The Company hereby announces, as set forth below, that it resolved at the Board of Directors meeting held on May 12, 2015 to introduce the executives remuneration system for stock remuneration (hereinafter the "System") in the Cosmo Energy Holdings Co., Ltd. (hereinafter the "Holding Company") which will be established on October 1, 2015, and decided to submit to the 109th General Shareholders' Meeting to be held on June 23, 2015 the proposal on the establishment of the Holding Company by the Share Transfer, including the introduction of the System within the Articles of Incorporation of the Holding Company(*1).

(1) Objectives and Background of the introduction of the System

The Cosmo Oil Group will transform to Holding Company system consisting of the Company, Cosmo Oil Marketing Co., Ltd, and Cosmo Energy Exploration and Production Co., Ltd. (hereinafter "Core Business Companies", the Holding Company and the Core Business Companies shall be collectively referred to as the "Subject Companies") in addition to Holding Company for the purposes of "strengthening of business competitiveness and realization of stable profits of the Holding Company", "acceleration of the enhancement of Group management and shifting of management resources", and "promotion of alliances in each business line." The executive's remuneration system of the Holding Company will have basic policies including incentives to enhance business performance and increase corporate value in the medium- and long-term, sharing profits with shareholders, encouraging a challenging spirit, and ensuring transparency and objectivity in the remuneration determination and evaluation processes, and clarify the linkage between remuneration and performance.

Remuneration for executives of the Holding Company will be composed of basic remuneration, which will be a set amount, and incentive remuneration, which will be linked to performance indicators such as consolidated ordinary income, the net debt-to-equity ratio (hereinafter "net D/E ratio") and Return on Equity (hereinafter "ROE"). The incentive remuneration will be composed of yearly incentive remuneration (bonuses) linked to consolidated performance indicators for each fiscal year and long-term incentive remuneration (stock remuneration) linked to the progress made in achieving targets in the Consolidated Medium-Term Management Plan.

Recipients of these forms of remuneration will be Directors (excluding Outside Directors and Directors who are members of the Supervisory Committee) and Executive Officers (hereinafter collectively referred to as the "Holding Company Directors, etc.").

Furthermore, in addition to the Holding Company, we will introduce the System for the Directors (excluding Outside Directors) of the Group's Core Business Companies (*2) (hereinafter the "Core Business Company Directors"; the Holding Company and the Core Business Companies shall be collectively referred to as the "Subject Companies").

In introducing the System, the Executive Remuneration Board Incentive Plan Trust (hereinafter the "BIP Trust") will be adopted. The BIP Trust is an incentive plan for executives developed by making reference to the performance-linked stock remuneration (performance share) system used in the U.S. Shares of the Holding Company acquired by the BIP Trust will be granted to Holding Company Directors and Core Business Company Directors in accordance with the degree to which performance targets are achieved.

(2) BIP Trust Organization

(i) The Company will obtain a resolution of approval from this Shareholders' Meeting regarding the establishment of the Holding Company by the Share Transfer, including the introduction of the System within the Articles of Incorporation of the Holding Company. Moreover, each of the Core Business Companies will obtain resolutions on the executives' remuneration systems regarding the introduction of the System at their respective ordinary general meetings of shareholders.

(ii) The Holding Company will establish share granting rules for the executive's remuneration at the Board of Directors' meeting in relation to the introduction of the System.

(iii) Each core business company will contribute money to the Holding Company within the scope approved by the respective ordinary general meetings of shareholders in (i). The Holding Company will entrust to Mitsubishi UFJ Trust and Banking Corp. (trustee) money within the scope stipulated by the articles approved by the Shareholders' Meeting in (i) in addition to the monetary contribution received from the respective Core Business Companies, and will establish a trust (hereinafter, the "Trust") with the beneficiaries being Holding Company Directors and Core Business Company Directors who meet the beneficiary requirements.

