Overview of Executive Remuneration Plan
Matters related to policy for deciding the remuneration for individual directors
The decision making policy for the remuneration of individual Directors was resolved at the Board of Directors meeting after deliberation within the Nomination and Remuneration Advisory Committee (chaired by Outside Director), a majority of whose members are Outside Directors.
System for remuneration (● indicates such Director eligible for each type of remuneration)
Type of Remuneration Director Type Executive Director Chairman of the Board of Directors Outside Director Fixed Monthly Remuneration ● ● ● Variable Performance Linked Bonus ● — — Stock-based remuneration ● ● —
Ratio and remuneration standards regarding each types of remuneration
The Company will establish an appropriate ratio, etc. between fixed remuneration (monthly remuneration) and variable remuneration (“performance linked bonus” which is linked with short term performance of the Company and “stock-based remuneration” which is linked with middle and long term performance of the Company and shareholder value) which corresponds to Director’s position, (i) by setting an appropriate remuneration standards to acquire and retain highly capable management who will bring about the Company’s sustainable growth and increase of corporate value in the middle to long term, and (ii) to design as healthy incentive to sustainable growth of the Company, based on its business environment, management strategy and human resources strategy, with reference to objective remuneration market research data, etc. provided by external specialized agencies.
Policy and method on the decision of the amount of each remuneration
- Policy on the decision of the amount of each remuneration: as follows
- Method on the decision of the amount of each remuneration: Remuneration of each Directors is resolved by the Board of Directors within the limit resolved at the General Meeting of Shareholders. For the resolution by the Board of Directors, the details are deliberated by the Nomination and Remuneration Advisory Committee and the results thereof are reported to the Board of Directors. For other method, as follows
|Policy on the decision of the amount of each remuneration||Method on the decision of the amount of each remuneration|
|Variable||Performance Linked Bonus||
|Restricted Performance Share Unit-Based Remuneration||
Executive remuneration plan (● indicates the persons eligible for each type of
Type of remuneration, etc. Eligibility Executive Directors/
Chairman of the Board of Directors Outside Directors Audit & Supervisory Board Members Fixed Monthly Remuneration ● ● ● ● Variable Performance-Linked Bonus ● — — — Restricted Performance
Share Unit-Based Remuneration
● ● — —
Remuneration standards and remuneration composition ratios of Executive Directors and Executive Officers>
- We have set our remuneration standards and remuneration composition ratios to appropriate levels in light of current business environment, business strategies and human resources strategy, . We have done so with reference to objective remuneration market research data, etc. provided by external specialized agencies.
- The image of the remuneration of Representative Director, President and Chief Executive Officer is as shown below.
- From the perspective of reinforcing the relationship with our group’s management strategy, the total amount to be paid is determined in accordance with the performance management index to be focused on in the medium term management plan “SHIFT 2023”, as well as the year-on-year stock price growth rate (ratio of the Company’s stock price growth to the growth rate of TOPIX(Tokyo Stock Exchange Stock Price Index))
- The amount to be paid to individual officers is distributed according to their position and personal evaluation and paid after the end of the fiscal year.
- Each officer is evaluated on the basis of both financial indicators (status of achievement of business plans, etc. in the respective areas of responsibility) and non-financial indicators (such as individual Strategic Business Units’ achievement of KPIs and KAIs, and progress in addressing important company-wide issues) so that they can become more aware in regard to their commitment to management strategy and results.
- The ratio of financial indicators to non-financial indicators in personal evaluation is 50:50, and of evaluation based on non-financial indicators, 20% relates to the important company-wide issues of business reform through digital transformation (DX), enhancement of sustainability management, and promotion of Diversity, Equity & Inclusion.
[Total amount of performance-linked bonuses]
- The potential range of business results in terms of consolidated net income and basic profit cash flow is assumed to be from 200 to 600 billion yen; if business results fall outside this range, the total amount of performance-linked bonuses to be paid is decided separately by the Board of Directors based on report from the Nomination and Remuneration Advisory Committee.
- In order to further promote the initiatives of the medium term management plan “SHIFT 2023”, we added the year-on-year stock price growth rate as a new indicator for determining the total amount of performance-linked bonuses. The total amount to be paid is worked out by multiplying the amount calculated from consolidated net income and basic profit cash flow by the year-on year stock price growth rate. The range of the year-on-year stock price growth rate is from 80 to 120%.
Restricted Performance Share Unit-Based Remuneration>
- With the aim of further promoting efforts to increase the Company’s corporate value over the medium to long term and share value with our shareholders, the number of company’s common shares (restricted) to be provided are determined according to the Company’s stock growth rate (ratio of the Company’s stock price growth to the growth rate of TOPIX (Tokyo Stock Exchange Stock Price Index)) during the three-year evaluation period.
- In order to promote efforts to help solve Company’s Key Social Issues and to make non-financial indicators (related to environment and/or society) be more closely linked with Share Unit-Based Remuneration so that increase awareness of the Company’s commitment to the enhancement of sustainability management, evaluation on the non-financial indicators (“climate change”, “promotion of women's active engagement” and “employee engagement”) is used to calculate the amount of Company’s common shares to be granted as restricted shares.
- The restriction period will be from the day the shares are provided until the day the recipient resigns or retires from all their positions as Director or Executive Officer of the Company or any other position determined by the Board of Directors to realize shareholder value over the medium to long term.