May 8, 2024
(Translated from the Japanese original)
Company Name: TIS Inc.
Yasushi Okamoto, President andRepresentative:
Representative Director
Stock Listing:Prime Market of the Tokyo Stock Exchange
Stock Code:
3626
Makoto Nakagawa, Section Manager ofContact:
Investor Relations & Shareholder Relations
OfficePhone:+81-50-1702-4115 (in Japan, 050-1702-4115)
Notice regarding Revision of Directors’ Compensation
TIS Inc. (hereafter, “TIS” and “the Company”) hereby gives notice that the Company’s Board ofDirectors decided at its meeting on this date to revise the compensation system (hereafter,“Compensation System Revision”) for directors, executive officers and executive fellows (excluding
external directors, non-executive directors and non-residents of Japan; hereafter, collectively“Directors”). Details are provided below.
In line with Compensation System Revision, the Board of Directors decided to put forward at
the 16th Annual General Meeting of Shareholders to be held on June 25, 2024 (hereafter, “the GeneralMeeting of Shareholders”), a proposal to increase maximum compensation for directors and corporate
auditors as well as a proposal to revise the upper limit on stock acquisition funds under a performancelinked stock incentive plan and the total number of Company shares granted to directors and executiveofficers (excluding non-executive directors and non-residents of Japan). Revisions, conditioned upon
approval of these proposals at the General Meeting of Shareholders, will go into effect withcompensation paid to Directors from July 2024.
Compensation System Revision was submitted to and approved by the Board of Directors,
based on recommendations by the Compensation Committee, a voluntary advisory body to the Boardof Directors comprising a majority of independent outside directors.
Details
1. Purpose of Compensation System Revision
To establish an executive compensation system designed to maximize corporate value by setting a
globally competitive compensation level that will attract and keep management personnel withexceptional talent, providing high performance-linked ratios that motivate executives to actively
contribute to sustainable corporate growth, and incorporating incentives to improve long-term
management efficiency and promote sustainability initiatives.
2. Summary of the Compensation System Revision
The contents of Compensation System Revision include changes to compensation composition
ratios for Directors as well as the level of total compensation, a review of performance evaluation
metrics, changes to compensation limits for directors and auditors, and changes to theperformance-linked stock incentive plan.
(1) Changes to compensation composition ratios for Directors as well as level of total compensation
Current compensation for Directors comprises the following three components:1

i.

Basic compensation (monetary): Monthly compensation set for each position in order toserve according to responsibilities of the job
ii.
Performance-linked compensation (monetary): Compensation linked to degree of successin achieving previous fiscal year’s initial performance targets
iii. Performance-linked stock incentive (stock-based): Compensation linked to degree ofsuccess in achieving medium- to long-term performance targets** In each fiscal year, operating income, earnings-per-share, service-style business gross profit,
job satisfaction, customer/service satisfaction, business partner satisfaction
The revision calls for a review of the level of total compensation and the ratio forperformance-linked compensation, based on the aforementioned composition structure, withreference to compensation market research data compiled by a specialized external agency. In
regard to composition ratios, the ratio of performance-linked compensation will increase and greater
emphasis will be placed on a performance-linked stock incentive to provide healthy motivation thatwill translate into higher corporate value over the medium to long term and fuel sustainable growth.
A model case demonstrating the defining attributes of composition ratios for basic compensation,
performance-linked compensation and a performance-linked stock incentive is presented below.
If performance targets (standard) are achieved(Before revision)
Performance-linked
compensation
30%

Performance-linked
stock incentive10%

Basic compensation

Performance-linked
compensation

Performance-linked
stock incentive

50.0%
55.0%

25.0%
22.5%

25.0%
22.5%

60.0%

20.0%

20.0%

100.0%－－

Title

Basic compensation

Director (excluding part-time)

60%(After revision)
Title
Directors
President
Executive Vice President, Senior
Managing Executive Officer
Managing Executive Officer,
Executive Officer
Director (non-executive officer)

