Governance | Compensation for Directors and Executive Officers

Matters Relating to Performance-Linked Compensation

1. Yearly Bonus as Performance-Linked Compensation
   Among the compensations for the Directors and the Executive Officers which is composed of the Base Salary, the Yearly Bonus and the Long-term Incentive Plan, the Company sets the Yearly Bonus as the PerformanceLinked Compensation. In relation to the Yearly Bonus, in principal, half of the amount of the Yearly Bonus of the Directors and Executive Officers is paid in cash and the remainder amount is paid by Nomura's shares in multiple years - installments as Deferred Compensation the following year after the Fiscal Year onwards.
2. Performance Indicator to be used for calculation of the Yearly Bonus
   The Nomura Group elects the Return On Equity (hereafter "ROE"), which is set out as the most important performance indicator for the Nomura Group, as the performance indicator to be used for calculation and determination of the Yearly Bonuses for the Directors and Executive Officers. The reason of the election of ROE is to be in line with the management vision and the business strategy of the Nomura Group.
3. Calculation method of the Yearly Bonus
   <Outline of calculation method>
   In calculating the Yearly Bonus for the Directors and the Executive Officers, a different calculation method is applied depending on the position.
   <Specific calculation method by position>
   • With respect to the President and the Group CEO, given the overall responsibility of business execution of the Nomura Group, the basic amount of the Yearly Bonus is calculated based on the level of achievement in actual value against the target value regarding ROE. In addition, Total Compensation (hereafter "TC") , including the Base Salary and the Yearly Bonus, is determined by considering, as needed, qualitative evaluation etc. by the Compensation Committee.
   • With respect to the Executive Officers, same as the President and the Group CEO, given the responsibility of business execution for the Nomura Group, an individual ratio is applied to calculate their basic amounts of the Yearly Bonus. In addition, the Yearly Bonus and TC are determined by reflecting the qualitative evaluation etc. such as the performance and contribution for their responsible area.
   • With respect to the chairman of the Board of Directors, it is treated in the same matter as the Executive Officers.

   <Actual value regarding the performance indicator used for the calculation of the Yearly Bonus>

   * Please scroll horizontally to look at table below.

   Performance Indicator	Target Value	Actual Value for The Fiscal Year
   ROE	8.0%	5.1%

4. Yearly Bonus of Director of the audit committee member and Outside Directors
   With respect to the Director of the audit committee member is paid in cash only, to exclude equity-linkage of its compensation, so as to keep its independency from business execution. Also, Outside Directors are out of the scope of the Yearly Bonus.

1. Deferred Compensation (equity-linked compensation)
   The Company sets half of the amount of the Yearly Bonus of the Directors and Executive Officers. In principle, equity-linked compensation (Restricted Stock Unit ("RSU"), Notional Stock Unit ("NSU") ) that falls under the Non-Monetary Compensation is used for payment of the amount.
2. Outline of current Deferred Compensation Awards.
   The outline of current Deferred Compensation Awards is as follows.

   * Please scroll horizontally to look at table below.

   Type of Award	Key Features
   RSU awards	Settled in Nomura's common stock. Graded vesting period is set as three years in principle. It is introduced as the Deferred Compensation since the fiscal year ended March 31, 2018. In principle, it has been granted in May every year.
   NSU awards	Linked to the price of Nomura's common stock and cash-settled. Same as RSU awards, graded vesting period is set as three years in principle. Following the introduction of RSU as a principle vehicle in 2,018 NSU awards are less commonly used in Nomura. Same as RSU awards, in principle, it has been granted in May every year.

   As stated above, RSU awards have been introduced as a principle vehicle from the fiscal year ended as of March 31, 2018 and replaced with stock acquisition rights and other awards.

3. Effect of payment of deferred compensation as equity-related compensation
   By providing deferred compensation as equity-linked compensation, the economic value of the compensation is linked to the stock price of Nomura, and a certain vesting period is set.
   • Alignment of interests with shareholders.
   • Medium-term incentives^* and retention by providing an opportunity for the economic value of Deferred Compensation at the time of grant to be increased by a rise in shares during a period of time from grant to vesting.
   • Promotion of cross-divisional collaboration and cooperation by providing a common goal of increasing corporate value over the medium to long term.

   In line with the introduction of RSU, among the equity-linked compensation, as the principal vehicle for Deferred Compensation, in principle, Nomura's common stock will be paid instead of cash over the threeyear deferral period from the fiscal year following the fiscal year in which the deferred compensation was granted. Since the number of shares to be paid is determined based on the Nomura's share price at the time of grant, the increase in Nomura's share price will increase the economic value of Deferred Compensation at the time of vest. Since the increase in share prices reflects the increase in corporate value, alignment of interest with that of shareholders, in addition to medium-term incentive effects for the Directors and Executive Officers, will be achieved.

4. Clawback prescribed in Deferred Compensation
   Any voluntary resignation, material modification of the financial statements, material breach of Nomura's internal policies and regulations etc.are subject to forfeiture, reduction or clawback (Conclusion of individual contracts including "clawback clause").
   Due to these benefits, the active use of Deferred Compensation is also recommended by regulators in the key jurisdictions in which we operate.
   With respect to Deferred Compensation in Nomura, a deferral period is generally three or more years from the following fiscal year or later. This is in line with the "Principles for Sound Compensation Practices" issued by the Financial Stability Board which recommends, among other things, a deferral period of there or more years.

Matters Relating to Individual Directors and Executive Officers' Compensation Determined by Compensation Committee

1. Method of Determining Compensation Policies
   As the Company is organized under the Committee System, the Compensation Committee has set the "Compensation Policy of Nomura Group" and "Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc."

2. "Basic Nomura Group Compensation Policy" and "Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc."
   The "Basic Nomura Group Compensation Policy" is as follows.

