February 14, 2024
To AllCompany Name Frontier Management Inc.
Representative

Shoichiro Onishi, Representative Director,
President & Executive Officer(Stock code: 7038

The Prime Market ofTokyo Stock Exchange)
Contact

Hiroaki Hamada,
Executive Officer, Head of Company
Planning and Administration Department(TEL．+81-3-6862-8335)

Notice of Revision to the Remuneration System for Directors Following the Transition to a
Company with Audit & Supervisory Committee
Frontier Management Inc. (the “Company”) hereby announces that at a meeting of the Board of Directors held today it
resolved to submit a proposal to revise the remuneration system for directors to the 17th Annual General Meeting of
Shareholders (the “Shareholders’ Meeting”) scheduled to be held on March 27, 2024. Details are as follows.

1. Outline of revisions to the remuneration system for directors
If the partial amendments to the Articles of Incorporation are approved at the Shareholders’ Meeting, the Company willtransition to a company with an Audit & Supervisory Committee.
Accordingly, at its meeting today, the Board of Directors decided to submit to the Shareholders’ Meeting a proposal toset the amount of monetary remuneration for directors (excluding directors who are Audit & Supervisory Committee
Members) and the amount of monetary remuneration for directors who are Audit & Supervisory Committee Members, andto revise the amount and details of restricted stock compensation in accordance with the transition to a company with an
Audit & Supervisory Committee. The table below outlines the directors’ remuneration system to be revised.
The existing system

Recommended revision

Monetary remuneration (Upper limit)

Monetary remuneration (Upper limit)

Monetary remuneration for directors

400,000

Monetary remuneration for directors

350,000

thousand yen(excluding directors who are Audit &thousand yen

Supervisory Committee Members)
Monetary remuneration for Corporate

50,000 thousand

Auditors

Monetary remuneration for directors

yen

who

are

Audit

&

55,000 thousand

SupervisoryyenCommittee Members
Restricted stock compensation (Upper limit)
Stock Compensation A

Restricted stock compensation (Upper limit)

100,000

Stock Compensation A

thousand yen
Stock Compensation B

thousand yen

50,000 thousand

Stock Compensation B

yen
Annual130,000
65,000 thousandyen

600,000 thousand

Annualyen

600,000 thousandyen

12. Setting amounts of monetary remuneration to directors (excluding directors who are Audit & Supervisory Committee
Members)
If the partial amendments to the Articles of Incorporation are approved at the Shareholders’ Meeting, a proposal will
be submitted to the Shareholders’ Meeting to newly set the annual amount of monetary remuneration for directors(excluding directors who are Audit & Supervisory Committee Members) at 350 million yen or less, in order to transition
to a company with an Audit & Supervisory Committee. The Company proposes that the amount of monetary
remuneration for directors (excluding directors who are Audit & Supervisory Committee Members) do not include theemployee salaries of directors who concurrently serve as employees as before.
The Company has established a policy for determining directors’ remuneration by the resolution of the Board of
Directors based on the deliberations and reports of the voluntary Nomination and Remuneration Advisory Committee
chaired by an outside director. If the partial amendment to the Articles of Incorporation and the establishment of the above
monetary remuneration amount are approved at the Shareholders’ Meeting, the policy for determining directors’
remuneration is scheduled to be changed as outlined in Attachment 1. The setting of the amount of such monetary
remuneration is necessary and reasonable in order to determine the remuneration, etc. of directors (excluding directors
who are Audit & Supervisory Committee Members) in accordance with the policy after such change.
3. Setting the amount of monetary remuneration for directors who are Audit & Supervisory Committee Members
If the partial amendments to the Articles of Incorporation are approved at the Shareholders’ Meeting, the Company
will transition to a company with an Audit & Supervisory Committee. Therefore, in order to ensure that the level of
remuneration is appropriate to the responsibilities of directors who are Audit & Supervisory Committee Members, a
proposal will be submitted to the Shareholders’ Meeting to set the annual amount of monetary remuneration for directors
who are Audit & Supervisory Committee Members at 55 million yen or less.
The amount of such monetary remuneration was determined by resolution of the Board of Directors, taking into
consideration the recent economic situation, the size of the Company’s business, the future composition of the Board of
Directors, the responsibilities of the directors who are Audit & Supervisory Committee Members, and other various
circumstances, and based on the deliberations and reports of the voluntary Nomination and Remuneration Advisory
Committee, which is chaired by an outside director. The Company has determined that the amount is appropriate.
4. Partial revision of the amount and details of restricted stock compensation for directors (excluding directors who are Audit& Supervisory Committee Members and outside directors)
If the partial amendments to the Articles of Incorporation are approved at the Shareholders’ Meeting, the Company
will transition to a company with an Audit & Supervisory Committee. In accordance with this, a restricted stockcompensation plan for directors of the Company (excluding directors who are Audit & Supervisory Committee Members
and outside directors; hereinafter referred to as “Subject Directors”) will be established. In addition, in order to further
enhance the corporate value of the Company, the Company will partially revise the content of this plan.
Specifically, in addition to the amount of monetary remuneration for directors (excluding directors who are Audit &Supervisory Committee Members), the Company plans to propose to the Shareholders’ Meeting: (i) the total amount ofcommon stock of the Company to be issued or disposed of as Stock Compensation A, which is linked to the consolidated
business results for a single fiscal year, shall not exceed 130 million yen per year and the total number of such sharesshall not exceed 900,000 shares per year and (ii) the total amount of shares of the Company’s common stock to be issued
or disposed of as Stock Compensation B, which is linked to the degree of achievement of management targets andimprovement in corporate value, shall be no more than 65 million yen per year and the total number of such shares shallbe no more than 45,000 shares per year.
(1) Revision of single-year performance-linked remuneration
Before revision

