Remuneration Plan for Directors

The remuneration for each director, except outside directors and non-executive directors, is composed of the monthly remuneration, bonuses and performance-linked and stock-based remuneration. The monthly remuneration and the bonus are determined on the basis of the standard amounts for different ranks in consideration of the short-term results and the level of contribution to the Company, whereas the amount of payment of stock-based remuneration is determined on the basis of consolidated net profit attributable to shareholders for the predetermined period subject to performance evaluation. The monthly remuneration alone is paid to outside directors and non-executive directors, and no bonus or stock-based remuneration is paid to them.The remuneration for audit & supervisory board members is determined through deliberations of the Board of Audit & supervisory board members, and no bonus or stock-based remuneration is paid to them.
The Company has a Governance Committee consisting of two internal directors, one outside director and one outside audit & supervisory board member. It holds discussions on policies and systems concerning remuneration for the board of directors, and then raises the issues with the board.

Performance-Linked and Stock-Based Remuneration Plan

In accordance with the resolution adopted at the 57th Ordinary General Meeting of Shareholders that took place on June 21, 2017, the Company has introduced a new performance-linked and stock-based remuneration plan (hereinafter referred to as “the Plan”) for directors (excluding outside directors and non-executive directors) as a scheme for director remuneration that is strongly linked with the Company’s business performance and with a high level of transparency and objectivity, for the purpose of raising their awareness of their contribution to improving medium- and long-term business performance and enhancing its corporate value. Under the Plan introduced, the Company will pay the amount calculated using a predetermined formula according to the level of achievement of corporate net profit attributable to shareholders, which is defined as one of the key performance indicators in the Medium-Term Management Plan, as the stock-based remuneration, in addition to the conventional monthly remuneration and bonuses. In introducing the Plan, the Company adopts a system for “Stock Distribution Trust for Directors”, whereby a trust created by the Company and funded with its money (hereinafter the “Trust”) shall acquire shares of the Company and distribute shares from the Trust to the eligible Directors.

The outline of the Plan

Persons to whom the Plan applies The Company’s directors, excluding outside directors and non-executive directors.
The trust period of the Trust two years(August 2017-September2019)
Limit on the amount that the Company contributes to the trust 120 million yen in total for two fiscal years.
Method of acquisition of the Company’s shares through the trust Shares will be acquired from the stock market, and no dilution will take place.
Limit on the number of shares acquired
(including the number of shares subject to the conversion into money)
The number of points (or the number of shares) granted to those to whom the Plan applies per fiscal year during the trust period is limited to 82,000.
Performance fulfillment conditions The number of points granted varies with the level of consolidated net profit attributable to shareholders for each fiscal year.
Timing of provision of the Company’s shares to those to whom the Plan applies After their retirement.
Exercise of voting rights associated with the Company’s shares in trust No voting rights associated with the Company’s shares held in trust may be exercised during the trust period in order to ensure management neutrality.