My name is Teresa Graham, and I’ve been appointed chair of the Compensation Committee in March 2023. An important part of increasing corporate value is securing talented personnel who are able to implement the corporate philosophy and providing them appropriate incentives. The Compensation Committee plays a key role in our efforts to do this, and I will make every effort to uphold my responsibility as chair.

During the decision-making for executive remuneration and so forth, the Compensation Committee deliberates on the individual remuneration of each director, which is then finalized by resolution of the Board of Directors. The Compensation Committee is composed of four members, all of whom are non-executive or independent outside directors. The structure enables deliberations without any internal directors, which ensures that the process of deciding executive remuneration is transparent and objective. It is also important that we continue to evolve until we have a system design that is linked to corporate value increase and management strategy.

The remuneration system has seen the strengthening of incentives for performance improvement with the introduction of restricted stock compensation in 2017 and has been revised to reflect not only financial results but also R&D results and achievement on ESG issues in the indicators for performance-linked remuneration in 2021. I think it is important that we continue to investigate these kinds of design.

In particular, since the Company’s business environment and industry trends related to executive remuneration are changing rapidly, we must closely monitor recent cases. In 2023, the Compensation Committee will change its member composition, including the appointment of two new members. While firmly maintaining our existing policy, we must also respond to environmental changes and evolve further.

Last year, a third-party organization reviewed the Company’s executive remuneration system and identified issues to be addressed. Looking ahead, we will analyze and examine these findings, and we will continue to strengthen our remuneration governance by improving the effectiveness of the Compensation Committee even further through continuous examination of system design and decision-making processes, while keeping an eye on the rapidly changing business environment and the latest industry trends related to executive remuneration.