After revision2

The single-year performance-linked remuneration (cashThe performance-linked remuneration for a single fiscal

bonus and Stock Compensation A) is linked to theyear (cash bonus and stock-based compensation A) is

Company’s consolidated performance for a single fiscal

linked to the Company’s consolidated performance for ayear, and the amount of remuneration is determined based

single fiscal year, and the amount of remuneration is

on the Company’s performance for the single fiscal year

determined based on the Company’s performance for theand other factors, and is paid to the directors (excluding

single fiscal year and other factors and is paid to directors

outside directors, hereinafter referred to as “Subject(excluding directors who are Audit & Supervisory

Directors”) in the form of cash bonuses and restricted stockCommittee Members and outside directors; hereinafter(Stock Compensation A) after the performance for eachreferred to as “Subject Directors”) in the form of cash

fiscal year is determined.

bonuses and restricted stock (Stock Compensation A) after
the performance for each fiscal year is determined.

The composition of the performance-linked remuneration

The composition of the performance-linked remunerationfor each Subject Director for a single fiscal year shall be 2/3

for each Subject Director for a single fiscal year shall be 1/2

cash bonus and 1/3 Stock Compensation A.

cash bonus and 1/2 Stock Compensation A.

Consolidated operating profit, etc. is used as basic

The amount of performance-linked remuneration to be paid

indicators of consolidated performance. The amount of

to each Subject Director for a single fiscal year will be

performance-linked remuneration to be paid to each Subject

determined based on his or her contribution to the

Director for a single fiscal year shall be determined based

Company’s performance and the maximum amount ofon his/her contribution to the Company’s performance andremuneration for each Subject Director, etc. The basic

the maximum amount of remuneration for each Subject

indicators of consolidated performance will be the rate of

Director.

increase in stock price and the amount of consolidated profit
excluding Frontier Capital Inc.

