Performance-linked compensation tied to consolidated net sales and consolidated operating profit

「At today's meeting of the Board of Directors, we resolved to allot 383,200 shares of common stock as specified transfer-restricted shares to 11 eligible directors of the company, including 5 outside directors; 8 executive officers; 15 directors of the company's subsidiaries, including 7 who also serve as directors or executive officers of the company but excluding outside directors of the subsidiaries; and 28 executive officers and fellows of the subsidiaries, including 6 who also serve as executive officers of the company. This will be effected by contributing to the company, as in-kind assets, the entire amount of monetary compensation claims totaling ¥1,277,205,600 to be paid to the eligible recipients. The above directors and executive officers and fellows of the company and its subsidiaries are collectively referred to below as the “eligible recipients.”」

「The target and actual values for the relevant indicators are as follows. FY2024 actual FY2025 actual FY2025 target Consolidated operating profit ¥330.2 billion ¥350.2 billion ¥331 billion Consolidated revenue ¥3,195.8 billion ¥3,357 billion ¥3,280 billion CCC 95 days 106 days —」

「The target and actual values for the indicators under the plan are as follows. FY2024 actual: consolidated operating profit of ¥330.2 billion, consolidated revenue of ¥3,195.8 billion, ROIC of 5.9%, an 18% reduction in CO2 emissions arising from energy used by the company (Scope 1 and 2) compared with FY2019, and an engagement score of 81%. FY2024 targets: consolidated operating profit of ¥300 billion, consolidated revenue of ¥3,100 billion, ROIC of 5.4%, a 17% reduction in CO2 emissions, and an engagement score of 80%.」

「From the current fiscal year, the company and certain subsidiaries have introduced share compensation plans using a share delivery trust. Under these plans, the company transfers treasury shares to the trust or the trust purchases the company's shares on the stock market, and shares of the company or cash equivalent to the proceeds from the sale of the company's shares are delivered and paid to directors and other officers and employees at or above specified positions according to their position and achievement of performance targets.」

「At the 128th Annual General Meeting of Shareholders held on 27 June 2024, a resolution was passed to introduce a new medium-term performance-linked share compensation plan.」

「The company introduced a performance share unit plan and a restricted stock compensation plan pursuant to a resolution of the 125th Annual General Meeting of Shareholders held on 29 June 2021. It further added an ESG metric, the percentage reduction in emissions relative to the CO2 emissions target, to the performance evaluation indicators effective 1 April 2022.」

「The company has revised the compensation structure for its directors, excluding outside directors, referred to below as the eligible directors, to further align their interests with shareholders through changes in the share price and to increase their incentive to contribute to improving corporate value and medium-term performance beyond previous levels.」

「The targets for the current fiscal year were consolidated revenue of ¥2,480 billion and consolidated operating profit of ¥240 billion. The previous fiscal year's actual results were consolidated revenue of ¥2,431.5 billion and consolidated operating profit of ¥209.8 billion, while the current fiscal year's actual results were consolidated revenue of ¥2,315.1 billion and consolidated operating profit of ¥186.6 billion.」

「For short-term performance-linked compensation, the company has selected consolidated revenue and consolidated operating profit, its numerical targets for short-term management, as single-year performance indicators. The amount of short-term performance-linked compensation varies based on the degree of achievement of the targets for these indicators and a comparison with the previous fiscal year's results.」