Executive Compensation

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Governance

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Executive Compensation

①Compensation for Directors

[Policy and Executive Summary]

Directors who serve concurrently as Executive Officers
Compensation for Directors who serve concurrently as Executive Officers is described in “②Compensation for Executive Officers/Executive Corporate Officers” below.

Directors who do not concurrently as Executive Officers
The basic policy regarding compensation for Directors who do not concurrently serve as Executive Officers is as follows.

• Highly transparent and objective
• Improvement of corporate value and compensation must interlock to share awareness of profit with shareholders.
• Contribute to ensuring and retaining global management team that satisfies accurate ability requirements to realize corporate vision

For Directors who do not concurrently serve as Executive Officers, the Company pays base salary as fixed compensation. For the purpose of securing diverse and talented human resources and further raising awareness of their roles, the Company grants some of such Directors with stock-based compensation (stock-based compensation where shares are delivered after a certain period of continuous service). The details of stock-based compensation are described below in “② Compensation for Executive Officers/Executive Corporate Officers,” “(b) Details,” “(i) Compensation Philosophy and Elements.”

The Compensation Committee sets the compensation ratio, level, and composition of compensation for each Director who does not concurrently serve as Executive Officers, taking into account the appropriate ratios and levels in light of the above-mentioned basic policies, corresponding to the duties of the Directors.

②Compensation for Executive Officers/Executive Corporate Officers

The following describes the compensation program for our Executive Officers/Executive Corporate Officers (A Director who also serves as an Executive Officer and other Executive Officers in this section are collectively referred to as “Executive Officers”). The composition of our Executive Officers/Executive Corporate Officers (as of the end of the current fiscal year) is as follows. An Executive Officer who is also a Director is remunerated as an Executive Officer.

Executive Officers/Executive Corporate Officers of the Company have the broadest job responsibilities and policy-making authorities in the Company. Executive Officers/Executive Corporate Officers are responsible for maintaining our business performance and a highly ethical corporate culture, as well as for ensuring thorough compliance.

Accordingly, the Company aims to ensure transparency in our disclosure regarding executive compensation for not only our Executive Officers, including the CEO, but also for our core members of the management team. Therefore, the Company discloses individual compensation for the CEO, CFO, and other top three compensated executive corporate officers (i.e., Executive Vice President in charge of matters relating to Operations Group, Senior Vice President in charge of matters relating to High Performance Computing Product Group, and Senior Vice President in charge of matters relating to Power Product Group) respectively, as well as compensation for Directors and Executive Officers with total compensation of at least 100 million yen that is required to be disclosed by law.

(a) Executive Summary

The Company regularly updates our compensation program for Executive Officers/Executive Corporate Officers. The Company views compensation as one of essential management tools to accelerate the expansion of our business portfolio in the focus area of Automotive, and Industrial/Infrastructure/IoT, where the Company has global presence and demonstrates strong market competitiveness.

When establishing compensation program and setting compensation levels, the Company uses global and Japanese companies in the semiconductor and other related industries as our peer companies for benchmark comparisons. Each year, the Company performs a market comparison of our executive compensation packages and updates them based on the results of that comparison. The Company designs appropriate and competitive compensation packages as a global company to attract and retain talented Executive Officers/Executive Corporate Officers who can drive our business.

Our compensation program is designed to include performance-linked compensation to encourage Executive Officers/Executive Corporate Officers to think and act in the best interests of shareholders in both the short- and long-term. A significant portion of our Executive Officers/Executive Corporate Officers’ total annual compensation is paid as performance-linked and stock price-linked compensation. Short-term incentives (STIs), which are performance-linked compensation, are linked to our short-term performance, and stock price-linked compensation (LTIs) are linked to our long-term performance. The Company also believes that our compensation program holds our Executive Officers/Executive Corporate Officers accountable for direct financial performance and overall market competitiveness of the Company.

(b) Details

(i) Compensation Philosophy and Elements

The basic philosophy regarding compensation for Executive Officers/Executive Corporate Officers is as follows.

• Highly linked to company performance, and highly transparent and objective.
• Improvement of corporate value and compensation must interlock to share awareness of profit with shareholders.
• Contribute to ensuring and retaining global management team that satisfies accurate ability requirements to realize corporate vision.

