AKEBONO REPORT 2016

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■ Basic Policy for Determining Compensation Paid to Directors and Audit & Supervisory Board MembersCorporate GovernanceAkebono has formulated the basic policy for determining the compensation for directors and Audit & Supervisory Board members 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 To maintain an objective and fair compensation system for Directors, we have established a Compensation Advisory Committee, which reviews the basic matters relating to director compensation. Based on the results of this review, the amount of compensation for each director will be determined at the Board of Directors’ Meeting within the limit of the total amount approved by the Ordinary General Meeting of Shareholders.Compensation for directors (excluding outside directors) consists of xed remuneration and Compensationperformance-based remuneration. The xed portion is basic compensation for duties and is based on positions. The total amount of xed remuneration must be approved by the Ordinary General Meeting of Shareholders.The performance-based portion is determined based on the performance of the Company and individual Directors in the preceding scal year. The upper limit for performance-based remuneration is set at 100% of the xed portion. Of this amount 40% (cash) may be provided as short-term performance-based remuneration; 20% (subscription rights to shares) as medium-term performance-based remuneration; and 40% (subscription rights to shares) as long-term performance-based remuneration.The compensation for outside directors consists of xed remuneration only.The compensation for each Audit & Supervisory Board Member is determined through discussion by the Audit & Supervisory Board, within limits approved by the Ordinary General Meeting of Shareholders.Outside Audit & Supervisory Board Members (as of March 31, 2016)NameReasons for ElectionAttendance at Board of Directors meetings(a)/ Audit & Supervisory Board meetings(b)(Attended/Convened in Fiscal 2015)Kesao EndoMr. Endo has extensive knowledge and experience as a certied public accountant. He was nominated as an outside Audit & Supervisory Board member based on his specialist perspective and highly independent status from management to bring to bear his knowledge and experience in the performance of audits.(a) 15/15(b) 15/15Michiyoshi HommaA lawyer, Mr. Homma has extensive knowledge and experience in corporate legal affairs. He was nominated as an outside Audit & Supervisory Board member based on his specialist perspective and highly independent status from management to bring to bear his knowledge and experience in the performance of audits.(a) 15/15(b) 14/15Keizo TannawaMr. Tannawa has extensive knowledge and experience as a management, organizational and human resources consultant in addition to as a corporate manager. He was nominated as an outside Audit & Supervisory Board member based on his specialist perspective and highly independent status from management to bring to bear his knowledge and experience in the performance of audits.(a) 15/15(b) 14/15Total Amount of Compensation Paid to Directors and Audit & Supervisory Board Members (Fiscal 2015)Amount of compensation (Millions of yen)Compensation by category (Millions of yen)Number of directors/Audit & Supervisory Board membersFixed remuneration (Cash)Performance-based remunerationShort-term (Cash)Medium-term (subscription rights to shares)Long-term (subscription rights to shares)Directors2542459--9Audit & Supervisory Board members5454---5Total3093009--14(Outside directors and Audit & Supervisory Board members) 4242---6(1) Directors Fixed Remuneration 300 millionShort-term performance-based remuneration 120 million(excluding outside directors)Medium-term performance-based remuneration 60 million(excluding outside directors)Long-term performance-based remuneration 120 million(excluding outside directors)(2) Audit & Supervisory Board members Fixed remuneration 60 millionUpper limits of annual compensation for directors and Audit & Supervisory Board members upon resolution of the Ordinary General Meeting of Shareholders (Annual amount)40AKEBONO REPORT 2016