basic remuneration will be paid monthly to Directors of the Company based on the amountdetermined by their position in the Company according to the level of the responsibilities of their duties.
<Bonuses>
The bonuses will be paid to Directors of the Company for the purpose of providing Directors withincentives to the Pigeon Group’s consolidated business performance in each fiscal year, the performanceof their respective departments, and the execution of their duties.
The consolidated performance will vary within a range from 0% to 150% according to the achievementlevel of the targeted “net sales” indicating the scale of main business, “operating income” indicating the
profitability of main business, and “PVA” (Pigeon Value Added), the unique management benchmark
indicating the amount of corporate value created exceeding capital cost. The targeted net sales andoperating income figures are determined in the performance forecast released in the Summary of
Financial Results at the beginning of each term and the targeted PVA figures are the values planned at
the beginning of each term.
The President’s bonuses will be determined based only on consolidated performance. Other Directors
ranked as Vice President and below will receive a qualitative review taking into consideration theperformance of their respective departments and the results of the execution of their duties, and will
receive adjustments of ±10% against achievement of targets for consolidated performance after
deliberation by the Remuneration Committee.
<Stock remuneration>
The stock remuneration is paid to Directors at the time of their retirement for the purposes of providingthem with incentives to improve the Pigeon Group medium- and long-term performance and corporate
value, and of encouraging Directors to share a sense of interest with shareholders.
The stock remuneration consists of 60% performance-linked remuneration (Performance Share) and 40%
non-performance-linked remuneration (Restricted Stock).
・Performance-linked remuneration (Performance Share)
In principle, the performance-linked remuneration will vary within a range from 0% to 150% in
accordance with achievement level against benchmarks including performance indicators (such as the– 22 –

compound annual growth rate (CAGR) of the consolidated net sales, growth rate of earnings per share(EPS), and return on equity (ROE)) and non-financial indicators (such as mitigation of climate change
and diversified employment promotion) set out in the Medium-Term Business Plan. The Company uses
the aforementioned indicators and other factors for further boosting the sustained growth of top-line (netsales) and the profitability and efficiency from the fiscal year 2020 onwards; however, the Company
plans to review them after completion of the current Sixth Medium-Term Business Plan in light of theMedium-Term Business Plan that will be newly set out. In fiscal year 2019, the performance-linked
remuneration will vary within a range from 0% to 150% in accordance with achievement level against
the consolidated performance (including net sales, operating income, and PVA).
・Non-performance-linked remuneration (Restricted Stock)
A fixed number of shares will be allocated as stock remuneration in order to strengthen links withshareholder value.
In principle, the Company recommends Directors hold an amount of the Company’s shares equal to or
exceeding basic remuneration (annual amount).
If the Board of Directors determines that there was serious misconduct during a Director’s term of office,it may restrict the provision or demand the return of stock remuneration after deliberation by the
Remuneration Committee.
Stock remuneration will be allocated through a trust-based stock remuneration system. This system will
grant units (points) to eligible persons every year, and will issue shares in the Company corresponding to
the number of units (points) from the trust at the time of retirement. The management of the Company’s
shares is slated to be entrusted to Mitsubishi UFJ Trust and Banking Corporation.
2) Standard model of the structure of remuneration payable to Directors (with the achievement level of
100% for each indicator)
Basic remuneration: 60%
Bonuses:20%
Stock remuneration: 20%(5) Decision-making process
In order to increase the independence, objectivity, and transparency of the details of the executive
remuneration system, the Company will establish a Remuneration Committee as an advisory body to theBoard of Directors. The chairman and the majority of members of the committee are Independent
Outside Directors. The committee meets at least twice per year, deliberates on matters such as the basic
policy on executive remuneration and the details of the executive remuneration system, and provides
advice and proposals to the Board of Directors.
In order to introduce an objective perspective from outside of the Company, as well as expertise on theexecutive remuneration system, the Company employs an outside remuneration consultant, with whose
support it considers the details of the remuneration system, while taking into account matters such asexternal data, the economic environment, industry trends, and management conditions.
(6) Policies for information disclosures, etc.
Based on the Disclosure Policy of the Company, the Company promptly and actively discloses thedetails of the executive remuneration system through its annual securities reports, reference documents
for the general meeting of shareholders, business reports, corporate governance reports, and integrated
reports, which are required to be documented and disclosed in accordance with relevant laws andregulations, as well as the Company’s website. Moreover, the Company actively engages withinstitutional investors.

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