In addition, the current compensation consists of the following:

• Base salary as fixed compensation
• Performance-linked compensation focused on achieving shorter-term financial and strategic objectives (Short-Term Incentives)
• Post-delivery stock-based compensation as stock price-linked compensation to motivate management to increase shareholder value (Long-Term Incentives)

The Company believes that our current program is consistent with practices in the global and Japanese domestic markets, as well as the interests of our stakeholders. The ratio of each type of compensation in the total compensation is set in consideration of the appropriate ratio commensurate with market comparisons, global trends, and roles and performance of each Executive Officer and Executive Corporate Officer. In addition, in order to link long-term performance to our executive compensation and realize strong alignment between shareholders and management team, the Company has been promoting a compensation strategy that emphasizes long-term incentives compared to many Japanese companies, and the Company has set the proportion of stock-based compensation to total compensation at a level that exceeds half.

(1) Cash Compensation

Base Salary

Base salary is the core compensation that reflects the market value of particular roles and responsibilities in the organization and is a reward for actual responsibilities, competencies, and experience of each Executive Officer and Executive Corporate Officer.

This compensation is paid as a fixed amount based on the scope of responsibilities and the expected contribution to the Company. This compensation is a fundamental element of executive compensation, and is set at a level that invites and ensures retention of competent Executive Officers/Executive Corporate Officers, and motivates them to drive global business expansion.

This compensation will be adjusted annually in consideration of market salary increase rates, our performance and individual performance.

Performance-linked Compensation (Short-Term Incentive (STI))

Short-Term incentives (STIs) are paid to Executive Officers/Executive Corporate Officers as motivation and reward for overall company financial performance as well as assessments of the individual performance of Executive Officers/Executive Corporate Officers for each fiscal year. This compensation is a crucial element of our executive compensation program and is focused on motivating Executive Officers/Executive Corporate Officers to contribute to the achievement of performance goals.

This compensation is based on one-year company performance, which consists of performance of Automotive Business segment, and Industrial/Infrastructure/IoT Business segment. In order to evaluate business expansion and the profitability thereof, this is evaluated by using certain indicators, including the following:

• Revenue (growth rate)
• Operating margin

Evaluation indicators and targets are set annually. And the payout amounts based on business performance are approved by the Compensation Committee.

(2) Stock-based Compensation

Stock Price-linked Compensation (Long-Term Incentive (LTI))

Long-Term Incentives (LTIs) are variable compensation with an evaluation period of 1 year or more and are generally granted in a manner that corresponds to the value earned by shareholders. The role of Long-Term Incentives is to align economic rewards for Executive Officers/Executive Corporate Officers with the long-term performance of the organization and the long-term orientation of our shareholders.

Beginning in 2021, current Long-Term Incentives are granted through stock-based compensation　where shares are delivered after vesting, and the actual earnings received by Executive Officers/Executive Corporate Officers are determined based on stock price growth and total shareholder return (TSR) over a 3-year period.

Specifically, Long-Term Incentives consists of Performance Share Units (PSUs), in which the number of units is determined according to our TSR and our shares are delivered, as well as Restricted Stock Units (RSUs) that are subject to continued service. Of these, PSUs are designed to include the Company’s TSR as the performance indicator in order to link PSUs more closely to strengthening awareness and activities aimed at maximizing medium- to long-term corporate value and contributing to our stock price.

The number of units to be granted will be determined based on the simple average of the closing price of our shares on the Tokyo Stock Exchange during the 3-month period specified at the time of grant decision, based on the base amount of compensation set for each Executive Officer and Executive Corporate Officers in proportion to their responsibilities and percentages. The composition rate of the compensation base amount for PSUs and RSUs is 50% to 50%.

Meanwhile, in the event that a person eligible for grant falls under any of the causes stipulated by the Company, such as certain misconduct stipulated by the Company, all or part of the unvested units shall be forfeited. In addition, if, after vesting, it is found that such events or the act causing such events occurred before vesting and the Company deems it necessary, the grantee shall return, without compensation, all or part of the shares issued in respect of such units or an equivalent amount of money.

[PSU]
The number of units to be granted to the grantees shall be calculated based on the following formula:

Number of PSUs = the base amount of PSU compensation (before performance evaluation) which the Company has determined to grant to each grantee / simple average of the closing price of our shares on the Tokyo Stock Exchange for the 3-month period specified at the time of grant decision.

Subsequent to the date the Company determines (in principle, the 3 years anniversary date after the grant date), we will issue a number of shares equal to such vested number determined as follows, taking into account the performance requirements for that period.

