Executive Compensation Scheme Focused on Enhancing Corporate Value and Sharing Value with Shareholders

「At a meeting of the Board of Directors held on 9 May 2018, the company resolved to introduce a restricted stock compensation plan for its directors, excluding directors who are Audit and Supervisory Committee members and outside directors, with the purpose of providing ongoing incentives to increase shareholder value during their terms of office, thereby achieving sustained growth in the company's medium- to long-term corporate value and promoting greater value sharing with shareholders.」

「From fiscal 2026, the Company revised the indicators used to evaluate company-wide performance. Operating profit had previously been used as the evaluation indicator, but from the current fiscal year, profit before income taxes is being applied to reflect final earning power, including financial activities as well as core operations. The amount is calculated by multiplying profit before income taxes by the points determined internally and a coefficient for each position.」

「Operating profit for the previous fiscal year × 200 shares × position-based coefficient」

「In addition, from fiscal 2023 (the fiscal year ending March 2024), the Company revised its restricted stock compensation program to further share value with its directors and shareholders and to promote the sustainable enhancement of corporate value. Specifically, the number of Company shares granted to directors is calculated by multiplying operating profit for the previous fiscal year by the number of shares per unit of the performance indicator determined internally and by a position-based coefficient, thereby increasing the linkage to performance.」

「In addition, from fiscal 2022, the Company revised its stock compensation program to further share value with its directors and shareholders and to promote the sustainable enhancement of corporate value. Specifically, the number of Company shares granted to directors is calculated by multiplying operating profit for the previous fiscal year by the number of shares per unit of the performance indicator determined internally and by a position-based coefficient, thereby increasing the linkage to performance.」

「At a meeting of the Board of Directors held on 3 February 2021, the Company resolved its policy for determining the details of individual compensation and other benefits for directors.」

「In addition, performance-based target achievement bonuses and fixed payments to full-time Audit and Supervisory Committee members have been discontinued from bonuses paid in July 2020.」

「Accordingly, the provision for directors' retirement benefits was fully reversed, and the unpaid portion of the discontinued payment amount, ¥35.598 million excluding amounts already paid, is presented under Other non-current liabilities (long-term accounts payable).」

「At the 32nd Annual General Meeting of Shareholders held on 26 June 2019, the Company resolved to make discontinued payments associated with abolishing the retirement bonus program for directors and to grant retirement bonuses to retiring directors.」

「To ensure transparency and objectivity in determining compensation amounts, the Company has established a Compensation and Nomination Advisory Committee and determines compensation amounts after prior deliberation by the committee. During the fiscal year, the committee met 4 times and, after discussing appropriate levels of executive compensation and other matters, submitted recommendations for specific compensation amounts.」

「The Company has introduced a restricted stock compensation program for directors, excluding directors who are Audit and Supervisory Committee members, to provide incentives for the sustainable enhancement of corporate value and further share value with shareholders. The specific allocation to each eligible director is to be determined by the Board of Directors.」