(iv) The trustee (the Trust) will acquire shares of the Holding Company from the stock market using funds provided by the contribution in (iii) under the direction of the trust administrator. The Holding Company shares in the Trust shall be allocated into accounts to be managed in accordance with the amounts of money contributed by the subject companies.

(v) Dividends shall be paid for the shares of the Holding Company held in the Trust in the same way as for other Holding Company shares.

(vi) The Holding Company shares held in the Trust shall not have their voting rights exercised during the trust term.

(vii) During the trust term, the beneficiaries will receive Holding Company shares in accordance with the share granting rules of the Holding Company (moreover, pursuant to the provisions of the trust agreement, the beneficiaries may convert the Holding Company shares into cash within the Trust and receive a cash payment in lieu of shares.)

(viii) If residual shares are left over at the completion of the trust term because of failure to achieve performance targets, and so forth, they shall be transferred without compensation to the Holding Company, which plans to acquire them without paying compensation and then cancel them by a resolution of the Board of Directors.

(ix) At the time when the Trust ends, the assets that remain after allocation to beneficiaries are to be returned to the Holding Company within the scope of the reserve for trust expenses, which the trust funds less the share acquisition funds. Furthermore, any portion exceeding the reserve for trust expenses is to be donated to an organization with no conflict of interest with the Holding Company and its board members and the respective Core Business Companies and their Board Members.

(Note 1: If the Holding Company shares are completely removed from the trust through granting to beneficiaries, the Trust will finish before the completion of the trust term.)

(Note 2: At the Ordinary General Meeting of Shareholders for the business year ending March 31, 2018, provided that the proposal to continue the System has been discussed and approved, the Trust may be continued by changing the trust agreement and conducting additional entrustment within the scope approved by the resolution of the Shareholders' Meeting.)

(3) Details of the System

(i) Overview of the System

The System is an incentive plan for granting Holding Company shares as executive compensation in accordance with the degree of achievement of performance targets, etc. for each business year, covering the three (3) years (hereinafter the "Plan Period") from the business year ending on March 31, 2016 to the business year ending on March 31, 2018.

(ii) Shareholders' Meeting resolution relating to the introduction of the System

At the Shareholder's Meeting of the Holding Company, the establishment of the Holding Company by means of the Share Transfer will be resolved, including the inclusion in the articles of the Holding Company of the upper limits on the amount of money to be contributed to the Trust by the Holding Company, the upper limit of the number of shares to be granted to Directors, and other necessary matters. Moreover, at the shareholders' meetings of the respective Core Business Companies, the upper limits on the amounts of money to be contributed to the trust through the Holding Company and the upper limits on the numbers of shares to be granted will be respectively resolved, along with other necessary matters.

(iii)Eligible persons for the System (beneficiary conditions)

The Holding Company Directors and Core Business Company Directors (hereinafter the "Eligible Persons") who have satisfied the following beneficiary conditions shall receive a grant of Holding Company shares from the Trust around June, 2018, the number of which shall be in accordance with the number of accumulated points (as described in (v) below).

a) Persons holding an ongoing appointment as a Holding Company Director or Core Business Company Director as of June 1, 2018 (*3) (*4)

b) Persons that have not conducted certain illegal activities

c) Persons that meet any other requirements considered necessary to achieve the objectives of the remuneration system

(iv) Trust term

The trust term shall be approximately three years from November 6, 2015 (planned) until July 31, 2018.

Furthermore, if the continuation of the System is proposed and approved at the Ordinary General Meeting of Shareholders for the business year ending March 31, 2018, the Trust may be continued by changing the trust agreement and carrying out additional entrustment within the scope approved by the resolution of the Shareholders' Meeting.

(v) Holding Company Shares to be granted to Eligible Persons

The Holding Company Shares to be granted to Eligible Persons will be determined in each business year ending on the 31st day of March within the trust term by the number of points obtained by multiplying a predetermined number of base points for each rank by a performance-linked coefficient that varies in accordance with the level of performance achievement. The number of points determined by the above will be awarded in June of each year within the trust term to people who are currently appointed as Eligible Persons as of the 1st of June each year. The Eligible Persons will be granted a number of Holding Company shares in accordance with the number of accumulated points (hereinafter the "Number of Accumulated Points") around June 2018. One Holding Company share will be granted per point (*5).

