Action to Implement Management That Is Conscious of the Cost of
Capital and Stock Price
SUBARU CORPORATIONMarch 15, 2024

https://www.subaru.co.jp/en/ir/

1 . F u r t h e r E n h a n c e S U B A R U ’ s C o r p o r a t e Va l u eAnalysisof Current
Situation

 Cost of capital (WACC) now stands in the mid-6% range (based on CAPM)
 In and after the end of March 2020, when the COVID-19 pandemic broke out, PBR hovered around0.8x but has since increased to around 1.0x more recently. At the same time, PER is 7-8x.
 ROE has exceeded the cost of capital, except for FYE 2021 and FYE 2022, when semiconductors
were in short supply.

PoliciesandTargets

 Amid the rapid and nonlinear transformation of the automotive industry, we are making steady progresson the initiatives announced in our New Management Policy in August 2023. Our future strategy’sinternal/external dissemination is also proceeding as planned.
 We are pursuing industry-leading profitability and an ROE of 10% or higher as long-term targets withan eye to 2030.

KeyInitiatives

Steadily
implement theinitiatives laidout in the New
ManagementPolicy
Reinforcemessagingand dialogue



Steady implementation of world-leading “Monozukuri Innovation” and “ValueCreation” (Monozukuri: Manufacturing)Internal dissemination of the concept of capital cost (using in-house ROIC tree)

Optimally allocate 
capital / Increasevalue per share Achieve both growth investments and stable shareholder returns (Aim for total
return ratio between 30% to 50%)
Effective share repurchaseImprove IR activities to enhance expectations for growth and to loweruncertainty
Reinforce ESG messaging (electrification, human capital, intellectual property,governance, etc.)

Improve ROE

Improve PERStrengthen effectivenesshttps://www.subaru.co.jp/en/ir/Revise the executive compensation plan (indicators: ROE, employee
engagement, and relative TSR)

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2. Analysis of Current Situation
 ROE has exceeded the cost of capital, except for FYE 2021 and FYE 2022
when performance was heavily affected by a drop in unit production due tothe semiconductor shortage.
 In FYE 2023, profitability began improving, chiefly because
production/sales environments normalized and foreign exchange rates had
a positive impact, with PBR recently climbing to around 1.0x.
 Our PER (7-8x) looks low in comparison with the average of companies on
the TSE Prime Market.
It is difficult to raise expectations now, as the medium-/long-term prospects
for electrification, etc., remain uncertain.
(Times)

Maintain/improve
profitability by steadily
implementing the New
Management Policy
Raise expectations forgrowth by reinforcing
messaging and dialogue(Times)
PBR (times) [left axis]
PER (times) [right axis]

https://www.subaru.co.jp/en/ir/

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3. Key Initiatives – Improve ROE (Return on Equity)
 Steadily implementing world-leading “Monozukuri Innovation” and “Value Creation” laid out in the New
Management Policy as we pursue industry-leading profitability and an ROE of 10% or higher as long-termtargets with an eye to 2030.
Monozukuri
Innovation

high-densitymonozukuri
monozukuri(manufacturing)
throughthe integration
 Promoting high-density(manufacturing)
throughthe integrationof productof productdevelopment, production, and the supply chain
the development
development leadleadtime,time,number
numberofofparts,parts,andandproduction
processes
to reduce
 Halving theproduction
processes
to reduce
the theprocess andand leadleadtimetimeininexisting
existing
domains
andstrengthen
ability
to respondto domains
domainsandstrengthen
ourourability
to respondto domains
experiencing a nonlinear transformation.

Value
Creationcreatesvalue
valueforfor
society
the future
by building
bonds betweenthe SUBARU creates
societyandandthe future
by building
strong strong
bonds between
thecompany, customers, retailers, and communities.
 To add more value to the products that are at the heart of this strong relationship, we will pursue
enjoyment and peace of mind, as well as a “seamless & stress-free” user
user experience,experience, in thethe ageof the BEV and the realization of the “Retaining Value” approach unique to SUBARU.

Our Initiatives So Far
 Made organizational changes to achieve Monozukuri Innovation(Transferred major functions of the Development Prototype Department of the Engineering Division to theMonozukuri Division)
 Updated the development bases in Gunma and Tokyo areas, which drive our technological innovation (GunmaPlant: innovation hub)
 Established five new CXO positions to accelerate various initiatives and achieve overall optimization (effective April1, 2024)
https://www.subaru.co.jp/en/ir/

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4. Key Initiatives - Achieve Both Growth Investments and Stable
Shareholder Returns
 As investments in electrification keep increasing, we intend to return profits with a greater awareness ofimproving capital efficiency while maintaining financial soundness (equity ratio: 50% or higher) and stability(a reasonable net cash position).
Growth Investments
Battery-related investments
Investments in development of production
systems in Japan and the US
Investments related to development of EVs

 Invest 1.5 trillion yen for sustainable growth.
 1.5 trillion yen is the maximum amount imaginable.
 Details of the plan are being assessed and will be
disclosed when appropriate.

