COMPANY INFORMATION
Compensation for Officers
Director compensation
The upper limit for annual compensation paid to directors is set at no more than ¥600 million (not including employee salaries paid to directors serving concurrently as employees). We have also introduced a stock-based compensation system, which, in principle, grants directors shares of the Company at the time of retirement. These shares are separate from monetary compensation. The Company has established a trust for granting stocks,and based on this, executive directors and operating officers with whom the Company has concluded mandate contracts (operating officers designated by the Board of Directors) may receive a maximum of 130,000 points per year (with one point equating to one share).
The Company may revoke all or part of the points granted to those who are deemed to have caused disadvantage or inconvenience to the Company.
Policies related to the determination of compensation for individual directors and other such matters are decided by the Board of Directors after consulting the Nomination and Compensation Committee.
Overview of policies related to the determination of compensation for individual directors and other such matters
Basic policy
- The level of compensation should enable the Company to acquire and maintain talented human resources and motivate them to perform their duties
- The system and structure should encourage them to contribute to increasing corporate value and shareholder value over the medium and long term
Compensation composition
Based on the basic policy, overall compensation comprises the following three compensation types.
Monthly compensation
Basic compensation for the performance of daily work
Bonuses
A short-term incentive determined based on consolidated business results for a single fiscal year and individual performance (Evaluation based on consolidated business results mainly focuses on consolidated operating profit but also includes comprehensive consideration of factors such as operating profit margin, ROE,the ratio of EBITDA to net interest-bearing debt, and ESG initiatives, while individual performance is evaluated on factors such as the business results of the organization the individual is responsible for and their contribution to achieving management plans.)
Stock-based compensation
A medium- to long-term incentive designed to motivate directors to contribute to improving medium- to long-term business performance and corporate value (A grant of the Company’s shares is paid on retirement through a trust for granting stocks, with the amount based on a number of points awarded to each director.)
Compensation levels
Executive directors
Determined based on a level of compensation set for the president and CEO with a differential for each position factored in, with reference to objective data from external research organizations. The level of compensation for the president and CEO, used as the base level,is set at around 0.1% of the consolidated operating profit for the previous fiscal year,in principle, and adjusted by factoring in extraordinary income and losses and the compensation levels of industry peers, among other considerations.
Non-executive directors
Set at a level that will attract the human resources the Company requires and motivate the performance of duties.
Composition Ratio of Compensation
Executive directors
Generally, a 5:4:1 ratio of monthly compensation, bonus, and stock-based compensation (when the bonus is the base amount)
Non-executive directors
Limited to monthly compensation only in light of their role of supervising the management of the Company from an independent, objective standpoint.
Compensation framework for executive directors
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| Item | Fixed compensation | Variable compensation | |
|---|---|---|---|
| Monthly compensation | Bonuses | Stock-based compensation | |
| When it is paid | Every month | Once a year | On retirement |
| Positioning | Basic compensation | Short-term incentive | Medium- to long-term incentive |
| Target percentage to total compensation | 50% | 40% | 10% |
| Approach to fluctuation | - | Varies according to performance evaluation | Linked to stock price |
| Fluctuation from base amount | 40～160% | ||
Compensation for Audit & Supervisory Board members
The upper limit for annual compensation paid to Audit & Supervisory Board members is set at no more than ¥120 million and compensation for individual members is determined through discussion by the Audit & Supervisory Board, within the scope of this upper limit.
Total amount of compensation for directors and Audit & Supervisory Board members
Total amount of compensation for directors and Audit & Supervisory Board members in fiscal 2023
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| Position | Total amount of compensation (Millions of yen) |
Total amount of each type of compensation (Millions of yen) | Number of eligible persons | ||
|---|---|---|---|---|---|
| Monthly compensation (fixed compensation) |
Bonus | Stock-based compensation | |||
| Directors | 414 | 201 | 160 | 52 | 14 |
| (of which, outside directors) | 58 | 58 | - | - | 5 |
| Audit & Supervisory Board members | 75 | 75 | - | - | 5 |
| (of which, outside Audit & Supervisory Board members) | 16 | 16 | - | - | 2 |
Notes:
- Stock-based compensation is categorized as non-monetary compensation.
- The number of people and the compensation amounts in the table to the above include one director and one Audit & Supervisory Board Member who resigned at the closing of the 10th Ordinary General Meeting of Shareholders held on June 28, 2023.
- The amount of bonuses includes the provision for bonuses for directors (and other officers) for fiscal 2023.
- The amount of stock-based compensation is the provision for share awards for directors for fiscal 2023. Provision for share awards for directors (and other officers) is basically the book value of the Company’s shares acquired through a trust using funds provided by the Company.
As of June 2024