Performance Indicators	TSR: Determined by comparing the companies which constitute SOX (Philadelphia Semiconductor Index) and TOPIX (Tokyo Stock Price Index) as well as a group of companies (called “Renesas Peers” here after) that the Company selects in light of the industry, company size, business model, etc.
Performance Evaluation Period	3 years from April 1 of the year in which the PSUs were granted
TSR Growth Rate of the Company	(Average stock price for the 3 months prior to the end of the performance evaluation period (*1) - Average stock price for the 3 months prior to the commencement date of the performance evaluation period (*2) + Total dividends per share for dividends from retained earnings with a record date during the performance evaluation period) / Average stock price for the 3 months prior to the commencement date of the performance evaluation period (*2) (*1) This refers to the simple average of the closing price of our shares on the Tokyo Stock Exchange during the last 3 months of the performance evaluation period. (*2) This refers to the simple average of the closing price of our shares on the Tokyo Stock Exchange for the 3 months prior to the commencement date of the performance evaluation period. Image
Method of Determining Issued Shares	When our TSR growth rate and the TSR growth rate of SOX-constituent companies are classified in ascending order, the percentage (SOX calculation rate) is calculated according to which of the following 1) to 5) is the classification of our TSR growth rate. When our TSR growth rate and the TSR growth rate of TOPIX-constituent companies are classified in ascending order, the percentage (TOPIX calculation rate) is calculated according to which of the following 1) to 5) is the classification of our TSR growth rate. When our TSR growth rate and the TSR growth rate of Renesas Peers are classified in ascending order, the percentage (Renesas Peers calculation rate) is calculated according to which of the following 1) to 5) is the classification of our TSR growth rate. The number obtained by multiplying the number of granted PSUs by the weighted average of the SOX calculation rate of 25 in 100, the TOPIX calculation rate of 50 in 100, and the Renesas Peers calculation rate of 25 in 100 (hereinafter referred to as the “Base Calculation Rate”) (rounded up to 100) will be vested as the number of vested PSUs on the date specified by us (Japan time) (as a general rule, the 3 year anniversary date from the grant date of the PSUs). The number of shares equal to the number of vested PSUs will be issued to the grantee. However, if our TSR growth rate is 0% or less, the Base Calculation Rate is limited to 100%. Our TSR growth rate shall be determined by the above formula, and the growth rate of TSR of SOX-constituent companies, TOPIX-constituent companies and Renesas Peers shall be determined by a method similar to our TSR growth rate. TSR growth rate Payout% 1) Less than the 25th percentile 0% 2) The 25th percentile or more, and less than the 50th percentile Rate obtained by assuming the same percentage increase between 50% and 100% 3) The 50th percentile or more, and less than the 75th percentile Rate obtained by assuming the same percentage increase between 100% and 150% 4) The 75th percentile or more, and less than the 90th percentile Rate obtained by assuming the same percentage increase between 150% and 200% 5) The 90th percentile or more 200%

[RSU]
The number of units to be granted to the grantees shall be calculated based on the following formula:

Number of RSUs = the base amount of RSU compensation for the 3 years (however, for Outside Directors, 1 year) that the Company decided to grant to each grantee / the simple average of the closing price of our shares on the Tokyo Stock Exchange during the 3 months period specified at the time of grant decision.

As a general rule, one-third of the units vest every year after the grant date (however, for Outside Directors, all of the units vest on 1 year after the grant date) and the Company will issue a number of shares equal to the number of vested units.

(ii) Comparator Group (FY2021 and thereafter, as of the end of the current fiscal year)

The Compensation Committee reviewed compensation of comparable companies to better understand compensation program design and competitive compensation levels. Given that the Company is operating our business globally, the Company selected the comparable companies not only in Japan, but also from the United States and Europe, both of which are our primary business areas and where the global executive compensation programs are functioning. The Company has set future performance targets with an appropriate balance of references to 3 key global regions, and has established a compensation program with the aim of promoting the achievement of business and financial indicators both globally and regionally.

Comparator groups in compensation include high-tech companies headquartered in Japan, which are either competitors in human resources acquisition or competitors in the same industry as viewed by investors, or both. At this stage, the correlation between the revenue level and the executive compensation level is not so strong in Japan, so the Company has selected Japanese companies from a wide range of revenue levels. For US and Europe, the Company selected semiconductor companies considering revenue level and market capitalization. The disclosed personal compensation data of comparable companies is supplemented by market compensation data (Willis Towers Watson, Mercer LLC and Aon survey).

