OMRON : Continuation and Partial Revision of the Performance-linked and Share-based Incentive Plan for Directors, etc.

May 14, 2021

Company name: OMRON Corporation

Representative: Yoshihito Yamada, President & CEO

Stock code: 6645

Stock exchanges: Tokyo (First Section)

Contact: Shunji Okumura, General Manager

Investor Relations Dept.

Phone: [phone]

Continuation and Partial Revision of the Performance-linked and Share-based

Incentive Plan for Directors, etc.

OMRON Corporation (hereinafter referred to as "the Company") hereby announces that the Board of Directors of the Company, in its meeting held on May 14, 2021, resolved to continue and partially revise the performance-linked and share-based incentive plan, which had initially been adopted in fiscal 2017 (hereinafter referred to as "the Plan") for directors (excluding outside directors) and executive officers of the Company and directors of the Company's subsidiaries who assume positions of executive officers of the Company (hereinafter collectively referred to as "Directors, etc.") Accordingly, the Company resolved to submit a proposal regarding the partial revision of the Plan, seeking approval at the 84th Ordinary General Meeting of Shareholders to be held in June 2021 (hereinafter referred to as "the Shareholders Meeting").

1. Continuation and partial revision of the Plan

As the Company heads toward achieving the goals of the next medium-term management plan, the Company has decided to continue adopting and partially revising the Plan as an incentive plan for Directors, etc. Its purpose is to further clarify the linkage between compensation for Directors, etc. and the Company's stock value to heighten their motivation to attain the performance targets specified in the medium-term management plan. Moreover, the Plan is intended to further motivate Directors, etc., to contribute to sustainably enhancing corporate value (stock value) through their ownership of the Company's shares.

1. Outline of revisions
2. • The period covered by the continued Plan will be the four years from fiscal

2021 to fiscal 2024.

• Indexes to be used for the assessment of the degree of achievement of performance targets, etc. will be specified for each respective medium-term management plan.

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1. Background and reason for the revision

As the COVID-19 pandemic continues to spread throughout the world, the OMRON Group regards it as essential to place its first priority on implementing emergency response measures to ensure business continuity and secure earnings, while also preparing for the post-COVID-19 era and promoting the transformation of the Company. As such, the Company specified fiscal 2021 as the period during which the Company would accelerate its transformation in addition to making preparations for the upcoming medium-term management plan, which covers the three years from fiscal 2022 to fiscal 2024.

As the preparation period specified for fiscal 2021 is essential for the achievement of the goals of the next medium-term management plan, and it is necessary to heighten the motivation of Directors, etc., to contribute to sustainably enhancing corporate value through the practice of the next-medium management plan, the Company specified that the continued Plan would cover the four years from fiscal 2021 to fiscal 2024.

Moreover, it was originally decided to evaluate the achievement of performance for the Plan in terms of the degree of achievement of performance targets, etc., in the respective medium-term management plan. As such, with the aim of further increasing the motivation of Directors, etc., to contribute to the sustainable enhancement of corporate value, indexes to be used for the assessment of the degree of achievement of performance targets, etc., will be specified for each respective medium-term management plan.

The continuation and partial revision of the Plan are subject to approval at the Shareholders Meeting for the proposal concerning the Plan.

2. Overview of the Plan

The Plan targeting directors of the Company and those of the Company's subsidiaries, who assume the positions of executive officers of the Company (hereinafter collectively referred to as "Directors covered by the Plan"), employs a compensation structure called a "Board Incentive Plan Trust" (hereinafter referred to as "BIP Trust"). A BIP Trust is an executive incentive plan based on the performance share and restricted stock plans in the U.S. and Europe. It is designed to grant the Company's shares acquired by the BIP Trust and cash in the amount of the converted value of such shares (hereinafter referred to as "the Company's shares, etc.") to Directors, etc. according to executive position and their degree of achievement of performance targets, etc. The Company will establish two BIP Trusts to use depending on the eligible persons for each plan.

BIP Trust I: Directors of the Company

BIP Trust II: Directors of the Company's subsidiaries who also assume positions of executive officers of the Company

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The Plan covering the executive officers of the Company (excluding those who are covered by the BIP Trust I or II, hereinafter referred to as "Executive Officers covered by the Plan") employs a structure called an "Employee Stock Ownership Plan Trust" (hereinafter referred to as "ESOP Trust"). An ESOP Trust is an employee incentive plan using a trust fund based on the Employee Stock Ownership Plan employed in the U.S.

Regarding the BIP Trust I, BIP Trust II and the ESOP Trust, with the trust periods due to expire on August 31, 2021, the Company will extend the trust periods by making amendments to the Trust Agreements and making additional contributions to the Trusts, thereby continuously adopting the Plan.

Refer to Attachment 1 for BIP Trust I and II and Attachment 2 for the ESOP Trust.

