Director's remuneration

Remuneration for the Company's directors is divided into two categories: fixed remuneration (fixed periodic remuneration of the same amount) and performance-linked remuneration.
Fixed remuneration is paid in a standard amount by position, taking into consideration the level commensurate with the required abilities and responsibilities. As for the maximum amount, the 26th Annual General Meeting of Shareholders held on September 27, 2022 approved the annual amount of fixed remuneration to the Company's directors as 150,000 thousand yen or less (the number of directors immediately after the said meeting is four).
 

Performance-linked remuneration shall be paid to directors excluding outside directors (hereinafter referred to as "eligible directors" in this section. The short-term performance-linked remuneration consists of (1) a bonus linked to business performance for each fiscal year and (2) medium-term performance-linked remuneration consisting of performance-linked stock compensation linked to changes in indices during the subject period. The medium-term performance-linked remuneration is a stock-based remuneration in which shares of the Company's common stock are delivered to the subject directors, with the aim of further sharing value between the subject directors and shareholders through sustained improvement of the Company's stock price and providing incentives for the subject directors to continuously enhance the Company's corporate value. At the 26th Ordinary General Meeting of Shareholders held on September 27, 2022, it was approved that the maximum amount of performance-linked bonuses shall be 41,250 thousand yen per year per eligible director (the number of eligible directors immediately after the said meeting shall be two). The maximum amount of the medium-term performance-linked remuneration was approved at the 26th Ordinary General Meeting of Shareholders held on September 27, 2022 as 100,000,000 yen per subject period, and the number of shares to be delivered to the subject directors under this plan is 60,000 shares or less per subject director and 100,000 shares or less in total per year for all subject directors. The maximum number of shares to be issued to each eligible director under the plan is 100,000,000 yen per eligible period.

 

The terms and conditions of the medium-term performance-linked remuneration are reviewed by resolution of the General Meeting of Shareholders as necessary, and the most recent resolution was approved at the 27th Ordinary General Meeting of Shareholders held on September 27, 2023, consisting of two parts: (1) a part in which the Company's common stock is delivered at the end of a one-year subject period on the condition that the Company's stock price has risen from the beginning of the subject period, (The number of eligible directors immediately after the said shareholders' meeting was two).

 

The ratio of each remuneration is 45%-50% fixed remuneration, 15%-20% short-term performance-linked remuneration, and 35% medium-term performance-linked remuneration, using the achievement of performance targets as a guide (based on a short-term performance incentive coefficient of 100%).

Since outside directors are independent from the execution of business, performance-linked remuneration is not applied to them, and the above fixed remuneration is paid to them.

 

The amount of remuneration for Directors who are members of the Audit and Supervisory Committee is fixed remuneration only, in consideration of their responsibilities and roles in supervising and auditing the execution of business operations, and is determined within the maximum amount of remuneration resolved at the General Meeting of Shareholders, based on discussions among Directors who are Audit and Supervisory Committee members, taking into account such factors as whether they serve full-time or part-time, whether they are inside or outside Directors, and the division of duties. The maximum amount of remuneration was resolved at the 26th Ordinary General Meeting of Shareholders held on September 27, 2022 to be no more than 55,000 thousand yen per year (the number of directors who are members of the Audit Committee immediately after the said meeting is three).

Short-term performance-linked remuneration is a remuneration system paid in cash, and the amount is calculated by multiplying a short-term incentive coefficient by a standard amount determined according to position and other factors. Specifically, it is calculated by the following formula

 

Short-term performance-linked remuneration = Short-term performance-linked remuneration standard amount x short-term incentive coefficient

 

Directors (excluding Outside Directors and Directors who are members of the Audit and Supervisory Committee) Purpose, Basis of Indicators, and Specific Calculation Methods of Performance-Linked Remuneration and Performance-Linked Stock Compensation"). The short-term performance-linked remuneration to be paid to Directors (excluding Outside Directors and Directors who are members of the Audit Committee) shall be paid in an amount calculated in conjunction with the year-on-year increase or decrease in consolidated net income after taxes, which is consistently emphasized in the Company's medium- to long-term management strategy, medium-term management plan, and annual business results. The amount is calculated by multiplying the base amount (performance-linked bonus base amount), which is determined according to position, by the short-term incentive coefficient, which ranges from 0% to 150% according to the change in consolidated net income after taxes from the previous year.

 

The coefficients are calculated as follows

If consolidated net income after tax for the current period is "a" and consolidated net income after tax for the previous period is "b," the value calculated by the following formula is used as the coefficient.

 

   (i) If "a" is less than or equal to "b":0

   (ii) If "a" exceeds "b" and is less than "b" × 137.5%: (a÷b-1)÷0.375 × 1.5

　 (iii) If "a" is 137.5% or more of "b": 1.5

 

Net income after taxes for the current fiscal year, which serves as a performance indicator, was 2,850 million yen, a 136% change from the consolidated net income after taxes of the previous year (2,094 million yen). Short-term performance-linked compensation was paid at 144% of the short-term performance compensation base amount.

　Short-term incentive coefficient = (1)

　(Consolidated net income after taxes for the current period: 2,850 million yen / Consolidated net income after taxes for the previous period: 2,094 million yen - 1) / 0.375 x 1.5 = 1.44

This is a performance-linked stock compensation plan under which shares of the Company's common stock are delivered in accordance with the degree of achievement of performance targets.

The period for which a decision has been made as to whether or not to pay the allowance in the current fiscal year will be from September 2020 to September 2023. The number of shares to be delivered will be determined by multiplying the number of shares determined by our board of directors (the base number of shares to be delivered) by the share delivery ratio determined in the range of 0% (our stock growth rate is less than 100%) to 100% (our stock growth rate is more than 150%) depending on our stock growth rate (Note), a representative indicator of our corporate value during the above three-year period.

 

(Note) The Company's stock growth rate is calculated by dividing the Company's Total Shareholder Return (TSR) during the subject period by the growth rate of the Tokyo Stock Exchange Stock Price Index (TOPIX) during the subject period.

The period for which a decision has been made as to whether or not to pay the allowance in the fiscal year ended June 30, 2024 will be from September 2020 to September 2023. Our total shareholder return was 135.0%, which translates into a TOPIX growth rate of 145.7% and our equity growth rate of 92.7%. Since this is a case where the Company's stock growth rate is less than 100%, the share delivery ratio is 0%, and medium-term performance-linked compensation is not paid.

Not stated because there are no persons whose total amount of consolidated remuneration, etc. is 100 million yen or more.