Remuneration

Remuneration

Remuneration Committee of the Company has resolved the policy for determining the content of Remuneration for each Director and Executive Officer. In addition, Remuneration Committee that the method for determining the content of Remuneration for each Director and Executive Officer for the current fiscal year and the content of Remuneration Remuneration upon are consistent with the policy, and has determined that the compensation is in accordance with the policy.
Furthermore, we are revising Remuneration system in the fiscal year ending March 31, 2023, with the aim of improving alignment with the Long-Term Management Plan 2030 and improving shared value with shareholders by increasing the proportion of variable Remuneration.

The decision-making policy concerning details of remuneration for each director and corporate executive officer of the Company is deliberated at meetings of the Remuneration Committee. The Remuneration Committee also confirms that the method for deciding the details of remuneration paid to each director and corporate executive officer for each fiscal year as well as the details of each decided amount of remuneration are consistent with said policy.
　In FY2022, the remuneration system was revised to improve the linkage between officer remuneration and the attainment of the targets of Long-Term Management Plan 2030 and to further align officer's interests with those of shareholders following the increase in the percentage of variable remuneration.

• Total amount of Remuneration paid to Director and executive officers
• Policy regarding determining the amount of executive Remuneration, etc.
• Overview of performance-based Remuneration

• Total Remuneration Paid to Directors, Corporate Executive Officers, and Statutory Auditors
• Board Policies and Procedures in Determining the Remuneration of Senior Management and Directors
• Overview of Performance-Based Remuneration

　

Policy on Determining Amounts of Executive Remuneration, etc.Board Policies and Procedures in Determining the Remuneration of Senior Management and Directors

(i) Procedures for determining officer Remuneration
The policy for determining the content of Remuneration for the Company's Director and executive officers and the content of individual Remuneration are determined by a resolution of Remuneration Committee, which consists of only outside Director.

(ii) Basic Policy for Determining Executive Remuneration
The Company's basic policy for determining Remuneration for Director and executive officers is as follows.

(ⅰ) Procedures for Deciding Remuneration Paid to Officers
The policy concerning decisions on the details of remuneration paid to directors and corporate executive officers of the Company and the details of remuneration for each person shall be decided upon by a resolution of the Remuneration Committee, which comprises solely outside directors.

(ⅱ) The Basic Policy for Deciding Remuneration for Officers
The basic policy for deciding remuneration for directors and corporate executive officers of the Company is as follows.

• Remuneration system will be linked to medium- to long-term performance targets, etc. in management strategies and medium-term management plans, and will realize sustainable improvement in corporate value and shared value with shareholders.
• Remuneration system will provide incentives to encourage management to take on challenges and take appropriate risks in line with strategic goals and the expectations of shareholders and other stakeholders.
• Through objective deliberations and judgments by Remuneration Committee, we will establish a Remuneration system that enables us to fulfill a high degree of accountability to our shareholders and other stakeholders.
• The remuneration system shall be linked with our medium- to long-term performance targets, etc., aimed at in management strategies and medium-term management plans and realize sustained corporate value improvement and the sharing of value with our shareholders.
• The remuneration system shall allow for the giving of incentives to management executives to encourage them to take on challenges and conduct appropriate risk-taking in line with the above strategies' targets and expectations of shareholders and other stakeholders.
• The remuneration system shall make it possible to fulfill high accountability for the benefit of our shareholders and other stakeholders through objective deliberations and judgments by the Remuneration Committee.

(iii) Executive Remuneration System
Remuneration systems for Director and executive officers shall be separate systems in light of their respective functions and roles to be fulfilled in order to sustainably improve corporate value. Director concurrently serving as executive officers shall be paid Remuneration as executive officers.

(ⅲ) Remuneration Systems for Officers
Remuneration systems for directors and corporate executive officers shall be separately established in consideration of their respective functions and roles to be fulfilled for the purpose of achieving sustained corporate value improvement. In addition, directors who concurrently serve as corporate executive officers shall be paid remuneration as corporate executive officers.

