The Company has adopted a remuneration structure that links remuneration for Directors (excluding Outside Directors) and Chief Officers to shareholder interests so that the structure can fully function as an incentive to achieve sustained improvement of corporate value, in accordance with its basic policy that remuneration for individual Directors shall be determined at an appropriate level based on their respective duties.
Specifically, remuneration of Directors (excluding Outside Directors) and Chief officers of the Company consists of (1) monetary compensation made up of (i) fixed compensation including basic compensation and service compensation and (ii) variable compensation that is performance-linked compensation and (2) non-monetary compensation made up of two types of stock compensation that are (i) performance-linked stock compensation and (ii) restricted stock compensation, while remuneration of Outside Directors of the Company consists only of fixed compensation that is monetary compensation.

[Monetary remuneration]
A) Fixed remuneration

• Fixed remuneration is determined based on the [standard amount according to positions and responsibilities of eligible Directors and Chief Officers. Fixed remuneration is paid monthly.

B) Performance-based variable remuneration

• The base amount of performance-based variable remuneration (monetary remuneration) is set based on fixed remuneration for eligible Directors and Chief Officers. They are evaluated based on the Company’s financial results and their individual performance related to their responsibilities. The amount of payment is determined within a range of 20% to 200% of the base amount.
• For the evaluation of performance-based variable remuneration, consolidated results, division results and individual qualitative targets according to roles of eligible Directors and Chief Officers are weighted to total 100%.
• Evaluation indicators for performance-based variable remuneration are based on consolidated net sales and consolidated operating profit from a perspective of emphasizing the Group’s growth potential and profitability.
• Performance-based variable remuneration is paid with monthly fixed remuneration.

[Non-monetary remuneration (stock remuneration)]
C) Performance-based stock remuneration

• The Company has adopted a stock-based remuneration plan as non-monetary remuneration, etc.
• The stock-based remuneration plan is a performance-based stock remuneration system in which the Company’s shares are acquired through a trust funded by the Company and are delivered to individuals based on the individuals’ performance and contributions to the Company’s financial results for each fiscal year in accordance with the Rules of Stock-Based Remuneration Plan.
• Under the stock-based remuneration plan, consolidated operating profit is an indicator for the stock-based remuneration plan and a basic criterion for determining the level of achievement of business results because the Company reviews it as key financial data for achieving a sustained improvement in corporate value.
• For share-based compensation, the Company shall grant points in June each year based on individual performance, contributions to the Company's financial results for each fiscal year, etc.
• In the event that it is decided to deliver share-based compensation, the Company shall deliver 50% of the Company’s shares in August in a determination year, and the remaining 50% shall be delivered in August three years after the determination year.

D) Restricted stock (RS) remuneration

• The Company shall adopt a performance-based stock remuneration plan for granting the Company’s shares under the Share Granting Rules according to the level of achievement of business results and the level of individual contribution to the Company’s financial results. Under the stock-based remuneration plan, consolidated operating profit is an indicator for the stock-based remuneration plan and a basic criterion for determining the level of achievement of business results because the Company reviews it as key financial data for achieving a sustained improvement in corporate value.

The ratio of fixed remuneration to variable remuneration for Directors (excluding Outside Directors) and Chief Officers is set as 50%:50%, in principle. The ratio of stock-based remuneration to fixed remuneration is not set.

The Remuneration Committee adopts a resolution specifying remuneration, etc. for Directors and Chief Officers. The Remuneration Committee is chaired by an Independent Outside Director. Independent Outside Directors accounts for a majority of the committee members. The Committee considers and determines remuneration in accordance with the above basic policy.