Design of Profit-Linked Compensation and Share-Based Compensation Granted Upon Leaving Office

「The company will pay the incentive-based cash compensation to eligible directors when net income attributable to owners of the parent after recording profit-linked monetary compensation is ¥1 billion or more, …provided that total payments are capped at ¥100 million. …For the fiscal year ended March 2026, the amount was ¥1,225 million.」

「The Company has introduced a profit-linked cash compensation plan for directors, excluding directors who are Audit and Supervisory Committee members and outside directors, referred to below as “eligible directors,” based on profit attributable to owners of the parent. The plan is intended to increase incentives for sustained improvements in performance and corporate value by enhancing the transparency of compensation standards and linking compensation to consolidated performance, thereby further promoting management that prioritizes shareholders. Compensation is paid to eligible directors when profit attributable to owners of the parent after recording profit-linked cash compensation is ¥1 billion or more. As shown in Table 1 below, a base amount is calculated using a predetermined payout rate based on profit attributable to owners of the parent, and each eligible director’s individual payout is calculated by multiplying that base amount by a position-based coefficient predetermined for each position, as shown in Table 2. Payments to each eligible director are made within 1 month after the date of the general meeting of shareholders. The total payout is capped at ¥100 million. The target for the indicator, profit attributable to owners of the parent, is ¥1,900 million under the “Plan for Compliance with Listing Maintenance Criteria under the New Market Classification” and the medium-term management plan “Sustaina V (Value),” whose final year is the fiscal year ending March 2026. The figure for the fiscal year ended March 2025 was ¥1,566 million.」

「Outside directors have newly been added as eligible recipients under the plan. The total amount of monetary compensation claims paid for the grant of restricted stock is capped at ¥60 million per year, of which the portion for outside directors is capped at ¥10 million per year. The total number of common shares of the Company is capped at 96,000 shares per year, of which the portion for outside directors is capped at 16,000 shares per year.」

「At a meeting of the Board of Directors held on 23 June 2023, the Company resolved to dispose of treasury shares as restricted stock compensation, and the payment procedures were completed on 21 July 2023. Common shares of the Company: 5,577 shares.」

「At a meeting of the Board of Directors held on 23 June 2022, the Company resolved to dispose of treasury shares as restricted stock compensation, and the payment procedures were completed on 22 July 2022. Class and number of shares to be disposed of: common shares of the Company, 9,644 shares.」

「At a meeting of the Board of Directors held on 24 June 2021, the Company resolved to dispose of treasury shares as restricted stock compensation, and the payment procedures were completed on 21 July 2021. Class and number of shares to be disposed of: common shares of the Company, 12,793 shares.」

「At a meeting of the Board of Directors held on 25 June 2020, the Company resolved to dispose of treasury shares as restricted stock compensation, and the payment procedures were completed on 22 July 2020. Class and number of shares to be disposed of: common shares of the Company, 13,627 shares.」

「At the 132nd Annual General Meeting of Shareholders held on 25 June 2020, the Company obtained approval to revise its profit-linked cash compensation plan and introduce a restricted stock compensation plan. With the introduction of the restricted stock compensation plan, the performance-linked share compensation plan will be discontinued going forward.」

「Profit-linked compensation will be paid when profit attributable to owners of the parent after recording profit-linked compensation is ¥800 million or more. A payout rate will be determined based on profit attributable to owners of the parent, and the resulting total payout will be allocated according to position-based coefficients and paid within 1 month after the date of the general meeting of shareholders. However, the total payout is capped at ¥51 million. Under the performance-linked share compensation plan involving delivery upon retirement, compensation will be paid when profit attributable to owners of the parent after recording profit-linked compensation exceeds ¥1.5 billion, and points under the share delivery trust will be granted. The plan is capped at 28,000 points, equivalent to 28,000 common shares of the Company.」

「At the 130th Annual General Meeting of Shareholders held on 27 June 2018, the Company resolved to increase the number of directors, excluding directors who are Audit and Supervisory Committee members, from 4 to 7 and revise the annual limit on directors’ compensation to ¥320 million or less, with the aim of increasing incentives for officers to take appropriate risks and practice proactive governance.」

「Profit-linked compensation will be paid when profit attributable to owners of the parent after recording profit-linked compensation is ¥800 million or more. As shown below in Table 1, a payout rate will be determined based on profit attributable to owners of the parent, and the resulting total payout will be allocated according to position-based coefficients and paid within 1 month after the date of the general meeting of shareholders. However, the total payout is capped at ¥51 million. Under the performance-linked share compensation plan involving delivery upon retirement, compensation will be paid when profit attributable to owners of the parent after recording profit-linked compensation exceeds ¥1.5 billion. The payout amount will be determined in accordance with the “Share Delivery Regulations,” and points under the share delivery trust will be granted based on the individual contributions of executive directors deliberated by the Compensation Committee. The plan is capped at 280,000 points, equivalent to 280,000 common shares of the Company.」