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Remuneration for Directors and Executive Officers

Japanese

NEC’s Compensation Committee decides matters related to the amount of remuneration for Directors and Executive Officers or the policies concerning the method of calculation thereof. In order to improve objectivity, fairness, and transparency of remuneration for Directors and Executive Officers, the Compensation Committee deliberates by utilizing, as necessary, executive compensation survey data, etc., obtained from an outside third-party professional compensation consulting firm.

(i) NEC’s basic policy on remuneration for Directors and Executive Officers

- The remuneration system is highly objective and transparent, with content which leads to sustainable growth with the aim of maximizing corporate value, and which allows shareholders to confirm that management is linked to shareholder value.

- The remuneration system is linked to the Mid-term Management Plan target indicators and provide incentives for Executive Officers to achieve the management targets indicated in the Mid-term Management Plan.

- As a technology company with global operations, the remuneration system is competitive in the human resources market in terms of both remuneration structure and level.

(ⅱ) The objectives and views of remuneration
The objectives and views of each remuneration based on the above basic policy are as follows.

Basic Remuneration
Fixed remuneration with the amount paid determined based on market competitiveness in accordance with the role, authority, and responsibility of each job title.

Short-term Incentive (Bonuses)
Variable incentive remuneration where the payment amount is determined by the degree of achievement of performance targets for each fiscal year linked to the indicators set forth in the Mid-term Management Plan.

Mid- to Long-term Incentive (Stock Compensation)
Incentive remuneration for the sustainable growth of corporate value with an awareness of shareholder value.

(iii) Remuneration system and Level
The remuneration system and Levels for Directors and Executive Officers are as follows.

Directors (excluding Directors concurrently serving as Executive Officer)
Remuneration for Directors consists of basic remuneration and mid- to long-term incentive (stock compensation).

The level of remuneration shall be determined in accordance with the responsibilities of each Director, taking into consideration the level of remuneration at competing companies, etc. The approximate ratio of the amount of basic remuneration and stock compensation for Outside Directors is 3:1. In addition, for Inside Directors, mid- to long-term incentive (stock compensation) will be paid up to a maximum of approximately 30% of their total remuneration.

Executive Officers
Remuneration for Executive Officers consists of basic remuneration short-term incentive (bonuses) and mid- to long-term incentive (stock compensation). The mid- to long-term incentive consists of performance-linked stock compensation and non-performance-linked stock compensation. For Directors who concurrently serve as Executive Officers, the remuneration system for Executive Officers shall apply.

The level of remuneration and the composition ratio of each type of remuneration shall be determined in accordance with the responsibilities of each Executive Officer, taking into consideration the level and composition ratio of remuneration at competing companies, etc.