Performance-linked compensation will vary from 0 to 1.5 times and the performance-linked
incentive will vary from 0.5 to 1.5 times, depending on the degree of success in achieving targets,where the performance-linked ratio increases in relation to management accountability. At the first
general meeting of shareholders, held on June 25, 2009, a proposal was adopted whereby TIS pays
performance-linked compensation based on the results of the previous fiscal year, effective from theCompany’s second fiscal year, with performance-linked compensation divided into 12 equal partsand paid monthly. Based on compensation market research data compiled by a specialized external
agency, TIS will change from monthly payments of performance-linked compensation to a single,
annual lump-sum payment. For payment of performance-linked compensation based on fiscal 2024business results, the current payment method will be used as a transitional measure to the newsystem, and payment of performance-linked compensation based on fiscal 2025 business results
will be a lump-sum payment in 2025.
(2)

Review of performance evaluation indicators
Seeking to maximize corporate value, TIS will introduce new metrics for performance-linked
compensation and performance-linked stock incentives that will further encourage efforts tocontribute to improving management efficiency and promoting ESG initiatives.
2

i. Performance-linked compensation
TIS will introduce coefficients linked to the degree of success in achieving conventional
single-year consolidated performance, with consolidated net sales, consolidated operating
income and EPS as financial indicators and stakeholder satisfaction (*), ESG score andgovernance items as non-financial indicators.
(*) Stakeholder satisfaction is based on the results of surveys to garner satisfaction among
employees, clients and business partners.
ii. Performance-linked stock incentive
TIS will revise coefficients similar to the degree of success in achieving conventional
performance-linked compensation targets and introduce a metric linked to total shareholder
return (TSR).
(3)

Changes to compensation limits for directors and auditors
At the first General Meeting of Shareholders, held on June 25, 2009, shareholders approved aproposal that set a limit on director compensation at ¥400 million per year (of which, ¥50 million
was for outside directors) and a limit on auditor compensation at ¥85 million per year. However,in line with Compensation System Revision, TIS will put forward a proposal at the General
Meeting of Shareholders to raise the limit on director compensation to ¥800 million (of which,¥100 million will be for outside directors) and the limit on auditor compensation to ¥150 million.

(4)

Changes to performance-linked stock incentive plan
On May 10, 2018, TIS announced the introduction of a performance-linked stock incentive
plan (hereafter, “the Plan”; adopting a framework known as a Board Incentive Plan Trust (“theTrust”); wherein, the Trust is set up under a trust contract with Mitsubishi UFJ Trust and Bank
Corporation which performs trust-related administrative tasks). The Plan was approved asdirector compensation by shareholders at the 10th General Meeting of Shareholders, on June26, 2018, and a proposal to continue the Plan was similarly approved by shareholders at the13th General Meeting of Shareholders, on June 24, 2021, and remains in effect at this time. TIS
has acquired Company’s shares from the market through the Trust in a number reasonably
expected to be required for delivery and payment of Company’s shares (Note 1) in eachapplicable period (Note 2). However, in line with Compensation System Revision, the upper
limit on funds contributed by TIS to acquire shares in each period will revise, from ¥700
million (of which, Company portion is ¥520 million) to ¥1,810 million (of which, Company
portion is ¥1,630 million). In addition, the Company will put forward a proposal at the General
Meeting of Shareholders to increase the compensation limit related to the Plan and change therecipients of compensation from directors who are currently eligible for compensation to
directors and executive officers (excluding non-executive directors and non-residents of Japan).
The Plan will have a limit set separately from the director compensation limit described in (3)above. In line with this, TIS will partially revise the content of the Plan. For details, please referto the press release “Notice regarding Continuation of Performance-Linked Stock Incentive
Plan and Partial Changes,” dated today.

Notes:

1. Refers to Company’s shares and cash equivalent to amount of Company’s sharesconverted to market value.
2. The three business years, from the year ended March 31, 2019, through the year ended
March 31, 2021, and the three business years that begin after the previous three businessyears are each referred to as the applicable period.

END3