(iii) Analysis of Compensation Decisions

(1) Total Compensation

The Compensation Committee reviewed both the overall package and each type of compensation before the final determination of Directors’, Executive Officers/Executive Corporate Officers’ compensation. The reviewed information includes total cash compensation (base salary and STI), stock-based compensation amount, total compensation amount (base salary, STI, and stock-based compensation), and the impact of proposed compensation on other compensation elements. When determining the amount of compensation, compensation composition and incentives for Executive Officers/Executive Corporate Officers, the Compensation Committee reviewed each position, role, and status of service, including career history, in relation to corporate performance and individual performance and our medium- to long-term value creation, in accordance with our basic philosophy of compensation. The Compensation Committee assessed whether overall compensation was consistent with the purposes of the program.

Based on this comprehensive review, the Compensation Committee determined that the compensation levels and compensation composition for the current fiscal year were appropriate and consistent with the policies stated in “Compensation for Directors” and “Compensation for Executive Officers/Executive Corporate Officers”.

Base Salary

The amount of base salary paid to Executive Officers/Executive Corporate Officers for the current fiscal year was determined after deliberations by the Compensation Committee, taking into account the role of each position and the related employment markets (Japan, US or UK).

Performance-linked Compensation (Short-Term Incentive (STI))

The STI base amount for the Executive Officers/Executive Corporate Officers in the current fiscal year that the Company decided to disclose is shown below.

(Note) The amounts are rounded to the nearest million yen. For overseas officer, the currency for payment is converted into Japanese yen at the average exchange rate during the current fiscal year (JPY150.77 = USD 1.00). The percentage of STI for Base salary is calculated based on amounts before rounding.

Provisional STI payments are calculated based on the revenue (growth rate) and operating margin (both Non-GAAP basis) of whole company.

This scheme is the same as the scheme for employees, and it is a mechanism for sharing incentives with employees.

The final amount of payment will be determined upon deliberations by the Compensation Committee based on the provisional STI payment determined by the scheme described above, our performance, various requirements other than financial performance, and other factors for the fiscal year.

Stock Price-linked Compensation (Long-Term Incentive (LTI))

The following table shows the base amount of grant level for each Executive Officers/Executive Corporate Officer used as a basis for calculating the number of PSUs and RSUs granted to Executive Officers/Executive Corporate Officers that the Company decided to disclose in the current fiscal year.

(Note) The table sets forth the base amount of the annual grant level for each Executive Officer and Executive Corporate Officer (amounts are rounded to the nearest million yen and, for overseas officers, the currency of payment is converted into Japanese yen at the average exchange rate during the year (JPY150.77 = USD 1.00)). The actual amounts vested are set forth in the table below under “(d) Total compensation amount in FY2024 (ii) Total Amount of Consolidated Compensation for Each Executive Officer/Executive Corporate Officer Subject to Disclosure.”

The compensation composition for Executive Officers/Executive Corporate Officers disclosed by the Company for the current fiscal year is shown below. The percentage of the variable portion is greater than the current general situation of executive compensation in Japan to reward Executive Officers/Executive Corporate Officers for company performance and individual performance.

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(Note) Each compensation element is based on a base amount before reflecting performance (as of December 31, 2024)

(2) Performance Evaluation for the current fiscal year used in calculation of Performance-linked Compensation and Stock Price-linked Compensation

Revenues (Non-GAAP basis) and operating margin (Non-GAAP basis) both decreased during the current fiscal year.

Total shareholder return grew by 109.8% on a 3-year average, outpacing the median of TOPIX constituent companies, the median of SOX-constituent companies and the median of Renesas Peers.

Revenue (Non-GAAP basis)

• Our revenue decreased by 8.2% in the current fiscal year compared with the previous fiscal year.
• Revenue by business unit is as follows:
  • Revenue in the Automotive Segment in the current fiscal year increased by 6.4% compared with the previous fiscal year.
  • Revenue in the Industrial/Infrastructure/IoT Segment in the current fiscal year decreased by 20.3% compared with the previous fiscal year.

Operating margin (Non-GAAP basis)

• Our operating margin in the current fiscal year decreased by 4.6pts compared with the previous fiscal year.
• Operating margin by business unit is as follows:
  • Operating margin in the Automotive Segment in the current fiscal year decreased by 3.1pts compared with the previous fiscal year.
  • Operating margin in the Industrial/Infrastructure/IoT Segment in the current fiscal year decreased by 6.3 pts compared with the previous fiscal year.