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(Attachment 1)

Framework of BIP

Trust I and II

retirement and	or⑧ ⑨
assets residual of Granting issues residual of use Continued compensation without transfer

④Company's shares

Stock market

④Payment

	① Resolution of						① Resolution of
			③Fund		Shareholders Meeting
	Shareholders Meeting
			adjustment	The Company's
		[Settlor]						subsidiaries
		The Company									②
											Share rulesgranting
		Dividends	③
		⑤
		[Trustees]
Mitsubishi UFJ Trust and Banking Corp.
(Co-trustee: The Master Trust Bank of Japan, Ltd.)		⑦Granting
	Company's shares
								[Beneficiaries]
		BIP Trust I & II					& cash payout
									Directors covered
Company's shares and cash
				by the Plan
		⑥Instruction not to
		exercise voting rights
		Trust
		administrator

• With respect to the partial revision of the Plan, the Company and the Company's subsidiaries will obtain approval of compensation for Directors, etc. at their respective Shareholders Meetings.

• The Company and the Company's subsidiaries will revise share granting rules with respect to the Plan by a resolution of the Board of Directors.

• The Company will extend the BIP Trust I wherein the Company's directors who meet the beneficiary requirements are beneficiaries, and the BIP Trust II wherein the directors of the Company's subsidiaries who assume positions of the Company's executive officers and who meet the beneficiary requirements are beneficiaries (BIP Trust I and II hereinafter combined and referred to as "the Trust"). The Company will therefore entrust additional money within the upper limit approved by the resolution of the Shareholders Meeting as in ① , above, for share- based compensation for directors covered by the Plan. An amount equivalent to the trust money

contributed to the BIP Trust II, for compensation of directors of each subsidiary of the Company who assume positions of executive officers of the Company, will be adjusted between the Company and the subsidiary concerned.

• The Trust will acquire the Company's shares from the stock market using the funds entrusted in

• ③ above, in accordance with the instructions of the trust administrator.

• Dividends on the shares of the Company under the Trust will be paid in the same manner as those on other shares of the Company.

• Voting rights will not be exercised during the trust period with regard to the Company's shares under the Trust.

• During the trust period, a certain number of points will be awarded to Directors covered by the Plan according to executive position and the degree of achievement of performance targets, etc. Directors covered by the Plan who meet certain beneficiary requirements will be granted the Company's shares in proportion to their accumulated points as in (6) below after the completion

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of the medium-term management plan and their retirement. (As stated in (6) below, beneficiaries, as a basic rule, will receive the Company's shares equivalent to 50% of the Company's shares corresponding to their accumulated points (odd-shares will be rounded off). Meanwhile, the Company's shares in a number equivalent to the remaining points will be converted into cash in the Trust in accordance with the Trust Agreement and beneficiaries will receive monetary equivalent.)

• If there are residual shares at the expiry of the trust period, the Company will either continue the Trust for use in the Plan or for other similar share-based compensation plans by making amendments to the Trust Agreement and additional contributions to the Trust, or the residual

shares will be transferred from the Trust to the Company without compensation and the Company will then retire the said residual shares by a resolution of the Board of Directors.

• Upon the termination of the Trust, residual assets remaining after distribution to beneficiaries will belong to the Company within the range of the reserve for trust expenses derived by deducting the funds for purchasing shares from the trust money. With regard to any portion in excess of the reserve for trust expenses, the Company plans to donate to organizations that have no interest in the Company.

Note: If the number of the Company's shares under the Trust fall short of the number of shares corresponding to the accumulated points during the trust period due to granting of the Company's shares, etc. to the Directors covered by the Plan who meet the beneficiary requirements, the Trust will be terminated prior to the expiry of the trust period. To circumvent such termination, however, the Company may entrust additional money to the Trust to the extent of the upper limit of trust money approved by the resolution of a Shareholders Meeting and the upper limit of the number of the Company's shares to be granted (as stated in (7) below) for use in acquisition of additional shares of the Company.

1. Overview of the Trust

The Trust is a share-based compensation system covering four years including the fiscal years that correspond to the Company's next medium-term management plan (hereinafter referred to as "the covered period") by which the Company's shares, etc. are granted as compensation for Directors covered by the Plan depending on their executive position and the degree of achievement of performance targets, etc. The Trust consists of the performance-linked portion in which the Company's shares, etc. will be granted after the completion of the Company's medium-term management plan, and the non-performance-linked portion in which the Company's shares, etc. will be granted after retirement of the Directors covered by the Plan. The performance-linked portion is aimed at motivating the Directors, etc. to achieve the goals of the Company's medium-term management plan and strengthening the linkage of the compensation for Directors, etc. with the medium- to long-term corporate performance. The non-performance-linked portion in turn is intended to promote alignment of interests of the Directors covered by the Plan with those of other shareholders of the Company through ownership of the Company's shares. The performance-linked portion and the non-performance- linked portion account for 60% and 40%, respectively.

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