Remuneration

Basic Policy for Determining Remuneration Paid to Directors

The Company formulates the basic policy for determining the remuneration for Directors as follows:

1) Acquire and develop talented human resources
2) Motivate them to continuously improve corporate performance and value
3) Maintain a high level of fairness and rationality

The remuneration system for Directors (excluding Directors who are Audit & Supervisory Committee members) consists of the base remuneration (fixed amount) and performance-based remuneration. The remuneration for Outside Directors and Directors who are Audit and Supervisory Committee members shall consist of only fixed remuneration. The maximum amount of performance-based remuneration is 100% of the base remuneration, of which 40% is short-term performance-based remuneration (cash), 20% is medium-term performance-based remuneration (stock acquisition rights), and 40% is long-term performance-based remuneration (stock acquisition rights). The base remuneration is a monthly fixed remuneration based on position and responsibility, and the specific amount is determined by the Board of Directors based on comprehensive consideration of remuneration levels benchmarked to companies of similar business size and in related industries and business categories to the Company.

Performance-based remuneration shall be determined based on the Company's performance in the previous fiscal year. Company performance is evaluated based on the degree to which consolidated operating income, free cash flow, and ROA targets are achieved. The evaluation weighting for each indicator is set at 40% for consolidated operating income, 40% for free cash flow, and 20% for ROA. Free cash flow is calculated by "EBITDA-CAPEX + Changes in Working Capital," and ROA is calculated by "net income before deducting net income attributable to noncontrolling interests/total assets at the end of the period." The reason for selecting these indexes is that they are clear and objective indicator that motivates directors to continuously improve corporate performance and corporate value, and are appropriate for measuring the responsibility for performance that directors should adopt in light of the Company's current business situation, thereby increasing the transparency of performance-based remuneration.

The remuneration for each Director (excluding Directors who are Audit and Supervisory Committee members) is determined by the Board of Directors after consulting with the Remuneration Advisory Committee and receiving a report from the Committee. The remuneration of Directors who are Audit and Supervisory Committee members consists solely of fixed remuneration, and the allocation of such remuneration for each Director is determined through discussions among the Directors who are Audit and Supervisory Committee members.

Remuneration for Directors

In the Business Report, the total amount and total amount by type of remuneration of Directors are disclosed, and in the Annual Securities Report, in addition to the information disclosed in the Business Report, individual disclosure is made for persons whose total amount of remuneration is 100 million yen or more.

Remuneration for Directors (excluding Directors who are Audit & Supervisory Committee Members) *Number of Directors: 2
1. Total amount of remuneration: 67 million yen
2. Fixed remuneration (cash): 64 million yen
3. Performance-based remuneration: 3 million yen
1) Short-term performance-based remuneration (cash): 3 million yen
2) Medium-term performance-based remuneration (share acquisition rights): 1 Million JPY
3) Long-term performance-based remuneration (share acquisition rights): 1 Million JPY

Remuneration for Directors who are Audit & Supervisory Committee Members *Number of Directors: 4
1. Total amount of remuneration: 45 million yen
Remuneration for Directors who are Audit & Supervisory Committee Members consists solely of fixed remuneration.

Existence of persons whose total amount of remuneration is 100 million yen or more
There is no Director whose total amount of remuneration for the previous fiscal year was 100 million yen or more.

Notes:

• The above number of directors includes one director who retired at the conclusion of the 121st Ordinary General Meeting of Shareholders held on June 24, 2022. As of the end of the fiscal year under review, there is one Director (excluding Directors who are Audit & Supervisory Committee Members) and four Directors who are Audit &Supervisory Committee Members.
• The maximum amount of remuneration for Directors (excluding Directors who are Audit & Supervisory Committee Members) is as follows: fixed remuneration of 200 million yen, short-term performance-based remuneration of 80 million yen, medium-term performance-based remuneration of 40 million yen, and long-term performance-based remuneration of 80 million yen; the upper limit of remuneration for Directors who are Audit & Supervisory Committee Members is 100 million yen.