• Director (excluding Director concurrently serving as executive officers)
  In light of the function and role of supervising the execution of duties by Executive Officers and Director, as a general rule, only basic Remuneration is in the form of money, and the level of remuneration will be determined individually taking into account the position and responsibilities as Director, whether full-time or part-time, etc. and decide.
• Executive officer
  In principle, compensation consists of basic Remuneration and variable Remuneration in view of the function and role of the Company's business execution. Variable Remuneration consists of monetary Remuneration based on short-term business performance, etc., and stock Remuneration, etc. (including monetary Remuneration based on indicators such as stock prices), which aims to realize shared value with shareholders over the medium to long term. and The level and ratio of basic Remuneration and variable Remuneration, evaluation indicators for variable Remuneration, etc. shall be determined in consideration of medium- to long-term performance targets, etc. in management strategies and management plans, as well as positions and responsibilities as executive officers.
• Directors (excluding directors who concurrently serve as corporate executive officers)
  In consideration of their function and role of supervising the performance of duties by corporate executive officers and directors, they shall receive, in principle, only basic remuneration in the form of cash, and the standards shall be decided upon individually taking into account factors such as their position and responsibilities as directors and whether they are full-time or part-time.
• Corporate executive officers
  In consideration of their function and role of taking charge of business execution of the Company, their remuneration shall, in principle, comprise basic remuneration and variable remuneration. Variable remuneration comprises monetary compensation that is paid based on short-term performance, etc., and stock compensation, etc. (including monetary compensation paid based on indicators such as stock price), that is paid with a view to realizing the medium- to long-term sharing of value with shareholders. The standards and ratios of basic remuneration and variable remuneration, valuation indicators for variable remuneration, and other matters shall be decided upon taking into account medium- to long-term performance targets, etc., aimed at in management strategies and the current management plan and factors such as position and responsibilities as corporate executive officers.

Overview of performance-linked RemunerationOverview of Performance-Based Remuneration

(1) Performance-linked cash Remuneration（1）Performance-Based Monetary Compensation

① Remuneration form: money
(2) Method of determining performance evaluation and Remuneration

① Form of remuneration: Cash
② Performance evaluation and method for determining remuneration

• 財務の健全性を担保しながら企業としての成長及び効率性向上を目指すことを目的に、全社の事業利益、ROA、ROE、EPS及び各役員が担当する部門の事業利益等の目標水準を基準とし、報酬金額が変動します。
• In determining Remuneration, in addition to the performance of the previous fiscal year for each indicator, the degree of contribution to medium- to long-term performance based on an interview with President & Chief Executive Officer, the status of ESG initiatives, and each business (domestic asset, overseas asset, non-asset ), and the final amount Remuneration Remuneration is determined by Remuneration Committee. See the table below for details.
• With the aim of achieving further corporate growth and greater efficiency while guaranteeing financial soundness, the amount of remuneration varies depending on consolidated business profit, ROA, ROE, EPS, and the target level of business profit in the divisions for which the individual officers are responsible.
• When determining remuneration, the amount is calculated using the actual indicators, etc., for the previous fiscal year, to which is added an evaluation of qualitative aspects, established during interviews with the president,* including the degree of contribution to performance over the medium to long term and the status of ESG-related initiatives, the level of progress of each business (domestic, international, and non-asset) in achieving targets stipulated in Long-Term Management Plan 2030, with the final remuneration amount being decided by the Remuneration Committee. Please see the table on page 85 for details.

