Notice Regarding Revision of Executive Compensation System

Purpose of Revising the Executive Compensation System

NSK Ltd. resolved to revise its executive compensation system aiming to achieve the numerical targets of the medium-term management plan and to sustainably enhance corporate value. Considering changes in the global competitive environment and compensation systems of ESG-leading companies, the company places importance on maximizing the linkage between compensation and corporate value and ensuring transparency. The basic policy includes securing excellent human resources, encouraging contributions to medium- to long-term corporate value enhancement, aligning interests with shareholders, and realizing high governance standards.

Overview of Compensation Framework and Future Plans

The compensation for executive officers consists of fixed compensation (base salary) and variable compensation (short-term performance-linked compensation and medium- to long-term performance-linked stock compensation). Stock compensation has been revised from the prior method of granting at retirement to the method of granting restricted shares during tenure. Compensation levels are set with reference to peer groups in the machinery manufacturing industry and ESG-leading companies, and for the Representative Executive Officer, President & CEO, base salary, short-term performance-linked compensation, and stock compensation are allocated almost equally. Specific evaluation indicators will be finalized after formulating the medium-term management plan and notified once decided.