These documents have been translated from Japanese originals for reference
purposes only. In the event of any discrepancy between these translated
documents and the Japanese originals, the originals shall prevail.
May 21, 2024

NIHON KOHDEN CORPORATION (6849)
Stock Exchange Listing:
Head Office:Representative:
Contact:

Prime Market, Tokyo Stock Exchange
Tokyo
Hirokazu Ogino, Representative Director, President and Chief Executive Officer
Fumio Izumida, Operating Officer, General Manager of Corporate Strategy Division
Phone: +81 / 3-5996-8003

Announcement of Introduction of Performance-linked Post-delivery
Restricted Stock Remuneration Plan
Nihon Kohden announced that it has decided to submit a proposal for the introduction of a Performancelinked Post-delivery Restricted Stock Remuneration Plan (“Plan”) at the 73rd Ordinary General Meeting ofShareholders to be held on June 26, 2024 for voting, following a meeting of the Board of Directors held
today, which reviewed the Company’s executive remuneration plan and resolved to introduce the Plan.
1. Purpose and Conditions for Introduction of the Plan
(1) Purpose of Introduction of the Plan
The Company will introduce the Plan to provide incentives for Directors (excluding Directors serving
as Audit & Supervisory Committee Members and Outside Directors; “Eligible Directors”) tostrengthen its remuneration governance and further improve the Company’s corporate value to achieve
its Three-year Business Plan, BEACON 2030 Phase II, starting from FY2024.
(2) Conditions for Introduction of the Plan
Because monetary compensation receivables are paid as remuneration to Eligible Directors to allot thenumber of shares of restricted stock (“Performance Stock”) in accordance with the degree ofachievement of numerical targets for business performance during the relevant performance evaluation
period, which is each fiscal year, the introduction of the Plan shall be subject to the approval of theOrdinary General Meeting of Shareholders with regard to the provision of such remuneration. It waspreviously approved at the Company’s 65th Ordinary General Meeting of Shareholders held on June 28,
2016 that the total amount of remuneration to Directors (excluding Directors serving as Audit &Supervisory Committee Members) be limited to within 400 million yen per year (including themaximum amount of Remuneration to Outside Directors, 30 million yen per year, not including thetotal amount of the Directors’ salaries as employees of the Company). It was also previously approvedat the Company’s 69th Ordinary General Meeting of Shareholders held on June 25, 2020 that themaximum amount of monetary compensation receivables to be paid to Directors (excluding Directors
serving as Audit & Supervisory Committee Members and Outside Directors) in respect of restricted1