[Reason for the revision of this item] In accordance with the Company’s transition to a company with an Audit &Supervisory Committee, the Company has changed this system for directors (excluding outside directors) to a system fordirectors (excluding directors who are Audit & Supervisory Committee Members and outside directors) of the Company.
In addition, the Company has made revisions such as further increasing the proportion of stock-based compensation as asingle-year incentive (the maximum amount of compensation and the maximum number of shares of Stock Compensation
A are as described in (3) below). In light of their supervisory functions, outside directors and directors who are Audit &Supervisory Committee Members are not subject to this system.
(2) Revision of mid- to long-term performance-linked remuneration
Before revisionThe

medium-tolong-term

After revisionperformance-linkedThe

medium-tolong-term

performance-linked

remuneration (Stock Compensation B) is linked to the

remuneration (Stock Compensation B) is linked to thedegree of achievement of the management targets of thedegree of achievement of the management targets of themedium-term management plan and the degree of

medium-term management plan and the degree of

improvement in corporate value, etc. Restricted stock

improvement in corporate value, etc. Restricted stock(Stock Compensation B) is paid to the Subject Directors at(Stock Compensation B) is paid to the Subject Directors at

the beginning of each fiscal year based on the remuneration

the beginning of each fiscal year based on the remuneration

standard amount according to his/her position. In principle,

standard amount according to his/her position. In principle,

after the end of the period covered by the medium-term

after the end of the period covered by the medium-term

management plan, the number of shares for which the

management plan, the number of shares for which thetransfer restrictions will be lifted will be determined basedtransfer restrictions will be lifted will be determined basedon the degree of achievement of the management targets ofon the degree of achievement of the management targets ofthe medium-term management plan and the degree ofthe medium-term management plan and the degree of

improvement in corporate value with respect to the relevant

improvement in corporate value with respect to the relevant

shares granted during the relevant period.

shares granted during the relevant period.

The indicators of management targets for the medium-term

The indicators of management targets for the medium-term
3management plan for the period from 2021 to 2023 include

management plan for the period from 2024 to 2026 are theconsolidated sales growth rate, consolidated operatingstock price appreciation rate, the consolidated profit

profit margin, and achievement of consolidated ROE, etc.

excluding Frontier Capital Inc. and the achievement ofIn the event that a new medium-term management plan is

consolidated ROE excluding Frontier Capital Inc. In theformulated in the future, such management target indicators

event that a new medium-term management plan ismay be changed by a resolution of the Board of Directors.

formulated in the future, such management target indicators
may be changed by a resolution of the Board of Directors.

[Reason for the revision of this item] As an indicator of management targets for the Company’s medium-term management
plan for the period from 2024 to 2026, the contents, etc. of the performance achievement conditions, which are determinedby resolution of the Board of Directors based on the deliberations and reports of the voluntary Nomination andRemuneration Advisory Committee chaired by an outside director, are to be revised (The maximum amount and numberof shares of Stock Compensation B are as described in (4) below.) In light of their supervisory functions, outside directors
and directors who are Audit & Supervisory Committee Members are not subject to this system.
(3) Revision of the maximum amount of remuneration and number of shares of Stock Compensation A linked to theconsolidated business results for a single fiscal year
Before revision

After revision

Maximum amount of stock-based remuneration: Up to

Maximum amount of stock-based remuneration: Up to

100,000 thousand yen per year

130,000 thousand yen per year

Maximum number of shares to be allocated: Up to 40,000

Maximum number of shares to be allocated: Up to 90,000

shares per year

shares per year

[Reason for the revision of this item] The Company is revising the maximum amount of money to be contributed by theCompany under the Plan in order to ensure that the remuneration of Subject Directors is at a market-competitive level andto further increase the ratio of stock-based remuneration as a single-year incentive, thereby raising still further theirawareness of their contribution to the degree of achievement of management targets and improvement in corporate value
during a single fiscal year. The maximum number of shares to be granted to Subject Directors (the definition of “Allotted
Shares” is as described in Attachment 2) will also be revised in consideration of the recent share price trend and otherfactors.
(4) Revision of the maximum amount and number of shares of remuneration for medium- and long-term performance-linked
remuneration (Stock Compensation B)
Before revision

After revision

Maximum amount of stock-based remuneration: Up to

Maximum amount of stock-based remuneration: Up to

500,000 thousand yen per year

650,000 thousand yen per year

Maximum number of shares to be allocated: Up to 20,000

Maximum number of shares to be allocated: Up to 45,000

shares per year

shares per year

[Reason for the revision of this item] To ensure that the remuneration of Subject Directors is at a market-competitive level
and to further increase the ratio of stock-based remuneration as a medium- to long-term incentive, thereby raising still
further their awareness of their contribution to the degree of achievement of the management targets of the medium-term
management plan and the degree of improvement of corporate value, etc., the maximum amount of money to becontributed by the Company under the plan is to be revised. The maximum number of shares to be granted to Subject
Directors (the definition of “Allotted Shares” is as described in Attachment 2) will also be revised in consideration of therecent share price trend and other factors.

