As of June 24, 2024

The amounts of compensation paid to individual directors are to be decided by the Nominating and Compensation Committee and set within the limit approved at the Ordinary General Meeting of Shareholders. These amounts are to be determined based on a comprehensive evaluation of factors including the responsibility of each director for the management of the Group and the progress of the Group's medium-term management plan. The amount of compensation paid to individual executive officers is to be decided by the Nominating and Compensation Committee. Director compensation is to be set at a level that will provide motivation for directors to perform their duties of making management decisions and providing supervisory functions. Compensation for directors includes fixed basic compensation, performance-linked bonuses based on the performance of the Company in a given fiscal year meant to serve as short-term incentives, and performance-linked stock-based compensation based on the medium-to-long-term performance of the Company designed to provide medium-to-long-term incentives. The portion of compensation linked to performance is meant to provide an incentive for pursuing sustainable growth. External directors only receive basic compensation out of consideration for their roles and their need for independence. Audit & Supervisory Board members shall only receive basic compensation. The amount of basic compensation paid to individual Audit & Supervisory Board members will be decided through discussion by the Audit & Supervisory Board, in line with the upper limit set at the Ordinary General Meeting of Shareholders.

The compensation levels and the ratio of performance-linked compensation have been revised to increase the portion of performance-linked compensation. This revision was aimed at boosting motivation to contribute to improved medium-to-long-term performance and corporate value for the Company in order to have officers share the interests of shareholders and to strengthen management from the perspective of shareholders.

• Ratio up to the fiscal year ended March 31, 2019 Basic compensation : Performance-linked bonuses : Performance-linked stock-based compensation = 8 : 1 : 1
• Ratio from the fiscal year ending March 31, 2020 Basic compensation : Performance-linked bonuses : Performance-linked stock-based compensation = 6 : 1 : 3

Performance-linked bonuses are decided in accordance with the duties of each Director and with the goal of increasing motivation for improving corporate performance on a single fiscal year basis. Performance-linked coefficients are set based on the degree of accomplishment of targets for performance indicators in a given fiscal year, and these coefficients are multiplied by the standard amount of compensation defined for each rank. EPS (published plan) is set as the target indicator to better share value with shareholders and link them to corporate performance. The range of performance-linked coefficient is set in the range of 0% to 200%, depending on the degree of accomplishment of the targets.

Target Indicators and Performance-Linked Coefficients

In the fiscal year ended March 31, 2017, the Group introduced performance-linked share-based remuneration (BIP Trust) to increase motivation to contribute to improved medium-to-long-term performance and corporate value for the Company. Performance-linked share-based remuneration employs a scheme in which a trust fund established through contribution by the Company is used to issue shares of the Company to Directors.
Over the two-year period from the fiscal year ending March 31, 2025, to the fiscal year ending March 31, 2026, Directors will be granted points based on their rank at a set time each year. These points will then be adjusted via a performance-linked coefficient within the range of 0% to 110% determined by the Company’s performance (EPS, ROE, and ROIC) and ESG indicators (to facilitate the promotion of the Group’s cocreation sustainability management) for the last fiscal year ending March 31, 2026. Shares of the Company will then be allocated to each Director, reflecting their cumulative total of points post adjustment.

Target Indicators and Performance-Linked Coefficients

※1 Dow Jones Sustainability World Index (DJSI World): An ESG index comprising companies selected through a comprehensive evaluation of economic, environmental, and social factors from the perspective of long-term improvements to shareholder value
※2 Amount of reduction compared to the fiscal year ended March 31, 2017

Limit for performance-linked share-based remuneration

Upper limit for fund contributions from the Company

At the General Meeting of Shareholders held on June 20, 2019, it was determined that the upper limit for fund contributions from the Company under the performance-linked share-based remuneration scheme from the fiscal year ended March 31, 2020, would be ¥200 million multiplied by the number of years in the given target period. Accordingly, the upper limit for the two-year period beginning with the fiscal year ending March 31, 2025, and ending with the fiscal year ending March 31, 2026, will be ¥400 million.

Upper limit for shares, etc. of the Company acquired by Directors

At the General Meeting of Shareholders held on June 20, 2019, it was determined that the upper limit for shares of the Company acquired by Directors from the fiscal year ended March 31, 2020, would be 100,000 points (equivalent to 100,000 shares) multiplied by the number of years in the given target period. Accordingly, the upper limit for the two-year period beginning with the fiscal year ending March 31, 2025, and ending with the fiscal year ending March 31, 2026, will be 200,000 points (equivalent to 200,000 shares).

Directors that satisfy the beneficiary requirements will receive allocations of shares of the Company in an amount equivalent to the allocated points, in principle, in June or later after the conclusion of the final year of the target period. At this time, applicable Directors will receive a number of shares of the Company based on part of the allocated points, the remaining shares of the Company will be appraised by the trust fund, and the applicable Directors will receive monetary payments in an amount equivalent to the appraised liquidation value of shares. However, shares allocated under the first target period will be subject to a oneyear transfer restriction period beginning with the date of issuance during which the shares are prohibited from being transferred, used as collateral, or disposed of through other means.
Should it be decided to extend the target period and maintain the trust fund, the number of years of the extension shall be the number of years remaining in the Company’s current medium-term management plan. Should a new target period be established with a duration of two years so as to realize the beneficial effects of a medium- to long-term incentive, shares allocated under this period will also be subject to a oneyear transfer restriction period beginning with the date of issuance.

At the General Meeting of Shareholders held on June 27, 2012, the upper limit for basic compensation (excluding salaries paid to Directors that are also employees of the Company or Group companies) to Directors was set at ¥300 million.
At the General Meeting of Shareholders held on June 24, 2024, the upper limit for annual compensation of Audit & Supervisory Board Members was set at ¥100 million. The amount of monthly compensation paid to individual Audit & Supervisory Board Members is decided through discussion by the Audit & Supervisory Board, in line with the upper limit set at the general meeting of shareholders.

As for performance-linked share-based remuneration, in case of any serious wrongdoing or violation of laws and regulations committed by an eligible Director, the Company has established a system to enable it to have the Director forfeit the beneficiary rights for the shares expected to be delivered (malus) and demand the return of the amount of money equivalent to the shares delivered (clawback) from the Director.

Officer Compensation in the Fiscal Year Ended March 31, 2024

※1 The number of Directors and Audit & Supervisory Board Members at the end of the fiscal year under review is six (6) Directors and four (4) Audit & Supervisory Board Members.
※2 The amount of performance-linked bonus and performance-linked stock compensation is the amount recognized as expenses for the fiscal year under review.

Total compensation on a consolidated basis by officer (FY2024)

※ This information is only stated for an individual whose total compensation on a consolidated basis was ¥100 million or more.