Remuneration for Member of the Board of Directors

In order to create a remuneration system that supports the embodiment of “Innovator in Electronics” through the practice of the Murata Philosophy, which aims for creating shared value with stakeholders to contribute to sustainable corporate value enhancement, the following basic policy for the remuneration system for officers shall be established.

• The remuneration system for officers should share the values of its stakeholders, including shareholders, employees, customers, society, and communities, etc.
• Short-term incentive remuneration should maintain and deepen a corporate culture in which the Company's officers and employees work together autonomously, cooperate and collaborate toward sustainable company development through the creation of innovation
• Medium- to long-term incentive remuneration should increase officer's morale and motivation toward the creation of medium- to long-term economic value and social value
• The remuneration system should have a structure in which a highly independent Remuneration Advisory Committee proactively verifies the appropriateness of remuneration system for officers structure and remuneration amounts, etc. from the perspective of medium- to long-term value creation

Remuneration consists of basic remuneration (fixed remuneration) and variable remuneration. Variable remuneration consists of bonuses, performance-linked share-based remuneration (Performance share unit; PSU), and restricted stock remuneration (RS).
The remuneration level and composition ratio are based on the “Executive Compensation Database” operated by the external compensation consulting company, WTW (Willis Towers Watson) and will be determined by performing benchmarks on corporations similar to the Company's type of industry and size and verifying the consistency with the basic policy of the remuneration system for officers.
Furthermore, the composition ratio of remuneration elements of remuneration for the President and Representative Director is largely as shown in Figure 3. The composition ratio of remuneration elements for other inside Members of the Board of Directors who are not Audit and Supervisory Committee Members is set so that variable remuneration is higher for upper ranking positions according to the responsibilities etc. for each position.

Table 1: Overview of Executive Directors' Remuneration System and Variable Remuneration Mechanism

(Notes)

1. PSU is an abbreviation for Performance Share Unit.
2. RS is an abbreviation for Restricted Stock.

Table 2: Reasons for Selection of PSU Performance Evaluation Indicators, Evaluation Weights, and Payment Rates

(Notes)
For Sustainability Indicators, the Company has set an individual evaluation period of one year (the first year of the performance evaluation period) from the perspective of evaluating measures for each fiscal year the social value targets set forth in the Company's Medium-Term Direction 2027. Therefore, although it will be evaluated on a single fiscal year, the Company's shares will be delivered after end of the three consecutive fiscal years, which is the performance evaluation period.

Table 3: Remuneration Composition Ratio for President and Representative Director

(Notes)

1. This remuneration composition ratio is based on the standard amount for bonuses and share-based remuneration.
2. 50% of the performance-linked share-based remuneration will be paid in cash for the purpose of covering tax expenses.

Remuneration for Outside Directors (excluding Audit and Supervisory Committee Members) independent of the Company's business execution consists only of basic remuneration, in light of their role. The level is determined with reference to benchmark results and other information from companies of similar industry or size. However, each Outside Director will be paid additional allowances, such as a Chairman's allowance or a Committee Member's allowance, depending on their responsibilities, such as being the Chairman or a member of a committee.

Remuneration for Members of the Board of Directors (including Outside Directors) who are Audit and Supervisory Committee Members consists only of basic remuneration, in light of their role. Individual remuneration is determined according to discussions between Members of the Board of Directors who are Audit and Supervisory Committee Members, pursuant to the provisions of Article 361, Paragraph (3) of the Companies Act.

From the perspective of strengthening the sharing of value with shareholders, the Company has recommended shareholdings as follows for Executive Directors. At the end of FY2024, the President and Representative Director holds shares equivalent to 2.6 times his fixed remuneration.

In order to ensure soundness of the remuneration system for Members of the Board of Directors, the Company has established the malus and clawback provision, whereby based on the decision of the Board of Directors following deliberations by the Remuneration Advisory Committee, all or part of variable remuneration will be forfeited or repaid regardless of whether it has been paid or delivered under certain circumstances, such as misconduct or retrospective adjustments to financial statements due to fraudulent accounting. After the 86th Ordinary General Meeting of Shareholders held in June 2022, remuneration types to which this provision applies were a bonus before it was paid and the share-based remuneration before the lifting of transfer restrictions. However, after the 89th Ordinary General Meeting of Shareholders held in June 2025, they will be variable remuneration paid or delivered from FY 2025 onward, and the target period will be the fiscal year in which the relevant event occurred and the three preceding fiscal years.

Amount of remuneration for each Officer type (FY2024)

(Notes)

1. Out of the total shown above, total remuneration, etc., provided to seven Outside Directors, is 102 million yen (only monthly remuneration).

Targets and results of performance evaluation indicators for performance-linked remuneration (FY2024)

<Bounus>

<Stock-based remuneration (Portion of the creation of social value and ESG)>
The Remuneration Advisory Committee confirmed the progress of the measures for achieving the social value target set forth in the Mid-term Direction 2024, as listed below, and has decided on an assessment for FY2024. For the results of the initiatives for achieving each target, refer to
Link: Key Environmental and Social Issues (Materiality)

The Remuneration Advisory Committee deliberates on the remuneration system and levels for Members of the Board of Directors and reports its findings to the Board of Directors, and is entrusted from the Board of Directors to decide on the amounts of individual remuneration.

The members of the committees are selected by the Board of Directors from among its Members and Independent Outside Directors comprise the majority of the committee members in order to ensure the independence of the committees. Furthermore, the chairperson is an Outside Director.
The Remuneration Advisory Committee is currently made up of the following four Directors, three of whom are Independent Outside Directors. It is chaired by Yuko Yasuda, who is Independent Outside Director.

(Notes)

1. ◎ after the name means the person is the chairperson.

Activities of the Committee held during FY 2024 were as follows.

(Notes)

1. The 88th term refers to the period starting from the 87th Ordinary General Meeting of Shareholders held on June 29, 2023 until the 88th Ordinary General Meeting of Shareholders held on June 27, 2024.
2. The 89th term refers to the period starting from the 88th Ordinary General Meeting of Shareholders held on June 27, 2024 until the 89th Ordinary General Meeting of Shareholders held on June 27, 2025.
3. In June, December, January and February, a joint meeting for the Nomination Advisory Committee and the Remuneration Advisory Committee was held in addition to the meeting of the Remuneration Advisory Committee.
4. For information on the number of meetings and attendance rates, refer to
   Link: ESG Data colliction Page