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Attachment 1: Directors’ Remuneration System
To improve the linkage between the remuneration of directors (excluding directors who are Audit & Supervisory
Committee Members and outside directors; hereinafter referred to as “Subject Directors”) and business performance, and to
make the remuneration system more conducive to achieving its short-term performance targets, its medium- to long-term
performance targets, and a sustained improvement in its corporate value, the Company has established two types of
remuneration for directors: single-year performance-based remuneration (cash bonuses and Stock Compensation A) linked
to the achievement of performance targets for the single fiscal year, and medium- to long-term performance-based
remuneration (Stock Compensation B) linked to the achievement of management targets in the medium-term management
plan, and to the extent to which corporate value is improved. Both Stock Compensation A and Stock Compensation B will
be paid in the form of restricted stock to increase the sharing of value with shareholders and to strengthen incentives to achieve
the management targets of the medium-term management plan and enhance corporate value.
The Company’s policy for determining directors’ remuneration after the revision of the Directors’ remuneration system issummarized as follows.
[Summary of Policy for Determining Directors’ Remuneration](1) Basic policy
Remuneration shall be designed to enable the appointment of outstanding individuals as directors who embody the
corporate philosophy and who contribute to achieving short-term performance targets, medium- to long-term performancetargets, and the sustainable enhancement of corporate value.
We will establish a highly transparent, fair, and reasonable remuneration system that is accountable to our stakeholders.
(2) Structure of remuneration
Remuneration for Directors (excluding directors who are Audit & Supervisory Committee Members and outside directors)
shall consist of base remuneration, which is fixed remuneration, and performance-linked remuneration for single fiscal year
and performance-linked remuneration for medium- to long-term, which fluctuate according to business performance, while
maintaining a balance among the elements listed in the above basic policy.
Remuneration for directors who are Audit & Supervisory Committee Members and outside directors shall consist only ofbase remuneration, from the viewpoint of their roles and ensuring their independence.
The ratio of each performance-linked remuneration to base remuneration for directors (excluding directors who are Audit& Supervisory Committee Members and outside directors) is determined in accordance with the classification of directors.
(3) Basic remuneration
The basic remuneration, which is a fixed remuneration, is paid to directors on a monthly basis.
The amount of base remuneration for directors (excluding directors who are Audit & Supervisory Committee Members
and outside directors) shall be determined by taking into consideration the nature of their duties, the scope of their
responsibilities, their years of service, their contribution to the Company’s short-term, medium- and long-term performance,
and their contribution to the enhancement of corporate value and other factors, as well as by taking into account the standardsof other companies in the industry.
The amount of base remuneration for directors who are Audit & Supervisory Committee Members and outside directors
are determined in consideration of their responsibilities and the level of other companies.
(4) Single-year performance-linked remuneration
The single-year performance-linked remuneration (cash bonus and Stock Compensation A) is linked to the degree ofachievement of management targets in a single fiscal year and improvement in corporate value. The amount of remuneration
is determined based on the Company’s performance in a single fiscal year, etc., and the Subject Directors is paid thedetermined amount of remuneration in the form of a cash bonus and restricted stock (Stock Compensation A) after theCompany’s performance for each fiscal year is determined.
2