(2) Restricted stock Remuneration (fixed portion, variable portion)（2）Remuneration by Shares with Restriction on Transfer (Fixed and Variable Components)

(1) Remuneration form: Stock
(2) Transfer restriction period: Until retirement of director
③ Method of determining performance evaluation and Remuneration:

① Form of remuneration: Shares
② Restricted stock period: Until an officer resigns
③ Performance evaluation and method for determining remuneration

• In order to provide incentives for sustainable improvement of corporate value and to promote further sharing of value with shareholders, we have adopted stock Remuneration with a transfer restriction period until the retirement of an officer. Remuneration Committee will determine the amount of monetary Remuneration claims for the allotment of shares.
• The method of determining Remuneration and main evaluation items for the variable portion will be determined using the same evaluation indicators as in “(1) Performance-linked cash Remuneration.”
• With the objectives of creating incentives for officers to achieve sustainable growth and of further aligning officers' interests with those of shareholders, the Company adopted stock-based remuneration with a restricted transfer period that runs until the time an officer resigns. The amount of monetary compensation that can be claimed when allocating stock is determined by the Remuneration Committee.
• The Company will determine the method for deciding variable remuneration and the major evaluation items by using the same evaluation items as those for (1) Performance-based monetary compensation.

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(3) Medium- to long-term performance-linked Remuneration (stock price-linked cash Remuneration)（3）Medium- to Long-Term Performance-Based Remuneration (Phantom Stock)

① Remuneration form: Money
② Performance evaluation period: about 3 years
(3) Method of determining performance evaluation and Remuneration

In order to provide incentives for sustainable improvement of corporate value and to promote further sharing of value with shareholders, we use the stock price and the ranking of total shareholder return (TSR) compared with other companies in the same industry*1 as indicators. Remuneration amount varies. Remuneration Committee will determine the standard amount Remuneration and the final amount Remuneration for each position.

① Form of remuneration: Cash
② Performance evaluation period: Approximately three years
③ Performance evaluation and method for determining remuneration

With the objectives of creating an incentive to work for sustainable growth and of promoting the further sharing of value with shareholders, the amount of phantom stock remuneration varies depending on the share price and on an indicator based on the Company's total shareholder return (TSR) ranking relative to five peer companies.*1 The base amount by position and the final remuneration amount are determined by the Remuneration Committee.

*1 Other companies in the same industry
Nomura Real Estate Holdings, Inc., Tokyu Fudosan Holdings, Inc., Mitsui Fudosan Co., Ltd., Tokyo Tatemono Co., Ltd., Sumitomo Realty & Development Co., Ltd.

※1 Five peer companies:
Nomura Real Estate Holdings, Inc., Tokyu Fudosan Holdings Corporation, Mitsui Fudosan Co., Ltd., Tokyo Tatemono Co., Ltd., and Sumitomo Realty & Development Co., Ltd.

④ Calculation method of individual payment amount④ Calculation method for individual amount paid

*2 Remuneration standard amount
The standard amount Remuneration shall be as follows according to the position of the person eligible for payment.

※2 Remuneration base amount
The remuneration base amount corresponds to the rank of the officer eligible for payment, as listed below.

President & Chief Executive Officer and Chief Executive Officer	Deputy President	Senior Managing Executive Officer	Senior Executive Officer	Corporate Executive Officer
President and chief executive officer	Deputy president	Executive vice president	Senior executive officer	Corporate executive officer
21,300 1,000 yen	12,675 1,000 yen	10,413 1,000 yen	8,352 1,000 yen	6,288 1,000 yen
¥ 21,300,000	¥ 12,675,000	¥ 10,413,000	¥ 8,352,000	¥ 6,288,000

*3 Vesting ratio
Each TSR of our company and other companies in the same industry is ranked, and the percentage in the table below corresponding to our TSR ranking, with 100% as the upper limit.

※3 Vesting ratio
A rank is given to the TSR of the Company and its peers. The percentages in the table below correspond to the Company’s TSR rank, with 100% being the upper limit.

TSR rank	First place	2nd place	3rd place	4th	5th place	6th place
TSR rank	1st	2nd	3rd	4th	5th	6th
vesting ratio	Vesting ratio	100％	80%	60%	40%	20%	0%

In addition, TSR is calculated by the following formula.

TSR is calculated using the formula below.