stock be limited to within 100 million yen per year. In addition to the above Director’s remunerationand existing restricted stock remuneration, the Company plans to propose that the maximum amount ofmonetary compensation receivables that may be issued in respect of Performance Stock be set at 300
million yen for each period (as defined in 2 (1)), which the Company believes is reasonable in light ofthe purposes described above.
2. Overview of the Plan
(1) Allotment and Payment of Performance Stock
The Company will grant monetary compensation receivables to grant Performance Stock to Eligible
Directors in accordance with the degree of achievement of numerical targets for business performance,
which are determined by the Board of Directors of the Company in each fiscal year, the performance
evaluation period (“period”). Each Eligible Director will receive Performance Stock by making an inkind contribution of all monetary compensation receivables.
Therefore, at the beginning of the period, it is not determined whether or not monetary compensation
receivables will be paid and the number of shares of Performance Stock to be allotted to each Eligible
Director (“number of allotted shares”) is also not determined.
The above monetary compensation receivables will be granted to Eligible Directors on the condition
that they agree to the above in-kind contribution and that they have concluded with the Company anagreement on allotting Performance-linked Post-delivery Restricted Stock containing the terms
stipulated in (6) below.
The initial period is the 74th fiscal year (April 1, 2024 to March 31, 2025) and each fiscal year
thereafter shall be a new period for allotting Performance Stock.
(2) Total Number of Shares of Performance Stock
The maximum number of shares of Performance Stock to be allotted to Eligible Directors will be
150,000 shares per fiscal year.
However, if a share split of the Company’s common stock (including allotment of the Company’scommon stock without contribution), a share consolidation of the Company’s common stock, or any
other event occurs that requires an adjustment of the total number of shares of Performance Stock to be
allotted to Eligible Directors after the day of the resolution of this proposal, the Company may
reasonably adjust the total number of shares of Performance Stock.
(3) Calculation Method of Number of Allotted Shares
The performance evaluation indicators such as numerical targets, which are necessary for calculating
the specific number of shares of Performance Stock to be allotted, shall be determined by the Board ofDirectors of the Company based on indicators in its Three-year Business Plan. (As shown in Reference
1 below, in FY2024 to FY2026, it is planned that these will be the target of each indicator in its Threeyear Business Plan, such as consolidated operating income margin, consolidated ROE, and relativeTSR.)
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In the specific calculation, the number of shares to be allotted to each Eligible Director shall becalculated based on the following formula (provided, however, that if a fraction of less than one shareoccurs, it shall be rounded down).
In the event that the total number of shares of Performance Stock to be allotted to each Eligible
Director exceeds the above maximum number of shares to be allotted to Eligible Directors or the total
amount of monetary compensation receivables to be granted to Eligible Directors by allotting shares ofPerformance Stock in accordance with the following formula, the number of shares to be allotted toeach Eligible Director and the amount of monetary compensation receivables to be granted to each
Eligible Director shall be adjusted to the extent that they do not exceed the total number of shares ofPerformance Stock to be allotted to Eligible Directors or the amount of monetary compensation
receivables to be granted to Eligible Directors. Adjustments shall be made in a reasonable manner, suchas proportional allotment, which is determined by the Board of Directors of the Company.
Number of shares allotted to each Eligible Director: number of stock points (*1) x payout ratio (*2)
*1 Determined by the Board of Directors of the Company according to the position and responsibilitiesof each Eligible Director.
*2 Determined by the Board of Directors of the Company in the range of 0 to 200% according to theachievement rate of each numerical target for each period.
(Reference 1)
The method of determining performance evaluation indicators and payout ratio for FY2024 to FY2026
in the event that the plan is introduced is as follows.
Provided, however, that if the consolidated operating income margin for the period is less than 10%, thepayout ratio in the period will be 0%.

Financial target evaluation
Corporate value evaluation

Valuation weight
30%
30%
40%

Performance evaluation indicators
Consolidated operating income margin
Consolidated ROE
Relative TSR*

* (Total shareholder return of the Company at the end of the relevant fiscal year) ÷ (Average of total shareholder returnof other companies in the same industry for the period corresponding to the calculation period of total shareholder
return of the Company)

Payment ratio = (Coefficient linked to the degree of achievement of the consolidated operating income
margin target x 30%) + (Coefficient linked to the degree of achievement of the consolidated ROE
target x 30%) + (Coefficient linked to the degree of achievement of the relative TSR target x 40%)(4) Requirements for Allotting of Performance Stock
In the event that the period expires, and that each Eligible Director meets the following grantrequirements, the Company will grant monetary compensation receivables to each Eligible Director.
Each Eligible Director will receive Performance Stock by making an in-kind contribution of all
monetary compensation receivables.
The allotment of Performance Stock shall be made by the disposal of treasury shares of the Company.

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The payment amount shall be determined at the Board of Directors of the Company to the extent thatthe amount is not particularly favorable value to each Eligible Director, based on the closing price of
the Company’s common stock on the Tokyo Stock Exchange on the business day immediately
preceding to the date of the resolution regarding the allotment of Performance Stock at the Board of
Directors of the Company (or the closing price on the immediately preceding trading day if thetransaction is not concluded on the same day).
Grant Requirements(a)

The Eligible Director has continuously held the position of Director or Operating Officer of theCompany for the entire period.

(b)

The Eligible Director has not conducted certain violations stipulated by the Board of Directorsof the Company.

