Board of Directors

Remuneration for Directors
FY2024 (July 1, 2023 - June 30, 2024)

1.Total Remuneration by Position, Total Remuneration by Type, and Number of Applicable Directors, etc.

2.Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

1. Basic Policy
The Company's basic policy is to set compensation for directors in consideration of shareholder interests so that the compensation system functions as an incentive to increase corporate value continuously, and to set the compensation of individual directors at an appropriate level based on the responsibilities of their positions.

2. Structure of the Compensation System
The compensation system for the Company's directors (excluding outside directors and directors who are members of the Audit and Supervisory Committee) consists of the following: the base remuneration as monthly fixed monetary compensation, performance-linked monetary remuneration as short-term incentive (annual bonus), and share-based stock options (non-monetary compensation) for the purpose of sharing shareholder interests. In light of their roles, the Company's outside directors receive only base remuneration. The compensation system for directors who are members of the Audit and Supervisory Committee of the Company also consists of base remuneration only, in consideration of their roles.
The base remuneration is a monthly fixed monetary compensation and is determined based on the position and responsibilities of each director, taking into consideration the level of compensation for directors at other companies of the same size as the Company, as well as the level of employee salaries, and a comprehensive range of factors.
The performance-linked cash remuneration (annual bonus) as a short-term incentive for the Representative Director shall be linked to the Company's performance for a single fiscal year. In the Company, the performance-linked KPI shall be 'consolidated operating income' from the perspective of improving earnings in the core business. The KPI target for "consolidated operating profit" for the fiscal year ended June 2024 was 111 billion yen, and the actual result was 140.2 billion yen.
The amount to be paid shall be determined based on the degree of achievement of that budget and shall vary in a ratio of 0% to 150% depending on the degree. Furthermore, for Directors other than the Representative Director, 50% of their remuneration will be linked to the Company's performance, similar to the Representative Director. Additionally, 50% will be linked to individual performance. The individual performance-linked portion will be assessed based on budget target achievement, reviewed by the Nomination and Compensation Committee, and the final payment rate, ranging from 0% to 150%, will be determined by the President and Representative Director.
Since the Company determines the necessity of granting share-based compensation on a case-by-case basis, taking into consideration the past results of stock option grants, etc., the Company does not clearly stipulate the ratio of share-based stock options or the timing of their payment. However, the Company will continue to consider the frequency of granting share-based stock options in the future in the context of an appropriate executive compensation system.
The composition of our remuneration structure for the Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee members) shall be designed based on 70% fixed remuneration as basic compensation and 30% performance-linked remuneration (annual bonus) as short-term incentive compensation.
Regarding the timing of remuneration payments, the fixed remuneration as basic compensation is paid monthly, while the performance-linked remuneration (annual bonus) as short-term incentive compensation is paid after the Company's performance is confirmed and following the conclusion of the annual general meeting of shareholders.

3. Policy on Determination of Individual Compensation
The Company consults its Nomination and Compensation Committee regarding the determination of individual director compensation, etc., and the Board of Directors adopts a resolution based on the Nomination and Compensation Committee's report.
However, with respect to base remuneration for Directors other than the President and Representative Director, the Company delegates to the President and Representative Director the authority to determine the final amount of such remuneration, taking into consideration the roles and responsibilities of each individual director, within the maximum and minimum amounts separately determined by the Board of Directors. The Company also delegates to the President and Representative Director the authority to determine the final payment rate of the performance-linked cash remuneration (annual bonus) for the individual performance-linked portion. To ensure that the delegated authority is properly exercised, the President and Representative Director must fully consult with the independent outside directors through the Nomination and Compensation Committee.

As of October 16, 2024