Benesse : Notice Regarding Introduction of a Restricted Stock Compensation Plan

May 9, 2017

Benesse Holdings, Inc.

Notice Regarding Introduction of a Restricted Stock Compensation Plan

Benesse Holdings, Inc. (hereinafter "the Company") has announced the Board of Directors resolved at a meeting held today to make a proposal regarding a restricted stock compensation plan (hereinafter "the Plan,") involving a review of the Company's officer compensation plan and the introduction of the Plan, at the 63rd Ordinary General Shareholders' Meeting (hereinafter "the Shareholders' Meeting") to be held on June 24, 2017.

1. Objective for introducing the Plan

   The Company's Basic Policy on Determining Officer Compensation aims to achieve sustained medium-term to long-term increase in corporate value for the entire Group. To this end, the Company has a compensation structure for directors' compensation that emphasizes medium- and long-term performance in conjunction with short-term business results. Furthermore, the Group has adopted competitive compensation standards commensurate with the roles, abilities, and responsibilities required of the Group's directors in the course of promoting Group management.

   Under this policy, compensation for directors (excluding outside directors) comprises basic compensation, which is established based on expectations for the director's role in each fiscal year; stock options, which are granted based on each directors' annual salary and years of service; and bonuses, which comprise performance-linked bonuses that are paid taking into account the Company's business results for each fiscal year.

   The Company has now decided to replace the current stock option plan by introducing a plan that grants restricted stock to directors (excluding outside directors; hereinafter "Eligible Directors"). In doing so, the Company aims to strengthen the correlation with its medium- to long-term performance, provide directors with a further incentive to sustainably increase corporate value, and promote further shared values between directors and shareholders.

   Under this plan, the Company pays the Eligible Directors monetary compensation receivables as compensation, which the Eligible Directors contribute as payment for the restricted stocks granted to them by the Company. Therefore, the introduction of the Plan is subject to the approval of the Company's shareholders at the Shareholders' Meeting with regard to payment of this compensation. Furthermore, the structure of compensation before and after the introduction of the Plan is shown in the figure below.

   Directors Compensation before and after Introduction of the Plan (Image)

   ＜Current plan＞ ＜After revision＞

   Total amount up to ¥500 million per year (No change) *Outside directors receive only basic compensation

   Stock options (Annual amount up to ¥70 million)

   Total amount up to ¥500 million per year (No change) *Outside directors receive only basic compensation

   Restricted stock compensation plan (the Plan) (Annual amount up to ¥70 million)

   Basic compensation

   Short-term incentive (bonus)

   Medium- to long-term incentive

2. Details of the Plan

Eligible Directors contribute the entire amount of monetary compensation receivables paid to them by the Company under the Plan as an in-kind contribution to acquire common shares of the Company that are either issued or disposed of by the Company in accordance with a resolution of the Board of Directors.

The entire amount of monetary compensation receivables to be paid to the Eligible Directors under the Plan shall not exceed 70 million per year. The specific timing and

allocation of payments for each Eligible Director is to be determined by the Board of Directors.

Under the Plan, the number of common shares of the Company to be issued or disposed of shall not exceed 30,000 per year (however, the total number may be adjusted within a reasonable range as necessary in case of a stock split of the Company's common shares (including a gratis allocation of the Company's common shares), stock consolidation, or other reason arising on or after the date of the resolution by the Shareholders' Meeting). The amount to be paid for each share shall be decided by the Board of Directors in a range that does not represent a particularly advantageous sum for the directors eligible for receiving the Company's common shares, based on the closing price for the Company's common shares on the Tokyo Stock Exchange on the business day preceding the Board of Directors meeting involving the issuance or disposal. (If there is not closing price on that day, then the closing price on the most recent day of trading before that.)

Furthermore, for the issuance and disposal of the Company's common shares under the Plan, the Company and the Eligible Directors shall conclude a restricted stock allocation agreement including provisions such as 1) a prohibition on the Eligible Directors transferring to a third party, creating a security interest upon, or otherwise disposing of their received allotment of common shares of the Company (hereinafter "the Shares") for a certain period of time and 2) gratis acquisition of the Shares by the Company in the case that certain reasons arise. To prevent Eligible Directors transferring to a third party, creating a security interest upon, or otherwise disposing of the Shares, during the restriction period, the Shares are to be managed in a dedicated account to be opened by the Eligible Directors with Nomura Securities Co., Ltd.

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