Hitachi : Issuance of New Shares based on Restricted Stock Compensation Plan and Restricted Stock Unit Plan

FOR IMMEDIATE RELEASE

Issuance of New Shares based on Restricted Stock Compensation Plan

and Restricted Stock Unit Plan

Tokyo, May 18, 2021 --- Hitachi, Ltd. (TSE: 6501, "Hitachi" or the "Company") announced that, pursuant to the decision made by the President in accordance with the authority delegated by the resolution of the Board of Directors, Hitachi decided to issue new shares based on restricted stock compensation plan and restricted stock unit (the "RSU") plan to Executive Officers and Corporate Officers, as described below (the "Issuance of New Shares").

1. Outline of issuance

① The issuance of shares of restricted stock

(1)	Payment date	June 15, 2021
(2)	Class and number of shares to be	332,000 shares of Hitachi's common stock
	issued
(3)	Issue price	5,384 yen per share
(4)	Total amount of issuance	1,787,488,000 yen
(5)	Allottees, number of Allottees and	28 Executive Officers:	252,800 shares
	number of shares to be allotted	33 Corporate Officers:	80,000 shares
(6)	Others	Issuance of New Shares is conditioned on the
		securities registration statement taking effect
		in accordance with the Financial Instruments
		and Exchange Act.
②The issuance of shares of RSU plan
(1)	Payment date	June 15, 2021
(2)	Class and number of shares to be	17,600 shares of Hitachi's common stock
	issued
(3)	Issue price	5,384 yen per share
(4)	Total amount of issuance	94,758,400 yen
(5)	Allottees, number of Allottees and	3 Executive Officers:	10,300 shares
	number of shares to be allotted	2 Corporate Officers:	7,300 shares
(6)	Others	Issuance of New Shares is conditioned on the
		securities registration statement taking effect
		in accordance with the Financial Instruments
		and Exchange Act.

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2. Purpose and reasons for issuance

Hitachi has introduced restricted stock compensation as compensation for Japanese Executive Officers and Corporate Officers from fiscal 2019 in order to propel management from a medium- and long-term perspective and to provide incentives to bring about a sustainable increase in enterprise value by further promoting senior management's shared values with shareholders through the holding of shares during their term of office. Hitachi introduced the RSU plan for non-Japanese Executive Officers and Corporate Officers from fiscal 2020. Based on these plans, the Company will conduct the Issuance of New Shares.

3. Outline of the restricted stock compensation plan

The restricted stock compensation plan (the "Plan") introduced by Hitachi consists of two types of restricted stock: shares of restricted stock with an incumbency condition (the "Type A") and shares of restricted stock with a "stock price condition" (the "Stock Price Condition") explained later in addition to incumbency condition (the "Type B"; hereinafter Type A and Type B are referred to collectively as the "Shares of Restricted Stock").

In accordance with the Plan, the eligible persons will receive shares of common stock to be newly issued or disposed by the Company by making contributions in kind of the monetary compensation claims which are granted in order to allot the Shares of Restricted Stock to the eligible persons.

In addition, with respect to the issuance or disposition of shares of common stock of the Company under the Plan, Hitachi and each eligible person will execute an agreement on allotment of restricted stock (the "Allotment Agreement"), which includes the details shown below.

【Outline of the Agreement on Allotment of Restricted Stock】

(1) Transfer restriction period

From the payment date relating to the issuance or disposition of the Shares of Restricted Stock to the date on which the eligible person ceases to be an Executive Officer, Director or Corporate Officer of the Company.

1. Conditions for lifting transfer restriction

1. Type A

If an eligible person ceases to be an Executive Officer, Director or Corporate Officer of the Company due to death, expiration of term of office or other legitimate ground that is approved by the Board of Directors, at the time of ceasing to hold all such positions, the transfer restriction shall be lifted with respect to the number of shares set forth below: In such case, the number of such shares shall be calculated by multiplying (x) the number of shares of

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common stock allotted under the Allotment Agreement (the "Shares"; hereinafter the number of shares of the Shares is the " Number of the Shares") by (y) the ratio obtained by dividing the number of months from the first month of the fiscal year in which the payment date falls to the month contains the day on which the eligible person ceases to hold all such positions by 36 months (or by 1 if the result of the following calculation exceeds 1; the "Incumbency Ratio") Any fractions of less than one trading unit resulting from the calculation will be rounded down.

(ii) Type B

If an eligible person ceases to be an Executive Officer, Director or Corporate Officer of the Company due to death, expiration of term of office or other legitimate ground that is approved by the Board of Directors, at the time of ceasing to hold all such positions, the transfer restriction shall be lifted with respect to the number of shares calculated by multiplying the number of shares determined in accordance with the Stock Price Condition ("Number of Shares Determined After Evaluation) by the Incumbency Ratio. Any fractions of less than one trading unit resulting from the calculation will be rounded down.

(3) Acquisition by the Company without consideration

If certain events set out in the Allotment Agreement occur, the Company will acquire the Shares without any consideration promptly on or after a date notified to the eligible persons. The Company will also acquire the Shares for which the transfer restrictions are not lifted at the time of such determination, without any consideration.

(4) Management of shares

In order to prevent the Shares from being transferred, having any security interest created thereon or otherwise being disposed of during the transfer restriction period, the Shares will be managed in dedicated accounts established by the eligible persons at a securities company designated by the Company. In order to ensure the effectiveness of transfer restrictions and other agreements on the Shares, the Company and each eligible person will execute an agreement with said securities company concerning the management of accounts for the Shares held by each eligible person.

(5) Treatment in case of Organizational restructuring, etc.