The composition of the performance-linked remuneration for each Subject Director for a single fiscal year shall be 1/2
cash bonus and 1/2 Stock Compensation A.
The amount of performance-linked remuneration to be paid to each Subject Director for a single fiscal year will be
determined based on his or her contribution to the Company’s performance and the maximum amount of remuneration foreach Subject Director, etc. The basic indicators of consolidated performance will be the rate of increase in stock price and theamount of consolidated profit excluding Frontier Capital Inc.
A summary of the details of the single-year performance-linked remuneration (Stock Compensation A) is provided in
Attachment 2, “Details of Remuneration under the Restricted Stock Compensation Plan for Directors.”(5) Medium- to long-term performance-linked remuneration
The medium- to long-term performance-linked remuneration (Stock Compensation B) is linked to the degree ofachievement of the management targets of the medium-term management plan and the degree of improvement in corporate
value, etc. Restricted stock (Stock Compensation B) is paid to the Subject Directors at the beginning of each fiscal year basedon the remuneration standard amount according to his/her position. In principle, after the end of the period covered by themedium-term management plan, the number of shares for which the transfer restrictions will be lifted will be determinedbased on the degree of achievement of the management targets of the medium-term management plan and the degree of
improvement in corporate value with respect to the relevant shares granted during the relevant period.
The indicators of management targets for the medium-term management plan for the period from 2024 to 2026 are thestock price appreciation rate, the consolidated profit excluding Frontier Capital Inc. and the achievement of consolidated
ROE excluding Frontier Capital Inc. In the event that a new medium-term management plan is formulated in the future, suchmanagement target indicators may be changed by a resolution of the Board of Directors.
An outline of the details of the medium- to long-term performance-linked remuneration (Stock Compensation B) is shownin Attachment 2, “Details of Remuneration under the Restricted Stock Compensation Plan for Directors.
(6) Compensation governanceDirectors’ remuneration (base remuneration, single-year performance-linked remuneration , and medium- to long-term
performance-linked remuneration) is determined by resolution of the Board of Directors, based on the deliberations andreports of the voluntary Nomination and Remuneration Advisory Committee.
If certain events occur, such as serious accounting irregularities or large losses, clawback clauses will be established to theeffect that all or part of the Stock Compensation A and B already paid will be returned without consideration in accordancewith the responsibilities of each director and executive officer.

3

Attachment 2: Details of Remuneration under the Restricted Stock Compensation Plan for Directors
Under this plan, shares of the Company’s common stock are issued or disposed of to the Subject Directors in principle
every fiscal year without requiring payment in cash or delivery of assets contributed in kind, and these shares are held by the
Subject Directors.
The Company will enter into a restricted stock allotment agreement (the “Allotment Agreement”) with the Subject
Directors. During a certain period set forth in the Allotment Agreement (the “Transfer Restriction Period”), the Subject
Directors may not freely assign, grant a security interest in, or dispose (the “Transfer, etc.”) of the shares delivered under the
Allotment Agreement (the “Allotted Shares”). (This restriction on transfer, etc. is hereinafter referred to as the “Restriction
on Transfer, etc.”).
Stock Compensation A

Stock Compensation B(1) Payment period and calculation

The amount of remuneration shall be

Restricted shares shall be allocated tomethod of the number of shares to be

determined based on the Company’s

the Subject Directors at the beginning

paid

performance for a single fiscal year,of each fiscal year based on the baseetc., and a portion of the remuneration

amount of remuneration according toamount determined shall be paid to thetheir position.

Subject Directors in the form of
restricted stock after the performancefor each fiscal year is determined.
(2)

Maximum

amountofMaximum amount of stock-based

Maximum amount of stock-based

remuneration and maximum number

remuneration: Up to 130,000 thousand

remuneration: Up to 65,000 thousandof shares

yen per year

yen per year

Maximum number of shares to be

Maximum number of shares to beallocated: Up to 90,000 shares per year

allocated: Up to 45,000 shares per year

However, in the event of a stock split or a consolidation of shares of theCompany’s common stock, or any other similar event requiring adjustment to
the total number of shares to be allotted, the total number of shares to be allotted
may be reasonably adjusted.
(3) Transfer restriction period

For a period of three (3) years from the date on which the Subject Director
becomes eligible to receive the Allotted Shares there shall be a restriction ontransfer of the shares, and during such period, the Subject Director shall not
Transfer, etc. the shares.

