Director Remuneration

Policy for determining the amount of remuneration, etc. by individual for fixed remuneration (monetary remuneration) (including policy for determining the timing or conditions of granting remuneration)

The basic remuneration of our Directors shall be a monthly fixed remuneration, which shall be determined in accordance with their position, responsibilities, and years in office, taking into consideration the standards of other companies, our performance, and the level of employee salaries, as well as other factors in a comprehensive manner.

Policy for determining the details and calculation method of the amount or number of performance-linked and non-monetary remuneration, etc. (including policy for determining the timing or conditions of granting remuneration)

Our performance-linked remuneration and non-monetary stock-based remuneration shall each consist of the following.

1) Performance-linked remuneration shall be based on the amount of consolidated operating income for the fiscal year for which it is paid, in order to motivate Directors to improve their performance and to appropriately reflect the results of each fiscal year. The amount of performance-linked remuneration shall be calculated by multiplying 2% of consolidated operating income by the number of points stipulated in the internal rules for each position of Executive Directors eligible for payment. However, the maximum total amount shall be 150 million yen. Performance-linked remuneration shall not be paid if the ratio of consolidated operating income to net sales is less than 2% or if the amount of consolidated net income is less than 1,000 million yen. The calculated amount of performance-linked remuneration shall be paid as Directors' bonuses each year after the Ordinary General Meeting of Shareholders following the end of the fiscal year.

2) Stock-based remuneration shall be granted to executive Directors who are determined by the Board of Directors as restricted stock with a certain Transfer Restriction Period in order to share value with shareholders and to provide an incentive to continuously improve corporate value. The total amount and total number of shares of stock-based remuneration per fiscal year shall be determined by the Board of Directors, with the maximum amount of 50 million yen and 20,000 shares. The specific amount of stock-based remuneration shall be calculated based on the points stipulated in the internal rules for each position of executive Directors who are eligible for payment. The number of shares to be granted shall be calculated based on the trading price on the stock exchange so that the amount to be paid per share will not be particularly favorable to the executive Directors. The timing of the granting of stock-based remuneration shall be determined by a resolution of the Board of Directors after the Ordinary General Meeting of Shareholders following the end of the fiscal year. Directors who have been granted shares of stock shall not transfer, grant a security interest in, or otherwise dispose of such shares until they retire from their positions as officers or employees of the Company or its group companies, as previously determined by the Board of Directors.

Policy on determining the ratio of the amounts of fixed remuneration, performance-linked remuneration, and stock-based remuneration to the amount of remuneration, etc. for individual Directors

Performance-linked remuneration shall be based on the amount of consolidated operating income for the fiscal year for which the remuneration is paid, and the higher the position, the higher the weight of the performance-linked remuneration. The Board of Directors will determine the appropriate allocation of stock-based remuneration as long-term incentive remuneration. The specific calculation method of the amount of performance-linked remuneration and the amount of stock-based remuneration is described in the previous section. Depending on performance, the ratio of performance-linked remuneration to the total amount of fixed remuneration, performance-linked remuneration and stock-based remuneration (total amount of remuneration) generally ranges from 0% to 50%, and the ratio of stock-based remuneration to the total amount of remuneration generally ranges from 0% to 25%.

Other important matters concerning the determination of the details of remuneration, etc. for individual Directors

The details, calculation method and amount of remuneration, etc. for each individual Director shall all be in accordance with internal rules established by the Board of Directors after deliberation and report by the Nomination and Remuneration Advisory Committee. The determination of the specific amount of fixed remuneration for each individual shall be delegated to and finally determined by the CEO in accordance with the relevant internal rules. The scope of delegation to the CEO shall be determined by the Board of Directors, subject to the report of the Nomination and Remuneration Advisory Committee.