Executive Remuneration System

The Company has established a policy on determining the details of remunerations, etc. payable to each Director (this “Policy”). The remunerations paid to Directors under our executive remuneration system consists of “Basic Remuneration,” the amount of which is fixed, and “Bonus,” which is linked to the business results of each fiscal year, as well as “Restricted Stock,” which is linked to medium- and long-term business results, and “Performance Share Unit,” for which the Company’s Board of Directors has set a certain period of time as the performance evaluation period. In the case of External Directors (Independent) and Audit and Supervisory Board Members who shall be in the position independent from the management, only “Basic Remuneration,” the amount of which is fixed.

Breakdown of the fixed basic compensation, performance-based bonuses, and Transfer-restricted stock compensation as rcentages of the compensation of officers is shown below.

Roles and Activities of Remuneration of Directors Advisory Committee

As an advisory body to Board of Directors, the Remuneration of Directors Advisory Committee discusses and resolves matters related to officers’ remuneration and system from an independent and objective perspective. A majority of the members of the Remuneration of Directors Advisory Committee, chaired by Independent External Director Mr. Tsunehiko Iwai, are Independent External Directors. The Remuneration of Directors Advisory Committee is also attended by the External Audit & Supervisory Board Member(s) as an observer to ensure transparency.

August 10, 2022 : Review of remuneration system
September 29, 2022 : Method of Calculating of executive bonus
February 24, 2023 : Remuneration (monthly remuneration) for fiscal Year ended March 31 2024
March 29, 2023 : Performance-based Bonus for fiscal Year ended March 31 2023
April 28, 2023 : Performance-based Bonus for fiscal Year ended March 31 2023

Roles and Agenda at the Board of Directors’ Meeting

Board of Directors discusses and resolves matters related to officers’ remuneration based on recommendations received from the Remuneration of Directors Advisory Committee.

May 12, 2022 : Review of total amount of restricted stock
May 12, 2023 : Performance-linked bonus for fiscal Year ended March 31 2023
May 31, 2023 : Remuneration (monthly remuneration) for fiscal Year ended March 31 2024

Basic Remuneration

The basic remuneration is based on the so-called single rate remuneration system, in which the same remuneration is paid for the same position. The Company annually verifies the adequacy of the level of remuneration, which has been set according to the business results and scale of the Company and is based on comparison with other companies within the same industry or of the same scale through the investigation results on remuneration prepared by an external agency.
Specific details of basic remuneration amount for Directors are determined by the Board of Directors based on the reports prepared by the Remuneration of Directors Advisory Committee, which is chaired by External Directors (Independent) and the majority of which are composed of External Directors (Independent). The basic remuneration amount for Audit and Supervisory Board Members is determined after discussion within the Audit and Supervisory Board.

Performance-Based Bonuses (performance-based remuneration)

The total amount of the performance-based bonus is based on achievement as a percentage of the consolidated operating income recorded for each fiscal year, plus other performance factors (consolidated net sales, consolidated income before income taxes), to increase the degree of linkage between bonuses and consolidated business performance. Performance-based bonus is paid once a year after approval at the general meeting of shareholders for the relevant fiscal year.
The amount of performance-based bonus to Directors is resolved at a Board of Directors meeting and the total amount is approved at the general meeting of shareholders based on reports prepared by the Remuneration of Directors Advisory Committee, which is chaired by External Directors (Independent) and the majority of which are composed of External Directors (Independent).

Restricted Stock (non-monetary remuneration)

Restricted stock is determined in consideration of the monthly amount of basic remuneration and the fair value of stock, which in turn are determined pursuant to the recommendations of the Remuneration of Directors Advisory Committee, and will be allotted in the number determined and resolved at a Board of Directors meeting once a year. Allotted shares will be subject to transfer restriction during the period from the date allotted shares are granted until the date such Director, Audit and Supervisory Board Member or Corporate Officer designated by the Company retires from their position. The transfer restrictions on all allotted shares will be removed upon the expiration of the transfer restriction period if such eligible grantee has continuously held the position of Director, Audit and Supervisory Board Member or Corporate Officer until the date of the first Ordinary General Meeting of Shareholders after the start date of the transfer restriction period. The Company may repurchase all of the allotted shares bearing transfer restrictions as a result of a breach of restricted stock allotment agreement without consideration.

Performance Share Unit (non-monetary remuneration)

As for the performance share unit, the Company allots to Eligible Directors our common stock in the number of shares in accordance with the degree of achievement to the numerical targets of business performance, etc., set by the Board of Directors during the performance evaluation period for a certain period of time determined by the Company’s Board of Directors.
The Board of Directors of the Company shall determine performance evaluation indicators and coefficient that are necessary in the specific calculation of the number of performance share unit to be delivered, such as respective numerical targets to be used in allotting the shares of the performance share unit.
Allotment of the number of shares that was resolved at the Board of Directors of the Company based on the calculation method is conducted once after the completion of the performance evaluation period. The Eligible Director needs to have continuously held the position of Director, Audit and Supervisory Board Member, or Corporate Officer as designated by the Company’s Board of Directors during the performance evaluation period and satisfy other requirements that the Board of Directors designate as necessary.
The transfer restriction period shall be the period from the date on which such shares of the performance share unit are granted until the date of retirement from the positions of Director, Audit and Supervisory Board Member, or Corporate Officer as designated by the Company, with the conditions for removing the transfer restrictions to be provided separately. If an Eligible Director resigns from any position of Director, Audit and Supervisory Board Member, or Corporate Officer as designated by the Company, the Company shall naturally acquire the Allotted Shares free of charge, unless the Company’s Board of Directors justifies the reason not to.

Remunerations Paid to Officers in fiscal Year ended March 31 2024