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 and Chief Officers 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 a performance-linked stock remuneration system under which shares of the Company’s stock are acquired through a trust established using money contributed by the Company, and points are awarded in accordance with the Regulations on Share Delivery for Officers when goals formulated by the Remuneration Committee are achieved based on a medium-term management plan or else another management plan or goals for one or several business years formulated by the Board of Directors. Then, shares of the Company’s stock corresponding to these points or money in lieu of these shares are given to the eligible Directors and Chief Officers through the trust. Under the system, consolidated operating profit, which the Company uses as a management indicator for the sustained improvement of corporate value, is used as an indicator related to the stock remuneration system and a criterion for evaluating the degree of achievement of performance targets. In June, immediately following the end of the business year for which the above targets are achieved, points corresponding to the degree of achievement of the targets are awarded according to the point awarding criteria defined by the Remuneration Committee. If delivery of shares of the Company’s stock, etc. is decided, this delivery is done collectively in August of the year in which it is decided to deliver the shares of the Company’s stock. Regarding portions equivalent to the points already awarded by June 2025, 50％ of the shares of the Company’s stock, etc. to be awarded shall be delivered in August of the year when this delivery of shares of the Company’s stock was decided, and the remaining 50% shall be delivered in August in the year three years after the decision was made.

D) Restricted stock remuneration

• The Company shall grant restricted stock remuneration (RS) as consideration for the provision of services in the future to provide incentives to focus on the sustainable improvement of corporate value and further promoting value sharing with shareholders. The number of shares to be granted shall be determined by the Remuneration Committee based on the duties, etc. of the individual eligible Directors and Chief Officers in accordance with the Regulations on Restricted Stock Remuneration. A certain transfer restriction period shall be imposed in accordance with the restricted stock allotment agreement, and the cancellation of the transfer restriction and gratis acquisition of shares shall be conducted in accordance with the same agreement.

The ratio of fixed remuneration to variable remuneration for Directors (excluding Outside Directors) and Chief Officers is set at 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.