The actual amount paid as short-term performance-based compensation varies according to financial and non-financial evaluation elements (selected according to the key indicators for the Group growth strategy for fiscal 2027 and beyond) where the target annual amount is set at 100%. The target annual amount is paid when the individual director's targets are achieved. Each of the financial and non-financial evaluation elements varies independently within the range of 0% (min.) and 200% (max.), and the total paid amount varies within the range of 0% (min.) and 200% (max.).

For all directors, other than the Representative Director and President, targets are set and evaluations against them are performed subsequent to interviews with the Representative Director and President. More specifically, distinct indicators and targets relating thereto are set after interviews at the beginning of each relevant fiscal year, and evaluations are performed during interviews following completion of the year, after confirming progress toward the targets during mid-term interviews.

Given his/her position as the person who has ultimate responsibility for the entire business management of the Panasonic Group, the evaluation of the Representative Director and President is synchronized with the representative indicators and progress toward indicator target achievement used to evaluate all directors other than the Representative Director and President, executive officers not serving concurrently as directors, and the presidents of major operating companies of the Panasonic Group.

In order to secure the objectivity and transparency of the evaluations, the specific indicators and an overview of the evaluations are reported to the Compensation Advisory Committee.

Effective from fiscal 2026, malus and clawback provisions have been introduced in order to encourage Company directors to take appropriate actions and to prevent, detect, and correct serious compliance issues. If a serious compliance issue arises (i.e., one that may materially affect the financial condition, reputation, or brand value of the entire Panasonic Group) or if the financial statements for the entire Panasonic Group need to be amended in any material respect, these provisions allow the Company to claim a refund of previously paid compensation (clawback provisions) or reduce the compensation to be paid (malus provisions).

This is intended to encourage an individual director to further promote value sharing with shareholders through the continuous holding of shares with transfer restrictions that are lifted immediately after termination of service, on the condition that the individual director continues to serve the Company after share allotment.

Directors (including outside directors) covered by this system (remunerated directors) pay all of their monetary claims given by the Company as property contributed in kind and have the Company common shares issued or disposed of. An agreement on the allotment of restricted shares is concluded between the remunerated directors and the Company every year.

Under this compensation system, depending on their performance during the performance evaluation period, the directors of the Company (other than outside directors; hereinafter in this section, the "Remunerated Directors") receive the Company common shares (through the grant of monetary compensation claims for the issuance of common shares) and monetary compensation following the end of the performance evaluation period. In principle, the amount of monetary compensation corresponds to 50% of the base number of shares, in view of the amount of income tax and other fees to be incurred by the Remunerated Directors, to secure the funds necessary for tax payments arising in connection with the issuance of the Company common shares. The Company's board of directors shall predetermine the performance evaluation period by specifying a period of one to three consecutive fiscal years starting in fiscal 2027 or later, as well as one or more performance metrics (hereinafter referred to as the "Performance Evaluation Indicators"), including relative TSR(Total Shareholder Return).

The initial performance evaluation period, Performance Evaluation Indicators, and other elements are outlined in the table below. Regarding the relative TSR (1), the actual paid amount, etc. is 100% when the Company's TSR relative to the TOPIX Total Return Index is 1. Concerning relative TSR (2), the actual paid amount, etc. is 100% when the Company's TSR ranks in the middle among peer companies.

For Reference: Overview of the performance evaluation period and the delivery of shares and monetary compensation, for performance-based shares as compensation