Total Shareholder Return (TSR)

• The TSR growth rate used to evaluate the performance in the PSU vesting process in the current fiscal year was 109.8%, higher than the median of TOPIX constituent companies, the median of SOX-constituent companies, and the median of Renesas Peers.
• Payout% based on the TSR is as below.

(Note) For Renesas Peers, we evaluated performance by dividing them into 2 groups based on industry and company size, etc.

Overview of performance results

(Note)

1. Revenue and Operating Margin: Disclosed on a Group-consolidated and Non-GAAP basis
2. TSR performance evaluation period: April 1, 2021 to March 31, 2024
3. TSR calculation: (Average stock price for the 3 months prior to the end of the performance evaluation period
   - Average stock price for the 3 months prior to the commencement date of the performance evaluation period
   + Total dividends per share for dividends from retained earnings with a record date during the performance evaluation period)
   / Average stock price for the 3 months prior to the commencement date of the performance evaluation period
4. The Company paid dividends totally 28 JPY from retained earnings during the performance evaluation period.

(3) Individual Performance Evaluation Results (MBO (Management By Objective))

The performance of the Executive Officer who also serves as CEO was evaluated by the Nomination Committee for his overall contribution to our performance. For Executive Corporate Officers whose compensation the Company decided to disclose, the CEO considered the elements described below in evaluating individual performance.

• Mr. Shuhei Shinkai served as CFO and the CEO focused on our financial management.
• Mr. Sailesh Chittipeddi served as General Manager of Operation Group and the CEO focused on the Supply Chain, Procurement and Production activities.
• Mr. Vivek Bhan served as head of High Performance Computing Group and the CEO focused on the financial performance and strategic positioning of the business unit.
• Mr. Chris Allexandre served as head of Power Group and the CEO focused on the financial performance and strategic positioning of the business unit.

(iv) Compensation for the current fiscal year

(1) Total compensation amount for Directors and Executive Officers

Before transition to Company with Nomination Committee, etc. (from January 2024 to March 2024)

(Note)

1. The Company has transitioned from “a Company with a Board of Corporate Auditors” to “a Company with Nomination Committee, etc.” with the approval of the 22nd Annual General Meeting of Shareholders held on March 26, 2024. Accordingly, “Director (excluding Outside Director)” and “Outside Director” in the table shows the number of Directors who served during the period from January 1, 2024 to March 26, 2024 and the total compensation amount paid for that period. Additionally, “Corporate Auditor (excluding Outside Corporate Auditor)” and “Outside Corporate Auditor” shows the number of Corporate Auditors who served during the period from January 1, 2024 to March 26, 2024 (including those who retired at the conclusion of the 22nd Annual General Meeting of Shareholders), and the total compensation amount paid for that period.
2. Compensation for “Directors (excluding Outside Director)” includes compensation for the CEO who also serves as an Executive Corporate Officer.
3. Amounts of less than one million yen are rounded. Therefore, the total amount in each section may not match the amount stated in the Total Compensation column.
4. The full amount of “Performance-linked Compensation (Short-term incentives)” under “Monetary Compensation” and “Non-monetary Compensation” columns for the current fiscal year are shown in the below table “After transition to Company with Nomination Committee, etc. (from April 2024 to December 2024)”.
5. For Directors and Corporate Auditors who do not reside in Japan, the currency for payment is converted into Japanese yen at the average exchange rate during the current fiscal year (JPY150.77 = USD 1.00).
6. The maximum annual compensation for Directors is resolved at the 16th Annual General Meeting of Shareholders held on March 29, 2018, to be 2 billion yen, including 400 million yen for Outside Directors. As of the conclusion of the relevant Annual General Meeting of Shareholders, there were 5 Directors (including 2 Outside Directors).
7. The maximum amount of post-delivery stock-based compensation for Directors was resolved to be within the amount described in Note 6 above for monetary compensation claims related to units, and to be within 2.7 million shares per year (including no more than 200,000 shares for Outside Directors) as for the total number of shares of the Company to be granted to Directors, at the 19th Annual General Meeting of Shareholders held on March 30, 2021. As of the conclusion of the relevant Annual General Meeting of Shareholders, the number of Directors eligible for Performance Share Units (PSU) (Outside Directors are not eligible) was 1and the number of Directors eligible for Restricted Stock Units (RSU) was 6 (including 5 Outside Directors).
8. The maximum annual compensation for Corporate Auditors was resolved at the Extraordinary General Meeting of Shareholders held on February 24, 2010, to be 12 million yen per month. As of the conclusion of the relevant Extraordinary General Meeting of Shareholders, there were 4 Corporate Auditors (including 3 Outside Corporate Auditors).

