Compensation for Directors and Executive Officers

Compensation for directors is made up of basic compensation as fixed pay and stock-based compensation. The ratio for the base amount of basic compensation to stock-based compensation is 2.5-to-1. The methods for determining each type of compensation are as follows.

The amount of basic remuneration is decided by adjusting a basic amount to reflect full-time or part-time status, committee membership and position,and attendance of meetings,etc.

Restricted stock compensation units (RSU) are granted to serve as an incentive to provide management oversight and advice with the medium- to long-term enhancement of corporate value in mind. After three years have passed, Hitachi provides an amount equivalent to the granted units in the form of common stock or cash.

If it is found that a director has engaged in misconduct during his/her term of office, compensation for Directors that has already been paid shall be returned to the Company (clawback policy). A director concurrently serving as an executive officer is not paid compensation as a director.

Compensation for Executive Officers consists of basic compensation as fixed pay and short-term incentive compensation and medium- and long-term incentive compensation as variable pay. The ratio of base amounts for each form of compensation is determined to ensure the enhancement of corporate value through global business growth, referencing ratios for executive compensation at leading global companies, including those in Europe and the United States. In the case of Hitachi’s President & CEO, this ratio is 1 : 1.5 : 3. In addition, ratios are set so that the higher the rank of an executive officer position, the greater the variable compensation as a percentage of total compensation. The details of compensation are disclosed in the Compensation to Directors and Executive Officers, etc. section on page 123 of Hitachi’s Annual Securities Report.

The amount of basic remuneration is decided by adjusting a basic amount set in accordance with the relevant position to reflect the results of an assessment.

The amount of short-term incentive compensation is decided within the range of 0 to 200% of a basic amount set according to the relevant position, by adjusting that amount to reflect financial results and individual performance.

The target amount (medium- and long-term incentive compensation target (LTI target)) is decided based on the positions of Executive Officers in order to propel management from a medium- to long-term perspective and to provide incentives to bring about a sustainable increase in corporate value by further promoting shared values among senior management and shareholders through the holding of shares from their term of office. In order to further clarify its commitment to enhancing corporate value over the long term, in March 2026, the Company revised its executive stock compensation program. Under a globally unified program, medium- and long-term incentive compensation consisting of restricted stock unit (RSU) awards and performance-linked stock unit (PSU) awards is granted.
Details are available on page 125 of the Annual Securities Report.

If it is found that an executive officer has engaged in misconduct during his/her term of office, compensation for Executive Officers that has already been paid shall be returned to the Company (clawback policy).

Shareholding guidelines for Executive Officers are designed to further enhance the effectiveness of sharing value with shareholders through shareholding and to promote continued shareholding. Specifically, the guidelines set a target whereby Executive Officers are expected to acquire, within four years of appointment, and continuously hold during their term of office, shares equivalent in value to an amount calculated by multiplying their basic remuneration by coefficients determined according to their respective positions.

①Strengthening the link with the management plan

• Adopt the key indicators set forth in Inspire 2027 as KPIs (STI, LTI)

②Strengthening the link with corporate value enhancement

• Set a high ratio of stock price condition compensation (LTI)
• Establish a global competitive comparison (LTI)

At Hitachi, the Compensation Committee, composed of a majority of independent outside directors, determines the policy for compensation of directors and executive officers, as well as the individual compensation details and amounts based on that policy. Starting in fiscal 2023, to strengthen sustainable management and enhance corporate value, the weighting of sustainability targets in short-term incentive compensation (STI) was set at 20%. In addition, for long-term incentive compensation (LTI), if sustainability targets are achieved, additional shares equivalent to 10% of the standard amount are granted.

From fiscal 2025, selected KPIs and targets from the newly formulated sustainability strategy PLEDGES have also been incorporated into the evaluation of executive compensation to further foster its implementation.