   Nomura Group has established compensation policy for Nomura Group officers and employees, including directors and executive officers of Nomura Holdings, Inc. ("NHI"). This policy is referred to as the "Basic Policy" and is as follows.

   Compensation Governance

   As a company with three Board Committees structure, pursuant to Japanese corporate law, NHI has established an independent statutory Compensation Committee. Majority the Committee members are outside directors. The Committee has established both the Basic Policy and a Compensation Policy for Directors and Executive Officers of NHI, on the basis of which it considers and determines the details of individual compensation for Directors and Executive Officers of NHI.

   With respect to the relevant policies and total compensation funding for Nomura Group officers and employees other than the Company's directors and executive officers, certain decisions regarding employment and remuneration matters are delegated to the "Human Resources Committee" ("HRC") by Executive Management Board of NHI. The HRC is chaired by the Group CEO and at a minimum is composed of the Chief Finance Officer and Chief Risk Management Officer. The HRC considers and determine the above mentioned matters by cooperating with the remuneration committees in each region.

   Compensation Policies and Practices

   Nomura Group recognizes that its employees are key in contributing to society in line with its mission of "We help to enrich society through our expertise in capital markets".

   Compensation for Nomura Group employees is designed to support achieving sustainable corporate growth, increasing enterprise value over the medium and long-term and maintaining sound and effective risk management, while at the same time positively contributing to the interest of all Nomura shareholders. In addition, in order to ensure that Numara Group attracts, retains, motivates and develops talent, the level and structure of remuneration takes into account the roles and responsibilities of individuals as well as the market pay levels in Japan and overseas, doing so in line with any relevant laws and regulatory expectations.

   1) Sustainable corporate growth and increasing enterprise value over the medium and long-term

   Compensation for Nomura Group employees aims to realize Nomura Group corporate philosophy, to promote healthy corporate culture and behaviour in line with Nomura Group "Code of Conduct" and to facilitate a greater alignment with the environmental, social and governance ("ESG") considerations.

   Based on the pay-for-performance principle, compensation supports Nomura Group business strategy, objectives and the aim of sustainable growth and increasing enterprise value over the medium and long-term, while at the same time it ensures the maintenance of sound and market-competitive remuneration practices.

   2) Sound and effective risk management

   Nomura Group maintains a sound and effective risk management with an appropriate risk appetite. The Company adjusts the performance measurement standards and indicators when determining compensation by considering both financial and non-financial risks in each business. The qualitative factors such as conduct, compliance, professional ethics and corporate philosophy are considered in determining the final amount of remuneration, which may include a reduction resulting from a disciplinary action.

   3) Alignment of interests with shareholders

   For Nomura Group employees who receive a certain amount of remuneration, a portion of the remuneration is stock-related remuneration linked to shares of NHI with an appropriate deferral period applicable, in order to ensure an alignment with the shareholders' interests.

   In addition, when granting stock-related compensation, in the event of a material revision of Nomura Group financial statements or a material violation of Nomura Group rules and policies, employees' compensation may be subject to suspension, reduction, forfeiture of rights, or for some employees even re-payment (so-called "clawback").

   Approval and Revision of the Basic Policy

   The approval, amendment or repeal of the Basic Policy can be made by the Compensation Committee of NHI.

3. Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc.
   "Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc." is as follows.

   Based on "Basic Nomura Group Compensation Policy", "Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc." has been set as follows:

   Compensation of Directors and Executive Officers is composed of base salary, annual bonus and long-term incentive plan.

   1) Base Salary

   • Base salary is determined based on factors such as professional background, career history, responsibilities and compensation standards of related business fields.
   • A portion of base salary may be paid in equity-linked awards with appropriate vesting periods to ensure that medium to long-term interests of Directors and Executive Officers are closely aligned with those of shareholders.

   2) Annual Bonus

   • Annual bonuses of Directors and Executive Officers are determined by taking into account both quantitative and qualitative factors. Quantitative factors include performance of the Group and the division. Qualitative factors include achievement of individual goals and subjective assessment of individual contribution.
   • In principle, certain portion of annual bonus payment should be deferred.
   • With respect to the Group CEO, given the overall responsibility of business execution of the Nomura Group, the basic amount of the annual bonus is calculated based on the level of achievement in actual value(s) against the target value(s) of key performance indicator(s). In addition, qualitative evaluation should be reflected when determining final annual bonus amount.
   • With respect to Directors and other Executive Officers, amount of annual bonus is determined with the annual bonus of Group CEO as standard baseline, taking into consideration the roles and responsibilities, local remuneration regulations and compensation levels in each jurisdiction etc., in addition to the qualitative evaluation of the individual.
   • Audit Committee members and Outside Directors are not bonus-eligible in order to maintain and ensure their independence from business execution.

   3) Mid-term Incentive Plan

   • In principle, certain portion of annual bonus should be deferred and paid in an equity-linked awards with appropriate vesting periods in lieu of cash to ensure that medium-term interests of Directors and Executive Officers are closely aligned with those of shareholders.
   • In specific circumstances, unvested bonus may be required to be forfeited. Any voluntary resignation, material modification of Nomura's financial statements, material breach of Nomura's internal policies and regulations, amongst others, may render such forfeiture. Additionally, in certain jurisdictions, clawback provisions may apply to already paid and/or vested bonus.

   4) Long-term Incentive Plan

   • Long-term incentive plans may be awarded to Directors and Executive Officers, depending on their individual responsibilities, performance etc.
   • Payments under long-term incentive plans are made when a certain degree of achievements are accomplished. Payments are made in equity-linked awards with appropriate vesting periods to ensure that long-term interests of Directors and Executive Officers are closely aligned with those of shareholders.