After transition to Company with Nomination Committee, etc. (from April 2024 to December 2024)

(Note)

1. The “Directors” in the table are all Outside Directors and do not include one Director who concurrently servers as an Executive Officer. Executive Officer who concurrently serves as Director receives compensation as an Executive Officer and is shown in the “Executive Officers” column.
2. Amounts are rounded to the nearest million yen. Therefore, the total amount listed in each column may not match the amount stated in the Total Compensation column.
3. Of the non-monetary compensation, etc. in the table, “Stock Compensation with Continuous Service Conditions” includes Restricted Stock Units (RSU), which is post-delivery stock compensation, and “Stock Compensation with Stock Price-linked Conditions” includes Performance Share Units (PSU). For PSUs for which the rights were vested during the current fiscal year, the fair value calculated based on the closing price of stock on the date of vesting, etc. is stated. In addition, the amounts recorded as expenses for accounting purposes for the current fiscal year are 28 million yen for Directors and 890 million yen for Executive Officer.
4. For Directors and Executive Officers who do not reside in Japan, the currency for payment is converted into Japanese yen at the average exchange rate during the current fiscal year (JPY150.77 = USD 1.00).

(2) Total Amount of Consolidated Compensation for each Executive Officer/Executive Corporate Officer Subject to Disclosure

(Note)

1. Amounts are rounded to the nearest million yen. Therefore, the total of the amounts listed in each column may not match the amount in the Total Compensation column.
2. “Base salary” represents the amount paid in the current fiscal year. “Performance-linked Compensation” represents the amount of short-term incentive (STI) payments using the current fiscal year as evaluation period. “Stock Price-linked Compensation” represents the amount vested in the current fiscal year.
3. For overseas officers, the currency for payment is converted into Japanese yen at the average exchange rate during the current fiscal year (JPY150.77 = USD 1.00).

(v) Benefits and Welfare

Executive Officers/Executive Corporate Officers are eligible to receive various benefits equal to those of our other employees, excluding severance benefits. Those benefits include social insurance, such as health insurance and welfare pensions, accident insurance, commuting expenses, and rights to use group insurance.

(vi) Pay Ratio (Compensation Ratio)

The median of total annual compensation of all employees (other than the CEO) for our current fiscal year was 6 million yen. The CEO’s total annual income was 1,076 million yen. Based on this information, the ratio of the CEO’s total annual compensation to the median of total annual compensation of all employees was approximately 179 to 1.

The following methodologies and significant assumptions were used to determine the median of total annual compensation of all our employees and to calculate the total annual compensation of the median employee:

• December 31, 2024 was selected as the date (record date) for determining the median employee.
• Our employees as of the record date consisted of approximately 22,000 employees working for the Company and its consolidated subsidiaries (excluding those on leave that are not expected to return to work and Altium employees and Transphorm employees because their compensation structure has not integrated to ours yet).
• To determine the median employee, the Company used information about base salaries and incentives paid to all employees. The monthly salary is calculated on an annualized basis for full-time employees who have a service period of less than 1 fiscal year or who have had a non-paid holiday during a 1-year period.

The CEO’s total annual compensation is the amount shown in the column “(iv) Compensation for the current fiscal year FY2024 (2) Total Amount of Consolidated Compensation for each Executive Officer and Executive Corporate Officer Subject to Disclosure” above (Base salary + STI + LTI).

③Compensation Committee

The Company transitioned to a “Company with Nomination Committee, etc.” with the approval of the 22nd Annual General Meeting of Shareholders held on March 26, 2024. As a Company with Nomination Committee, etc., in order to ensure the appropriateness of compensation, etc. and the transparency of the decision-making process, the Company has established a Compensation Committee, which is composed of a majority of Outside Directors, and is chaired by an Outside Director. The members of the Compensation Committee are as follows.

• Chairperson: Selena Loh Lacroix (Outside Director)
• Member: Hidetoshi Shibata (Director, Representative Executive Officer, President and CEO)
• Member: Noboru Yamamoto (Outside Director)
• Member: Tomoko Mizuno (Outside Director)

A total of four meetings of the Compensation Committee were held during the current fiscal year. The compensation structure, individual compensation level (including payout amount of performance-linked compensation and grant amount of stock-based compensation) for Directors, Executive Officers/Executive Corporate Officers are decided by the Compensation Committee based on market data and compensation advisor’s (Willis Towers Watson) advice.