Furthermore, the performance-lined coefficient will range between 0-200% at the Holding Company and 0-150% at Core Business Companies, depending on the level performance achievement. The indicators for evaluating the level of performance achievement at both the Holding Company and the Core Business Companies shall be the consolidated performance indicators including ordinary income (excluding inventory valuation gains and losses) net D/E ratio, and ROE. Moreover, the Company plans to establish the Nomination and Remuneration Advisory Committee at the Holding Company as an advisory body for the Board of Directors.

(vi) Method and period for granting Holding Company shares to Holding Company Directors and the Core Business Company Directors

Eligible Persons who meet the beneficiary requirements will receive a grant of 50% of the Holding Company shares corresponding to their Number of Accumulated Points around June 2018, while the residual shares will be converted to cash within the Trust and the Eligible Persons shall receive a benefit of money in the amount corresponding to the converted shares. Moreover, Eligible Persons who resign during the trust term (except for those who have resigned for their own reasons or have been asked to resign) shall, promptly after the resignation, receive a grant from the Trust of 50% of the number of Holding Company Shares corresponding to the Number of Accumulated Points awarded to them during their appointment, while the residual shares will be converted to cash within the Trust and the Eligible Persons shall receive a benefit of money in the amount corresponding to the converted shares.

(vii) Planned Amount of trust funds to be contributed to the Trust and planned number of Holding Company shares to be granted from the Trust

The amount of trust funds to be contributed to the Trust by the Holding Company and the Core Business Companies, being three companies in total, during the trust term is to be limited, respectively, as follows.

a. Holding company
Maximum amount of trust money contributed to the Trust: 687 million (*6) (planned)
Maximum number of shares delivered from the Trust: 380 thousand shares (*7) (planned)

b. Core Business Companies (total of 3 companies)
Maximum amount of trust money contributed to the Trust: 538 million (planned)
Maximum number of shares delivered from the Trust: 300 thousand shares (planned)

Furthermore, the amount of trust funds contributed to the Trust is to be calculated by considering an appropriate balance with basic remuneration and adding trust remuneration and trust expenses. Moreover, the total maximum number of shares that is deliverable from the Trust shall be determined with reference to the most recent share price level, etc., taking into account the total maximum amount of the trust money. Note that the total maximum number of shares will be calculated on the assumption that the shares will be delivered by allotment of 0.1 share of common stock of the holding company for each 1 share of common stock of the Company that shareholders own due to the establishment of the holding company. (*8)

(viii) Method of Holding Company share acquisition by the Trust

For the initial acquisition of Holding Company shares by the Trust, the shares are to be acquired within the scope of the respective limits for share acquisition funds and number of shares allotted for each of the companies subject to (vii) above.

(ix) Exercise of voting rights pertaining to Holding Company shares in the Trust

The voting rights for Holding Company shares in the Trust (that is, Holding Company shares that have yet to be granted to Holding Company Directors and Core Business Company Directors pursuant to (vi) above) shall not be exercised during the trust term in order to ensure their neutrality with respect to management.

(x) Handling of dividends for Holding Company shares in the Trust

Dividends for the Holding Company shares in the Trust shall be received by the Trust and allocated to cover its trust remuneration and trust expenses. After being allocated to trust remuneration and trust expenses, any dividend money that remains when the trust is finally ended is to be donated to an organization with no conflict of interest with the Holding Company and its board members and the respective Core Business Companies and their board members. However, if the residual money is to continue to be used by the Trust pursuant to (xi) below, then it will be used as share acquisition funds.

