Remuneration for Directors

Policy on Determining Remuneration for Directors (and Other Officers)

The Board of Directors of the Company passed a resolution on the Policy on Determining Remuneration for Directors (and Other Officers) as outlined below.

1. Basic policy

The Company will stipulate the following as basic policies for remuneration for Directors (and other officers).

  • Remuneration plans shall motivate the Group's sustainable growth and enhancement of medium- to long-term corporate value.
  • Remuneration plans shall be designed to share the same value with shareholders and other stakeholders.
  • Remuneration shall be set at levels that can attract and retain excellent human resources with global perspective.
  • The process to determine remuneration shall ensure transparent and objective.

2. Remuneration levels

Remuneration levels shall be determined by conducting a comparative analysis of corporations with similar business activities or size to the Company, while referencing remuneration for Directors (and other officers) survey data provided by external expert organizations.

3. Remuneration structure by position

  • Executive Directors
    "Basic remuneration," "performance-based bonuses," and "stock remuneration" will be paid.
  • Non-executive Directors who are not Audit & Supervisory Committee Members
    In consideration of their position as independent from the execution of business, only basic remuneration will be paid.
  • Directors who are Audit & Supervisory Committee Members
    In consideration of their position as independent from the execution of business, only basic remuneration will be paid.

4. Content, etc. of remuneration

Type of remuneration and content, etc. of remuneration

Type of remuneration Content, etc. of remuneration Fixed / variable
Basic remuneration Monthly cash in accordance with position and responsibilities Fixed
Performance-based bonus

Cash to be paid at a fixed time each year in accordance with the consolidated performance for each fiscal year

  • Performance evaluation indicators shall be designed to appropriately reflect the profitability of the Company's business and shall be the same as the consolidated operating profit margin used as the calculation indicator for employee bonuses.
  • The amount to be paid shall be calculated by multiplying the standard amount for each position by the payout ratio based on the level of achievement of the performance evaluation indicators (variable within a range of 0% and 200%).
Variable
Stock remuneration Performance-based post-delivery restricted stock remuneration

Stock remuneration aimed at motivating the enhancement of medium- to long-term corporate value

  • Performance evaluation indicators shall be selected from the economic and social value goals set in the Medium-Term Management Plan and decided by the Board of Directors after consulting with the Remuneration Committee.
  • Restricted stock, calculated by multiplying the standard amount for each position by the payout ratio based on the level of achievement of the performance evaluation indicators, will be issued at the end of each fiscal year.
  • The restrictions shall be released upon the forfeiture of all and any positions as Director and Operating Officer of the Company.
Variable
Restricted stock remuneration by position

Stock remuneration aimed at sharing value with shareholders

  • On the condition of continuous service for the period set by the Company's Board of Directors, restricted stock will be issued in advance at a certain time each year in accordance with the standard amount by position.
  • The restrictions shall be released upon the forfeiture of all and any positions as Director and Operating Officer of the Company.
Fixed

Performance evaluation indicators

Performance evaluation indicators Reason for selection Evaluation weight Range of payment rate
Performance-based bonus Consolidated operating profit margin Because it is an indicator that appropriately reflects the profitability of the Company's business and also serves as the calculation indicator for employee bonuses 100% 0% to 200%
Stock remuneration Performance-based post-delivery restricted stock remuneration Economic value goal Consolidated return on equity (ROE) Evaluation of management efficiency and medium-term corporate growth 50% 0% to 200%
Social value goal Sustainability indicators Realization of social value goals and medium- to long-term improvement of corporate value 50% 0% to 100%

5. Composition of remuneration

The composition of remuneration for Representative Director, President and Chief Executive Officer when the target achievement level of performance evaluation indicators for variable remuneration is 100% is generally as follows.

Composition of remuneration for Representative Director, President and Chief Executive Officer (as per design)

The overall breakdown is 1 unit of base salary, 1 unit of performance-linked bonus, and 1 unit of stock compensation. Of the stock compensation, 3 units are performance-linked and 1 unit is based on position. Performance-linked bonuses and performance-linked stock compensation constitute linked compensation.

The composition of remuneration for Other Executive Directors is determined in consideration of the responsibilities and remuneration levels for Directors, in accordance with the composition of remuneration for the Representative Director, President and Chief Executive Officer.

6. Shareholding guidelines

The Company has established shareholding guidelines that recommend Executive Directors hold a certain level of the Company's shares based on their position, with the goal of sustainably improving corporate value and sharing medium- to long-term value with shareholders. The shareholding levels and other details in the guidelines are decided by the Board of Directors following deliberation by the Remuneration Committee.

7. Process to determine remuneration

To ensure transparency and objectivity in the process to determine remuneration, the individual remuneration amounts for officers are determined by the Board of Directors based on this policy, following deliberation by the Remuneration Committee. It should be noted that remuneration for Directors who are Audit & Supervisory Committee Members shall be determined upon consultation with Directors who are Audit & Supervisory Committee Members.

Total remuneration for each officer category (fiscal 2025)

Business terms Total amount of remuneration Basic remuneration Performance-based bonus Restricted stock remuneration
by position Performance-based post-delivery issuance type
Number of persons Total (Millions of yen) Number of persons Total (Millions of yen) Number of persons Total (Millions of yen) Number of persons Total (Millions of yen) Number of persons Total (Millions of yen)
Director
(Of which Outside Directors)
7
(3)
222
(38)
7
(3)
166
(38)
3
(-)
29
(-)
3
(-)
26
(-)
3
(-)
0
(-)
Directors who are Audit & Supervisory Committee Members
(Of which Outside Directors)
3
(2)
50
(25)
3
(2)
50
(25)
-
(-)
-
(-)
-
(-)
-
(-)
-
(-)
-
(-)
Total 10 273 10 217 3 29 3 26 3 0

Remuneration Committee

The Remuneration Committee, presided over by an Outside Director, consists of all the Outside Directors who are not Audit & Supervisory Committee Members, along with the Representative Director, President and Chief Executive Officer. For auditing purposes, one member appointed by the Audit & Supervisory Committee attends the meetings. The Committee deliberates on remuneration plans for Directors and Operating Officers as well as the contents of remuneration paid to each Director, and it then reports the deliberation results to the Board of Directors.

Members Three Independent Outside Directors, One Inside Director
Seiichi Koike (Chairperson / Independent Outside Director)
Masashi Hiraiwa (Independent Outside Director)
Emiko Hamada (Independent Outside Director)
Katsuya Sase (Representative Director, President and CEO)

Status of activities of Remuneration Committee (fiscal 2025)

Number of meetings held 11
Main matters under deliberation
  • Deliberation regarding content of remuneration of individual Directors and Operating Officers.
  • Deliberation on the General Meeting of Shareholders' proposal relating to measures for transferring unexercised share acquisition rights into restricted stock
  • Review of the remuneration plan for directors in connection with the Medium-Term Management Plan