3. Remuneration for Directors and Chief Officers | Governance | INVESTOR RELATIONS

9. Remuneration for Directors and Chief Officers

Policy on determination of amount of remuneration for officers etc. or calculation method thereof
Total amount of remuneration, etc. by officer category and by type of remuneration, etc. and number of eligible officers

9.1 Policy on determination of amount of remuneration for officers etc. or calculation method thereof

The Company changed to a Company with a Nominating Committee, etc. by resolution of the 9th Ordinary General Meeting of Shareholders held on June 22, 2023. The composition of remuneration for the Company's officers (Directors and Chief Officers) after transition to a Company with a Nominating Committee, etc. is as described below.

(1) Composition of remuneration and persons eligible to receive payment of remuneration

Remuneration of the Company’s Directors (excluding Outside Directors) and Chief Officers　consists of monetary remuneration comprising (i) fixed remuneration made up of basic remuneration and service remuneration and (ii) performance-based variable remuneration. In addition, the Company has introduced (i) performance-based stock remuneration and (ii) restricted stock remuneration.
Remuneration of Outside Directors consists only of fixed remuneration.

Officer category	Monetary remuneration		Non-monetary remuneration
Officer category	Fixed remuneration	Variable remuneration	Stock-based remuneration
Directors (excluding Outside Directors) and Chief Officers	〇	〇	〇
Outside Director	〇	‐	‐

(2) Policy, etc. on determination of details of remuneration for officers (Directors and Chief Officers), etc.

At the meeting of the Remuneration Committee, the Company resolved a policy for determining the details of individual remuneration, etc. for Directors and Chief Officers, which includes the following.
Moreover, the Board of Directors judged that the remuneration, etc. for Directors and Chief Officers for the fiscal year ended on March 31, 2024 was in line with the determination policy.

(i) Basic policy

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.

[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.

(ii) Policy on determination of amount of monetary remuneration, amount of performance-based remuneration, etc. or the ratio of non-monetary remuneration, etc. to individual remuneration, etc. for each Director and Chief Officers

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.

(iii) Matters regarding the determination of details of individual remuneration, etc. for Directors and Chief Officers

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.

9.2 Total amount of remuneration, etc. by officer category and by type of remuneration, etc. and number of eligible officers

Before transition to a Company with a Nominating Committee, etc. (from April 2023 to June 2023)

Officer category	Total amount of remuneration (millions of yen)	Total amount by type of remuneration (millions of yen)			Number of eligible officers
		Monetary remuneration		Non-monetary remuneration
		Fixed remuneration	Variable remuneration	Stock-based remuneration
Directors (excluding Audit & Supervisory Committee Members and Outside Directors)	61	32	28	‐	6
Audit & Supervisory Committee Members (excluding Outside Directors)	‐	‐	‐	‐	‐
Outside Directors	15	15	‐	‐	5

(Notes)
1. The total amount of remuneration, etc. for Directors who are Audit & Supervisory Committee Members included in remuneration for Outside Directors above is the amount of remuneration, while in office, of three Directors (all three of whom are Outside Directors) also serving as Audit and Supervisory Committee Members who left office at the conclusion of the 9th General Meeting of Shareholders held on June 22, 2023.
2. Included in the basis for calculating the amount paid in the current fiscal year are consolidated results (fiscal year ended March 31, 2023) that were used as evaluation indicators; consolidated net sales of 255,429 million yen and consolidated operating profit of 25,931 million yen.

After transition to a Company with a Nominating Committee, etc. (from July 2023 to March 2024)

Officer category	Total amount of remuneration (millions of yen)	Total amount by type of remuneration (millions of yen)			Number of eligible officers
		Monetary remuneration		Non-monetary remuneration
		Fixed remuneration	Variable remuneration	Stock-based remuneration
Directors (excluding Outside Directors)	37	37	‐	‐	3
Outside Directors	69	69	‐	‐	7
Chief Officers	805	138	220	446	7

(Notes)
1. Remuneration for officers concurrently serving as Directors and Chief Officers and the number thereof are recorded in the Chief Officers columns.
2. The above includes stock remuneration for the fiscal year ended March 31, 2023 paid in the current fiscal year.

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