(xi) Handling of the Trust at the end of the trust term

If there are residual shares at the end of the trust term due to non-achievement of performance targets during the target period and so forth, then, if a proposal to continue the System has been presented and approved at the Holding Company's Ordinary General Meeting of Shareholders for the business year ending on March 31, 2018, the Trust may be continued by changing the trust agreement and carrying out additional entrustment within the scope approved by the resolution of the Shareholders' Meeting. If the Trust is ended due to the ending of the trust term, then as a shareholder return policy, the Trust is to transfer any residual shares to the Holding Company without compensation, and the Holding Company is to cancel these shares by a resolution of its Board of Directors.

(*1) The Articles of Association will have its supplement which describes the introduction of the System and the supplement will be removed at the end of the Trust term of the System (or on the ending date of the renewed term if a proposal to continue the System has been presented and approved at the Holding Company's Ordinary General Meeting of Shareholders for the business year ending on March 31, 2018).

(*2) As with remuneration of the Holding Company Directors, etc., remuneration of the Core Business Company Directors will be composed of "basic remuneration," "bonuses" and "stock remuneration." In addition, indices that take into account the nature of business of each company will be used for determining remuneration linked to business performance.

(*3) The Eligible Persons shall receive delivery from the Trust promptly after retirement of holding company shares of the number that corresponds to the accumulated points that were bestowed during service in the case of retirement on or after June 1, 2016 (excluding the case of retirement due to personal circumstances or dismissal).

(*4) If an Eligible Person dies during service on or after June 1, 2016, the heir of said Eligible Person shall receive payment from the Trust promptly after said death of the money of the converted equivalent amount of shares of the holding company of the number that corresponds to the accumulated points that were bestowed during service.

(*5) If the Holding Company Shares belonging to the Trust are increased or decreased by a stock split, a gratis allotment of shares, a stock consolidation, and so forth, the Holding Company will revise the number of shares to be granted per point.

(*6) This will be the net total of the funds for share acquisition by the Trust during the trust term, the trust remuneration, and the trust costs. The same holds for each core-business company.

(*7) This includes the number of holding company shares that are the target of the conversion processing stated in (vi) above. The same holds for each core-business company.

(*8) For the details, please refer to Press Release on May 12, 2015: Announcement on Incorporation of Holding Company through Sole Share Transfer and Group Reorganization.

(Reference)
[Trust Agreement Details]
(1) Type of trust Monetary Trust other than a specified solely administered monetary trust (Third Party Beneficiary Trust)
(2) Purpose of the trust Granting incentives to Holding Company Directors and Core Business Company Directors
(3) Trustor The Holding Company
(4) Trustee Mitsubishi UFJ Trust and Banking Corp.
(Joint-trustee: The Master Trust Bank of Japan, Ltd.)
(5) Beneficiaries Persons satisfying the beneficiary requirements among Holding Company Directors and Core Business Company Directors
(6) Trust Administrator A third-party with no conflict of interest with the respective subject companies (certified public accountant)
(7) Trust agreement date November 6, 2015 (planned)
(8) Trust term November 6, 2015 (planned) - August 31, 2018 (planned)
(9) System period December 1, 2015 (planned) to August 31, 2018 (planned) (Awarding of points to commence from June 1, 2014)
(10) Exercise of voting rights Voting rights shall not be exercised.
(11) Type of shares to be acquired Common shares of the Holding Company
(12) Amount of trust funds 1,225 million yen (planned) (including trust remuneration and trust expenses)
(13) Share acquisition period November 10, 2015 (planned) - December 10, 2015 (planned) (Excluding the five working days prior to the financial closing dates (including interim and quarterly financial closing dates))
(14) Share acquisition method Acquisition from the stock market
(15) Rights holder The Holding Company
(16) Residual assets The residual assets that may be received by the Holding Company as the rights holder shall be within the scope of the reserve for trust expenses, which the trust funds less the share acquisition funds.
[Details of administration relating to the trust and shares]
(1) Trust-related administration Mitsubishi UFJ Trust and Banking Corp. is to be the trustee of the trust BIP and will conduct trust-related administration.
(2) Share-related administration Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. is to conduct the administration related to the distribution of the Company shares to the beneficiaries based on the administration services contract.
distributed by