(4) Principle for cancellation of

In principle, the restriction on transfer

In principle, after the end of the period

restrictions on transfer

shall be lifted upon expiration of thecoveredtransfer restriction period.

management plan, the number of

by

the

medium-term

shares to be released from therestrictions on the transfer of suchshares granted during that period shallbe determined based on the degree ofachievement of the managementtargetsofthemedium-term

management plan and the degree of
improvement of corporate value, andthe restrictions on transfer shall be
released at the expiration of thetransfer restriction period.
4(5) Exceptional treatment in the eventof vacating office① Where a Subject Director vacatesIn the event that a Subject Director

In the event that a Subject Director

office for reasons including

vacates office before the expiration ofretires before the expiration of the

expiration of term of office, death

the transfer restriction period due totransfer restriction period due to theor any other justifiable reasonsthe expiration of term of office, death

expiration of term of office, death oror any other justifiable reason, theany other justifiable reason, thetransfer restriction shall be lifted withfollowing

respect to all such shares granted toreasonably adjusted as necessary: (i) if

such Subject Director, after making

the retirement occurs between the time

reasonable adjustments as necessary towhen the shares were granted andthe timing of the cancellation of the

before the number of shares to betransfer restriction.

released from the restrictions on

mattersshouldbetransfer of such shares is determined,
the number of such shares to bereleased from the restrictions ontransfer and the time when the
restrictionsontransferwill

bereleased, depending on the degree ofachievement of the management
objectives

of

the

medium-term

management plan and the degree of
improvement in corporate value as ofthat time, etc., and (ii) if the retirement
occurs during the period from the time
when the number of shares to betransferred out of such shares isdetermined to the time when thetransfer restriction is to be lifted until
the expiration of the transfer restriction
period, the time when the transfer
restriction is to be lifted.
(ii) When the office is vacated without

If, prior to the expiration of the transfer restriction period, the Subject Directora justifiable reason

vacates the office of director of the Company without the expiration of term ofoffice or any other reason deemed justifiable by the Board of Directors of theCompany, the Company shall naturally acquire all such shares allotted to the
Subject Director without consideration.

(6) Exceptional treatment in the case

If a joint venture agreement in which

If the Reorganization Agreement, etc.

of reorganization, etc.

the Company is a dissolving company,

is approved at a general meeting ofa stock exchange agreement in whichshareholders (or by the Board of

the Company is a wholly owned

Directors, if the approval of thesubsidiary, a share transfer plan, orCompany’s

other matters related to organizational

shareholders is not required withrestructuringrespect(“Reorganizationtogeneralsaidmeeting

ofReorganization

Agreement, etc.”) is approved at aAgreement, etc.) during the transfer

general meeting of shareholders (or by

restriction

the Board of Directors, if the approvalmatters should be reasonably adjusted

5

period,thefollowingof the Company’s general meeting ofas necessary: (i) if approval is given

shareholders is not required with

between the time when the shares wererespecttosaid

Reorganization

granted and before the number ofAgreement,etc.),

thetransfershares to be released from therestriction shall be lifted with respect

restrictions on transfer of said shares is

to all such shares granted to thedetermined, the number of said shares

Subject

makingto be released from the restrictions on

reasonable adjustments as necessary totransfer and the time when thethe timing for the lifting of therestrictions

restriction on transfers.

released, depending on the degree of

Director,

after

on

transferwillbeachievement of the management
objectives

of

the

medium-term

management plan and the degree of
improvement in corporate value as ofthat time, etc., and (ii) If such approvalis given during the period from thetime when the number of shares to betransferred out of such shares isdetermined to the time when thetransfer restriction is to be lifted until
the expiration of the transfer restriction
period, the time when the transfer
restriction is to be lifted.
(7) Other reason for acquisition

The Company shall naturally acquire without consideration such shares foracquisition without consideration

which the transfer restrictions are not cancelled at the time the Company
determines the number of shares for which the transfer restrictions are cancelled.

(8)

Returnofshareswithout

consideration

The Allotment Agreement shall include a clawback clause that provides that if
certain events occur, such as serious accounting irregularities or large losses, allor part of the stock-based remuneration already paid shall be returned without
consideration in accordance with the responsibility of each director.

(9) Other details to be determined by

Other details and matters relevant to the operation of the Plan shall be determined

the Board of Directors

by the Board of Directors based on the deliberations and reports of the voluntary
Nominating and Compensation Advisory Committee.

6