Director compensation centered on fixed and performance-linked compensation

「From the current consolidated fiscal year, the Company has introduced a performance-linked stock compensation plan for its directors (excluding directors who do not concurrently serve as executive officers, secondees accepted by the Company, and non-residents of Japan) and executive officers (excluding secondees accepted by the Company and non-residents of Japan), based on a resolution passed at the 104th Annual General Meeting of Shareholders held on 26 June 2025.」

「Beginning with the interim consolidated accounting period, we introduced a performance-linked share-based compensation system for directors of the Company, excluding directors who do not concurrently serve as executive officers, secondees accepted from other entities and non-residents of Japan, and for executive officers, excluding secondees accepted from other entities and non-residents of Japan, collectively referred to as "Directors, etc." The system was introduced pursuant to the resolution of the 104th Annual General Meeting of Shareholders held on 26 June 2025, with the objectives of clarifying the linkage between compensation for Directors, etc. and the Company's performance and share value, aligning their interests with those of shareholders, and enhancing their motivation to contribute to medium- and long-term performance improvement and increases in corporate value.」

「In view of the responsibility of directors other than directors who are Audit and Supervisory Committee members and outside directors to contribute to medium- and long-term performance improvement and increases in corporate value, the individual compensation of these directors will, in principle, consist of basic compensation, performance-linked bonuses and share-based compensation.」

「Specifically, in view of the directors' role in supervising the execution of duties by executive officers and employees, basic compensation constitutes all of each director's individual compensation, and no performance-linked or non-monetary compensation is paid.」

「Because directors are responsible for supervising management and are not directly involved in business execution, they receive no performance-linked compensation and are paid fixed compensation only. However, directors who also serve as executive officers receive, in addition to their fixed director compensation, fixed compensation based on their executive officer rank and bonuses, including some performance-linked bonuses.」

「To ensure the proper performance of supervisory and audit functions, directors receive fixed compensation only. A performance-linked compensation system has been introduced for part of the bonuses included in the executive compensation paid to directors who also serve as executive officers. Compensation for directors other than Audit and Supervisory Committee members is determined by a resolution of the Board of Directors following deliberation by the Compensation Advisory Committee, while compensation for directors who are Audit and Supervisory Committee members is determined by resolution of the Audit and Supervisory Committee.」