P.56 Corporate Governance (Officer Remuneration)

56 02. Foundations for Accelerating Transformation

Corporate Governance

Executive remuneration

▍Remuneration structure

	Remuneration types and purposes	Eligibility	Annual maximum amount (total)	CEOʼs remuneration (illustrative)*1	Summary
Fixed	Monthly remuneration	10 Directors who are not Audit & Supervisory Committee Members (5 Internal Directors and 5 Outside Directors)	¥700 million*2	22%	Payment determined by the recipientʼs title
Variable	Performance-linked bonus Purpose: Enhance alignment of remuneration with business strategy and performance	3 recipients (President and CEO, 1 Executive Vice President, and 1 Senior Managing Executive Officer)	¥750 million	27％	【Total amount】The Company sets a performance target as either the full-year forecast for consolidated net income for each fiscal year or consolidated net income corresponding to an ROE of 12%, whichever is higher. The total performance-linked bonuses to be paid are determined based on the rate of achievement against this target. 【Amount paid to individuals】The total bonus pool is allocated to each recipient based on his/her title and individual performance evaluation. Individual performance is assessed using a 50:50 weighting of financial and non-financial indicators. Key Group-wide priorities̶including DX, sustainability, and DE&I̶represent 20% of the overall evaluation, with the specific weighting differing depending on each executiveʼs area of responsibility.
Variable (shares)	Restricted performance share unit‒based remuneration Purpose: Promote management with a focus on enhancing the Groupʼs medium- to long-term corporate and shareholder value	5 recipients (Chairman, Vice Chairman, President and CEO, 1 Executive Vice President, and 1 Senior Managing Executive Officer)	600 thousand shares/¥2,600 million	51％	Each year, the number of shares to be granted is determined based on the Companyʼs share growth rate over the three-year evaluation period. The number of shares is then adjusted to reflect the evaluation results for environmental and social non-financial indicators and granted as restricted stock.

*1 The above breakdown is calculated on the assumption that the rate of achievement of business results, the stock growth rate,

and the results based on non-financial indicators are all 100%. The composition ratios for each type of remuneration vary according to changes in these rates.

Share price growth rate: Reflects price changes over a three-year period. Calculation method: {(Average price of the Companyʼs common shares in the month of termination of Evaluation Period) / (Average price of the Companyʼs common shares in the month of commencement of Evaluation Period)} / {(Average of TOPIX in the month of termination of Evaluation Period) / (Average of TOPIX in the month of commencement of Evaluation Period)}
*2 Separately, remuneration of Directors who are Audit & Supervisory Committee Members is set at an annual maximum of ¥250 million, as approved by a resolution of the General Meeting of Shareholders.

▍Method for calculating the number of shares to be delivered

Number of shares to be delivered

Standard number of shares by position
Percentage of shares to be delivered based on the Companyʼs stock growth rate (0% to 150%)
Percentage of shares to be delivered based on evaluation of non-financial indicators (80% to 120%)
Share grant ratio (%) 180 160 140 120 100 80 60 40 20
Result of non-financial indicators: 120%
Result of non-financial indicators: 100%
Result of non-financial indicators: 80%
50 100 150

The Companyʼs stock growth rate (%)

▍Non-financial indicators for determining the share grant ratio under restricted performance share unit–based remuneration

Indicator	Evaluation criteria	Evaluation ratio
Measures to tackle climate change	Reduction of the Groupʼs CO2 emissions (achievement of annual targets) and progress in developing businesses that support the energy cycle through social infrastructure transformation (overall performance is assessed at the Group level based on the achievement of SBU-specific targets and related initiatives)
Advancement of women into leadership roles	Results versus the quantitative targets set every year to achieve the target ratio of women in FY2030	Reflected in evaluation using a ratio of 1:1:1*3
Employee engagement	Quantitative results of “employee engagement” and “work environment” in engagement surveys (improved year on year and achieved the Group average)

*3 Performance against these indicators is reviewed and determined by the Nomination and Remuneration Advisory Committee, which is chaired by an Outside Director and composed of a majority of Outside Directors, then reported to the Board of Directors.