Shareholder Returns
 The level of returns remains unchanged.
 With improved value per share in mind, effectively repurchase our own shares as an option forshareholder returns.
[Previous policy: - July 2023][New Management Policy: August 2023 -] Aim for consolidated dividend Aim for total return ratio: between 30% topayout ratio: between 30% to 50%
50%
https://www.subaru.co.jp/en/ir/

55. Key Initiatives – Improve PER (Price Earnings Ratio) Raise expectations for growth and lower uncertainty by further reinforcing IR activities Continually disclose progress of sustainable growth strategy and reinforce the governance structure anddisclosure/dialogue for investment in and use of intangible assets
Progress in the electrification
strategy, a pillar of growth

Reinforce the governance structurethat supports growth Nurture a concrete image andcertainty of Monozukuri Innovation
and Value Creation
 Strengthen the plausibility ofachieving industry-leading
profitability by 2030

 An operation system designed toachieve sustainable growth andactivities by the BoD with a focus ona monitoring function
 Reinforce risk management thatfactors in impact from electrification,
environmental considerations, etc.
(using in-house risk map)

Invest in and use human capital andthe intellectual property (IP) thatdrive growth Construct a value-creation story
by using human capital andintellectual property in a way thattaps into our unique strengths

Outcomes of dialogues with shareholders/investors ⇒Regularly reported to the Board of Directors
 CEO and CFO proactively engage in dialogue via financial results briefings, overseas roadshows (NA, Europe), etc.
FY2022

FY2023*One-on-one dialogue

FY2022

FY2023*Financial results briefings

4 times

4 times

Small meetings
Securities houses’ conferences

7 times

9 times

Dialogue with investors/shareholders(overseas investors/shareholders)

170 times(103 times)

214 times(116 times)

7 times

6 times

Dialogue with analysts

90 times

83 times

Product/technical briefings, factory tours

5 times

3 times

Dialogue events

https://www.subaru.co.jp/en/ir/* The sum of results up to the end of February 2024 and ones scheduled for March 2024

66. Key Initiatives – Revise the Executive Compensation Plan toStrengthen Effectiveness Add relative total shareholder return (TSR) (vs. dividend-included TOPIX growth rate), on top of theexisting indicators, such as ROE and employee engagement improvement, to KPIs for the PSU*1 portionof restricted stock compensation*1 Performance share unit (variable compensation type)

Revisions to the restricted stock compensation plan
To provide more incentive for Company directors*2 and executive officers for achieving sustained improvement of theSUBARU Group’s value over the medium-/long-term, we will revise our restricted stock compensation plan*3 as part ofreviewing the executive compensation plan.
 Raise the ratio of stock compensation to total compensation to link improvements in the Company’s corporate
value more closely to compensation
 Add relative TSR (vs. dividend-included TOPIX growth rate), an indicator of improved corporate value, to KPIs for
the PSU portion of the plan Introduce clawback provisions to enhance governance over compensation*2 Other than Outside Directors*3 The revisions to the plan are subject to approval at the 93rd Ordinary General Meeting of Shareholders to be held in June 2024.

[Composition of compensation of the Representative Director of the Board, President and CEO]
Fixed

Short-term incentive

Basic compensation

Annual performance-linked
bonuses(Composition ratio*4)

1

0.5

Medium-/long-term incentive

Restricted stock compensation
Fixed
Variable compensation typecompensationtype(PSU)(RS)
0.5
0.2*4 The ratios of annual performance-linked bonuses and restricted stock compensation (variable compensation type / fixed compensation type) aredetermined by assuming that of basic compensation being 1.
https://www.subaru.co.jp/en/ir/

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Forward-looking statements, including projections and future strategies, mentioned in this presentation are based on
currently available information and assumptions and are subject to risks and uncertainties. Actual results could vary
本資料に記載されている計画、戦略などのうち、歴史的事実でないものは、現在入手可能な情報、予測に基づいた仮定、およmaterially as a result of various factors including, without limitation, economic conditions and fluctuations in market
び判断であり、様々なリスクや不確実性を含みます。将来における当社の実際の業績は、当社を取り巻く経済情勢や需要の変demand. Investors are asked to not rely solely on the information in this presentation when they make investment動などにより、これらと異なる結果となる場合がございます。投資に関する最終決定は、上記の点を踏まえ、投資家の皆様ご自decisions.
身の判断で行われるようお願いいたします。

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