Notwithstanding the provision of (1) above, if, during the transfer restriction period, a merger agreement under which the Company will become a dissolving company, a share exchange agreement or a share transfer plan under which the Company will become a wholly-owned subsidiary of another company or any other organizational restructuring is approved at a General Meeting of Shareholders of the Company (or by the Board of Directors of the

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Company, if the approval of the General Meeting of Shareholders is not required), then the transfer restriction on the Shares shall be lifted immediately before the business day preceding the effective date of such organizational restructuring. The number of Shares for which restrictions are lifted shall be as follows:

For Type A: the number of shares shall be calculated by multiplying the Number of Shares by the ratio obtained by dividing the number of months from the first month of the fiscal year in which the payment date falls to the month contains the date of such approval by 36 months (or by 1 if the result of the following calculation exceeds 1; the "Incumbency Ratio for Organizational Restructuring"). Any fractions of less than one trading unit resulting from the calculation will be rounded down.

For Type B: the number of shares shall be calculated by multiplying the Number of Shares Determined After Evaluation by the Incumbency Ratio for Organizational Restructuring. Any fractions of less than one trading unit resulting from the calculation will be rounded down.

In the cases described above, immediately after the transfer restriction is lifted, the Company will as a matter of course acquire the Shares for which the restriction has not been lifted without any consideration.

[Stock Price Condition]

1. If, when the Total Shareholder Return ("TSR") (Note 1) of Hitachi stock is compared to the
   TOPIX Growth Rate (Note 2), the TSR/TOPIX Growth Rate Ratio (Note 3) is 120% or more, the total Number of the Shares shall be the Number of Shares Determined After Evaluation.
2. If the TSR/TOPIX Growth Rate Ratio is between 80% or more but less than 120%, a portion of the Number of the Shares (Note 4) shall be the Number of Shares Determined After Evaluation.

(iii)If the TSR/TOPIX Growth Rate Ratio is less than 80%, the Number of Shares Determined After Evaluation shall be zero.

B + C

(Note 1) TSR =

A

where:

1. The closing price of shares of Hitachi's common stock on the Tokyo Stock Exchange on the first day (or if such day is a non-business day of the Tokyo Stock Exchange, the business day immediately preceding such day) of the fiscal year in which the date of allotment falls
2. The closing price of shares of Hitachi's common stock on the Tokyo Stock Exchange on the last day (or if such day is a non-business day of the Tokyo Stock Exchange, the business day immediately preceding such day ) of the fiscal year commencing two years after the fiscal year in which the date of allotment falls (or if an eligible person ceased to be an Executive Officer, Director or Corporate Officer of the Company or if organizational restructuring was approved at a General Meeting of Shareholders before such last day, the date of ceasing to hold all such positions or the date of such approval (or if such day is a non-business day of the Tokyo Stock Exchange, the business day immediately preceding such day))

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TOPIX Growth Rate = D / E

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1. Total amount of dividend per share of Hitachi's common stock in the period from the first day of the fiscal year in which the date of allotment falls to the last day of the fiscal year commencing two years after such fiscal year (or if an eligible person ceased to be an Executive Officer, Director or Corporate Officer of the Company or if organizational restructuring was approved at a General Meeting of Shareholders before such last day, the date of ceasing to hold all such positions or the date of such approval)

(Note 2) where:

1. The closing price of TOPIX on the Tokyo Stock Exchange on the last day (or if such day is a non-business day of the Tokyo Stock Exchange, the business day immediately preceding such day) of the fiscal year commencing two years after the fiscal year in which the date of allotment falls (or if an eligible person ceased to be an Executive Officer, Director or Corporate Officer of the Company or if organizational restructuring was approved at a General Meeting of Shareholders before such last day, the date of ceasing to hold all such positions or the date of such approval (or if such day is a non- business day of the Tokyo Stock Exchange, the business day immediately preceding such day))
2. The closing price of TOPIX on the Tokyo Stock Exchange on the first day (or if such day is a non-business day of the Tokyo Stock Exchange, the business day immediately preceding such day) of the fiscal year in which the date of allotment falls

(Note 3) TSR/TOPIX Growth Rate Ratio = TSR / TOPIX Growth Rate

(Note 4) Number of Shares Determined After Evaluation

= Number of the Shares × {(TSR/TOPIX Growth Rate Ratio × 1.25)－0.5}

Any fractions of less than one trading unit resulting from the calculation will be rounded down.

1. Outline of the RSU Plan
   Under the RSU Plan, the eligible persons will be granted restricted stock units ("RSUs") corresponding to the number of shares of Hitachi's common stock (the "Shares to be Delivered") set in advance for each eligible person and, over three fiscal years after granting, one-third of the RSUs will become vested after the end of each fiscal year and the Shares to be Delivered or cash for the vested RSUs will be delivered.
   The eligible persons will receive shares of common stock to be newly issued or disposed by the Company by making contributions in kind of the monetary compensation claims which are granted after the end of each fiscal year in order to allot the Shares to be Delivered to the eligible persons.
   If the eligible persons retire due to expiration of their term of office, death or other legitimate reasons recognized by the Company's Compensation Committee, they will receive the
   Shares to be Delivered or cash corresponding to the portion of RSUs granted reflecting the period from the granting date until such retirement.
2. Basis of calculation of the issue price and details thereof

The issue price is 5,384 yen, the closing price per share for the Company's common stock on May 17, 2021 (preceding business day of the date upon the decision by the President regarding the Issuance of New Shares) in the first section of the Tokyo Stock Exchange, Inc. The Company believes that the issue price is reasonable and is not deemed to be significantly advantageous because the issue price is the same as the market stock price on the preceding business day of the date upon the decision by the President.

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