Notice Regarding the Issuance of Stock Options as Stock-Based Compensation

Tokyo, April 11, 2018 --- Hitachi, Ltd. (TSE: 6501, Hitachi ) today announced that, pursuant to the decision made by President in accordance with the authority delegated by the resolution of the Board of Directors, Hitachi decided to issue stock acquisition rights to Executive Officers and Corporate Officers, as compensation for Fiscal Year 2018, as stock options as stock-based compensation regarding the grant of stock options announced on March 28, 2018.

The following is a description of the stock acquisition rights to be issued.

1. Purpose of granting stock option as stock-based compensation (stock acquisition rights)

Hitachi will grant stock options as stock-based compensation with share price conditions as remuneration for the Executive Officers and Corporate Officers in order to propel the management from medium and long term perspective and motivate them to make more contributions to sustainable increase in enterprise value by having them share the benefits and risks of stock price fluctuation with shareholders.

2. Name of stock acquisition rights

The Third Stock Acquisition Rights of Hitachi, Ltd.

3. Total number of stock acquisition rights: 17,399

The above total number is the scheduled number of stock acquisition rights to be allotted. If the total number is reduced due to reasons such as unfulfilled applications for acceptance of stock acquisition rights, the total number of stock acquisition rights allotted shall be the total number of stock acquisition rights that are actually issued. The persons eligible for stock acquisition rights to be allotted, the number of such eligible persons, and the number of stock acquisition rights to be allotted are as follows.

33 Executive Officers

13,351 of stock acquisition rights

35 Corporate Officers

4,048 of stock acquisition rights

4. Class and number of shares to be issued upon exercise of stock acquisition rights

The class of shares to be issued upon the exercise of stock acquisition rights shall be common stock of the Company and the number of shares to be issued upon exercise of each stock acquisition right (hereinafter, the Number of Shares to be Issued ) shall be 100 shares.

However, if the Company implements a stock split (including gratis allotment of shares of common stock; the same shall apply hereinafter) or a reverse stock split with respect to common stock of the Company after the date of allotment of the stock acquisition rights (the Date of Allotment ), the Number of Shares to be Issued with respect to the stock acquisition rights not exercised at that time will be adjusted based on following formula:

Number of Shares to be Issued after adjustment = Number of Shares to be Issued before adjustment x Ratio of stock split or reverse stock split

In addition, if there is an unavoidable ground requiring an adjustment of the Number of Shares to be Issued, the Number of Shares to be Issued may be adjusted to the extent necessary by a resolution of the Board of Directors.

Any fractions of less than one share resulting from the adjustment will be rounded down.

5. Amount to be paid upon allotment of stock acquisition rights

The amount to be paid upon allotment of one stock acquisition right will be equal to the fair value of the stock acquisition right as calculated at the Date of Allotment using the Monte Carlo simulation. The remuneration, the amount of which shall be equal to the total amount to be paid upon allotment, shall be granted by Hitachi to the person to whom stock acquisition rights are allotted ( Stock Acquisition Right Holders ) and the person shall set off such remuneration claims against his/her obligation to pay the total paid-in amount of the stock acquisition rights upon allotment. As this amount is the fair value of the stock acquisition rights, the allotment of stock acquisition rights shall not fall under an allotment at specially favorable conditions.

6. Amount of assets to be contributed upon exercise of stock acquisition rights

The amount of assets to be contributed upon exercise of a stock acquisition right shall be the amount obtained by multiplying (i) the amount to be paid in per share to be delivered upon exercise of stock acquisition right (the Exercise Price ) by (ii) Number of Shares to be Issued. The Exercise Price is one yen.

7. Exercise period of stock acquisition rights

The exercise period of stock acquisition rights shall be from April 27, 2018, to April 26, 2048.

8. Conditions for the exercise of stock acquisition rights

(1) During the exercise period specified in section 7, a Stock Acquisition Right Holder may exercise all the stock acquisition rights determined in accordance with the provisions of paragraph (2) or (3) below only at a time within 10 days (in case the last day is not a business day, the following business day) from the day immediately following the date on which he/she ceases to be an Executive Officer, Director, or Corporate Officer of the Company.

(2) The number of stock acquisition rights a Stock Acquisition Right Holder may exercise shall be determined based on the ratio of (i) the total shareholder return (the TSR ) for shares of Hitachi for the period between April 1, 2018, and March 31, 2021 (the Waiting Period ) to (ii) the growth rate of TOPIX (Tokyo Stock Price Index) for the Waiting Period (the TSR/TOPIX Growth Rate Ratio ), in accordance with the share price conditions on page 8 to 9. Any fraction less than one resulting from this calculation shall be rounded down.

a. In case the TSR/TOPIX Growth Rate Ratio is 120% or more

All the stock acquisition rights allotted (the Allotted Rights ) may be exercised.

b. In case the TSR/TOPIX Growth Rate Ratio is 80% or more but less than 120%

Only a part of the Allotted Rights may be exercised according to the degree of the TSR/TOPIX Growth Rate Ratio.

c. In case the TSR/TOPIX Growth Rate Rati

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