The Company's Board of Directors comprises seven executive directors and five directors who are Audit and Supervisory Committee members. Six of the executive directors are general managers and one is an external director (who has management experience at a listed company). The Audit and Supervisory Committee comprises one full-time internal director and four external directors (one is a certified public accountant, one has management experience at a listed company, and one has experience at an information and communications company). As such, all of these external directors possess specialized knowledge in fields considered to be important for business management.
Currently, the percentage of external directors on the Board of Directors is 41.7% and the percentage of female directors is 16.7%. Going forward, we will continue verifying the skill sets of those on the Board of Directors and will work to improve the efficacy of the Board.

Candidates for director shall be selected from those who have a wealth of knowledge, experience, and competence, and excellent character and high ethical standards.

Candidates for executive director shall be appointed from among people who have extensive knowledge and experience in the Company’s business, or who have superior knowledge of finance and accounting, etc.

People who are candidates for director (Audit and Supervisory Committee) who are judged to be capable of auditing and supervising appropriately, with emphasis on their expertise and background, will be appointed.

Candidates for external director will be selected with an emphasis on independence, and those with specialized knowledge and experience in corporate management are selected. We also take into consideration the diversity of the Board of Directors.

Compensation for directors (excluding Audit and Supervisory Committee members and other directors who are external directors) comprises base compensation and performancelinked compensation. Compensation for external directors (excluding those who are Audit and Supervisory Committee members) shall be limited to base compensation.
Base compensation, as fixed (monthly) compensation determined in accord with the director’s position, is calculated taking into account Nishimatsu Construction’s employees’ salary levels, standard salary levels in the business community, and other factors.
Performance-linked compensation fluctuates according to the degree to which performance targets were met. It includes a base level of compensation in accord with each director’s position, with this base level multiplied by a performance-linked coefficient to calculate the final amount. To calculate the final amount, evaluation indices covering the director’s contribution to corporate value are set for each position and job title, and the degree to which performance targets were met, as well as year-on-year performance are evaluated each fiscal year.
Performance-linked compensation is paid partly in cash, as a short-term incentive, and partly in stock, as a long-term incentive. The cash portion is paid as a bonus in July of each year and the stock portion is conferred every June in the form of conversion points for the Board Benefit Trust. When a director retires from his or her position as director, cumulative points are converted into shares of stock and delivered to the beneficiary.
The ratios of base compensation and performance-linked compensation are appropriately determined taking into account Nishimatsu Construction’s management strategies, business environment, and the level of difficulty of achieving job responsibilities and targets, while also referencing relevant changes at other companies in our industry. Within performance-linked compensation, there is generally a one-to-one ratio of cash-based compensation to stock-based compensation. Furthermore, for stock-based compensation, a minimum level is set that is the same as the minimum level for performance- linked compensation.
Based on these policies, the President drafts a preliminary proposal, then consults with the Nomination and Compensation Committee, whose input is taken into account and decided on by the Board of Directors (Base compensation and performance-linked compensation are determined in March and June, respectively, each year).

Compensation conceptual image

Directors who are Audit and Supervisory Committee members receive only base compensation that takes into consideration the compensation of directors who are not Audit and Supervisory Committee members, as well as the standard salary levels in the business community. Said base compensation is determined through discussions among all directors who are Audit and Supervisory Committee members.