(c)

The Eligible Director has satisfied other requirements deemed necessary by the Board of
Directors of the Company.
Provided, however, that notwithstanding (a) above, if there are any Eligible Directors newly
appointed during the period, the number of shares to be allotted to each Eligible Director shallbe adjusted as necessary.
If an Eligible Director retires from both the position of Director or Operating Officer of theCompany due to the expiration of the term of office or any other reasons, such as death, deemedjustifiable by the Board of Directors of the Company during the period, the amount of money
reasonably calculated by the Board of Directors of the Company as an equivalent amount inlieu of the allotment of Performance Stock shall be within the range of 300 million yen for eachperiod. Payments (including payments to heirs who will succeed in the event of death) may bemade within a certain period from the date of such retirement.

(5) Treatment in the Event of Reorganization
Before the grant date of Performance Stock, if proposals relating to a merger agreement in which theCompany is the dissolving company, share exchange agreement or share transfer plan in which theCompany becomes a wholly-owned subsidiary, or other reorganization, are approved at a General
Meeting of Shareholders of the Company (or if approval at a General Meeting of Shareholders of theCompany is not required in relation to the reorganization in question, approval by the Board ofDirectors of the Company), before the date on which the reorganization becomes effective, theCompany may pay an amount of money reasonably calculated by the Board of Directors of theCompany based on the period served as a Director or Operating Officer as an equivalent amount in lieuof the allotment of Performance Stock within the range of 300 million yen for each period.
(6) Details of the Agreement on Allotting Performance-linked Post-delivery Restricted Stock
The agreement on allotting Performance-linked Post-delivery Restricted Stock to be concluded
between the Company and Eligible Directors who receive an allotment of Performance Stock based ona resolution of the Board of Directors of the Company shall contain the following terms.
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(a) Details of the restriction on the transfer of shares
Eligible Directors to whom Performance Stock is allotted may not transfer to a third-party, create apledge or mortgage by transfer on, make an advancement, make a bequest, or otherwise dispose ofPerformance Stock allotted to them (“Allotted Stock”) during the period from the grant date of thePerformance Stock to the date when the Eligible Director retires from the position of Director orOperating Officer of the Company (“Transfer Restriction Period”).
(b) Acquisition of Performance Stock without compensation
If an Eligible Director who receives an allotment of Performance Stock retires from both theposition of Director and Operating Officer of the Company, all of his or her Allotted Stock willautomatically be acquired by the Company without consideration except in the case that the Boardof Directors of the Company deems that the reason for the resignation is valid.
The Company will automatically acquire all Allotted Stock without consideration if the restriction
on transfer of the Allotted Stock has not been lifted at the expiration of the Transfer Restriction
Period in (a) above based on the terms provided in (c) “Lifting of transfer restriction” below.
(c) Lifting of transfer restriction
The Company will lift the restriction on transfer of all of his or her Allotted Stock that an Eligible
Director to whom Performance Stock was allotted holds at that time when the Transfer Restriction
Period expires.
(d) Treatment in the event of reorganization
During the Transfer Restriction Period, if proposals relating to a merger agreement in which theCompany is the dissolving company, share exchange agreement or share transfer plan in which theCompany becomes a wholly-owned subsidiary, or other reorganization, are approved at a General
Meeting of Shareholders of the Company (or if approval at a General Meeting of Shareholders of
the Company is not required in relation to the reorganization in question, approval by the Board ofDirectors of the Company), the Company may lift the transfer restriction before the date on which
the reorganization becomes effective for all of Eligible Directors’ Allotted Stock by the resolutionof the Board of Directors of the Company.
(e) Malus and clawback clause
The Company will automatically acquire all or any part of the Allotted Stock allotted to an Eligible
Director, or the Company’s common stock, for which the transfer restriction has been lifted, if theBoard of Directors of the Company determines that the Eligible Director has violated laws andregulations or internal rules in a material respect during or after the Transfer Restriction Period, orif certain events including serious improper accounting or massive losses have occurred, asdetermined by the Board of Directors of the Company.
If these shares are disposed of, the Company will be able to claim payment of money from theEligible Director equivalent to the value of the shares at the time of disposal.
(Reference 2)
The Company will also allot Performance Stock described above to Operating Officers of the Company.
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