Remuneration of Directors (Excluding Independent Directors)

1. Basic Policy on Determining Remuneration
   • Remuneration shall be aimed at fully encouraging Directors and Executive Officers to perform their duties in line with management philosophy, Group vision, and Group management policy, and strongly motivating them toward the achievement of specific management goals to bring IHI’s and the IHI Group’s sustainable growth and improve the medium- and long-term corporate value.
   • Remuneration shall be structured with the appropriate allocation of a fixed base amount, an annual incentive (performance-based bonuses), which is linked to the operating performance of each fiscal year, and a medium- and long-term incentive (performance-based share remuneration), which is linked to medium- and long-term operating performance and corporate value aimed at broadly sharing a sense of value with stakeholders, and thereby shall contribute to performing with a sound entrepreneurial spirit.
   • Under the management philosophy, “Human resources are our single most valuable asset,” appropriate treatment shall be provided to Officers of IHI in consideration of IHI’s management environment, and social roles and liabilities IHI undertakes.
2. Remuneration Level and Allocated Ratios of Remuneration
   • IHI shall appropriately establish remuneration levels and allocated ratios of remuneration upon having considered factors that include IHI’s business characteristics, effectiveness of incentive remuneration, and professional duties. Moreover, the Company shall perform verification by regularly surveying objective market data on remuneration researched by an external specialized institution.
   • In the case of standard business performance, total amount of remuneration shall be allocated at approximate proportions of 50%:30%:20% for the Director and Chairman of the Board, and the Representative Director and President, and at approximate proportions of 55%:25%:20% for other Directors respectively to a fixed base amount, a performance-based bonuses, and a performance-based share remuneration provided upon the achievement of the targeted performance.
3. Framework of Incentive Remuneration
   1. Performance-based bonuses (Annual incentives)
      1. Performance indicators and reasons for selection thereof
         Performance indicators shall be those that include: profit attributable to owners of parent underpinned by the aim of maintaining common interests with our shareholders; consolidated operating cash flow underpinned by the aim of strengthening the capacity to generate cash necessary for growth; and ESG indicators^* aimed at promoting ESG management. The performance indicators shall be reviewed as necessary, particularly upon encountering changes in the management environment and Officers’ duties.

         ESG indicators are used to evaluate efforts to reduce greenhouse gases, improve employee engagement, and promote DE&I.

      2. Method of calculating remuneration
         The monetary amount of remuneration provided every fiscal year is calculated as follows, and the performance evaluation payout rate varies from a range of zero to approximately 200 depending on the percentage achievement of profit indicators, with a baseline value of 100 for the amount of payment when performance targets have been achieved. In addition, regardless of the calculation results, the annual incentive is not paid to Directors if no dividend is paid.
         

         

   2. Performance-based share remuneration (medium- and long-term incentives)
      1. Performance indicators and reasons for selection thereof
         The performance evaluation period shall encompass the next three fiscal years, and performance targets for the final fiscal year of the performance evaluation period shall be established at the outset of the performance evaluation period. Moreover, the performance indicators shall be of primary emphasis under the Group management policies, with consolidated ROIC serving as a performance indicator underpinned by the aims of engaging in business operations that place focus on investment efficiency, achieving sustainable growth, and increasing corporate value. IHI shall furthermore review the possibility of making change to the performance indicators as necessary in alignment with review of the Group management policies.
      2. Method of calculating remuneration
         The number of shares to be delivered as performance-based share remuneration is calculated as follows, and the coefficient varies from a range of zero to approximately 150 depending on the extent of having achieved such target, with a baseline value of 100 for the number of shares to be delivered when performance targets have been achieved. A monetary sum equivalent to the market value of the shares is to be delivered with respect to a portion of such remuneration.
         

         

4. Remuneration for Officers Who Are Serving Outside Japan
   If deemed necessary for the execution of their duties, an allowance may be paid separately for expenses, etc., as determined by IHI, taking into consideration local laws and regulations, customs, levels, etc., pertaining to remuneration, and remuneration may also be determined individually, taking into consideration local market levels, etc. For the allowance, the equivalent amount of money shall be paid as part of the base amount.
5. Procedures for Determining Remuneration
   To ensure appropriateness and objectivity regarding matters of officer remuneration, including remuneration for individual Directors, the Board of Directors shall make decisions on such matters subsequent to deliberation and reporting findings thereof by the Remuneration Advisory Committee established as an optional body by IHI.

Remuneration of Independent Directors and Audit & Supervisory Board Members

Remuneration of Independent Directors shall consist only of a base amount in the light of their duties. Remuneration of Audit & Supervisory Board Members shall consist only of a base amount, as compensation for responsibilities for auditing the execution of business throughout the IHI Group.
The amount shall be determined through discussions among the Audit & Supervisory Board Members. The base amount for Independent Directors and Audit & Supervisory Board Members shall be set at an appropriate level upon having considered factors that include roles and responsibilities assumed by the respective officers. Moreover, the Company shall perform verification by regularly surveying objective market data on remuneration researched by an external specialized institution.

Total Amount of Remuneration, etc. Paid and Number of Recipients

(Unit: Millions of yen)

1. The total amount of performance-based share remuneration is the amount of the provision for share acquisition costs related to the granted points recorded in the fiscal year under review, which is different from the actual total payment amount.
2. The total amount of performance-based bonus is the amount of the provision for the fiscal year under review, which is different from the actual total payment amount.

Remuneration Paid, etc. of Directors and Audit & Supervisory Board Members, Whose Total Amount Paid to Each Position of Directors and Audit & Supervisory Board Members, Equaled or Exceeded ¥100 Million

(Unit: Millions of yen)

The total amount of performance-based share remuneration and performance-based bonus is the amount of the provision that was recorded for the fiscal year under review, which is different from the actual total payment amount.

CEO’s Remuneration to Average Employee Salary, Total Annual Remuneration

Targets and Results of the Performance Evaluation Indicators for Performance-based Remuneration

1. Performance-based bonus: Performance-based bonuses paid with consideration to business duties executed during the fiscal year ended March 31, 2024.
2. Performance-based share remuneration: The fiscal year ended March 31, 2022, will be the beginning fiscal year of the performance evaluation period, and the fiscal year ended March 2024 will be the ending fiscal year of the performance evaluation period.
3. Consolidated profit: Refers to profit attributable to owners of parent.
4. Results for consolidated profit and consolidated operating cash flow performance indicators modified from the exchange rate presumed when drafting management plans.