Remuneration for Corporate Officers

Outline of the Policy to Determine the Contents of Remuneration Paid to Corporate Officers

Basic policy

 The corporate officer remuneration plans of the Company shall be designed to raise motivation for the achievement of the goals for the economic value and social value of the Medium-term Management Plan in accordance with the following basic principles.

  1. Remuneration plans shall emphasize the linkage with remuneration and the Group’s sustainable growth and medium- to long-term corporate value, and be designed to share the same value with shareholders.
  2. Remuneration shall be set at levels that can attract and retain excellent human resources with global perspective.
  3. The process to determine remuneration shall be highly transparent and objective.

How to determine remuneration levels

 Remuneration levels shall be determined by selecting a group of benchmark companies using objective officer compensation survey data provided by external expert organizations in order to ensure that they are sufficient to motivate the achievement of the goals of the Medium-term Management Plan and to enable the Company to secure excellent human resources.

Composition of remuneration by position

  1. Executive Directors

    ・Executive Directors receive monthly “basic remuneration” based on one’s position as well as “performance-based bonus” and “stock compensation-type stock options,” which are based on the performance and personnel evaluation for each fiscal year, as an incentive for their business execution.

    ・Remuneration will consist of 40% of basic remuneration, 40% of performance-based bonus, and 20% of stock compensation-type stock options, when the relevant goal of the Medium-term Management Plan is achieved.

  2. Non-executive Directors and Outside Directors
    In the interest of supervising business execution, Non-executive Directors and Outside Directors receive only “basic remuneration.”
  3. Audit & Supervisory Board Members
    In the interest of promoting audits of legality, Audit & Supervisory Board Members receive only “basic remuneration.”

<Remuneration Composition Percentage (as per design)>

Type, timing, and recipient of remuneration

Type Timing of
payment
Executive
Directors
Non-executive
Directors/Outside
Directors
Audit &
Supervisory
Board Members
Cash Basic remuneration Fixed Monthly
Performance-based
bonus
Variable Yearly
(July)
- -
Shares Stock compensation-
type stock options
Partially
variable
Yearly
(July)
- -

Amount or calculation method of remuneration

  1. Basic remuneration
    The Company shall provide basic remuneration as fixed monthly remuneration and determine its amount based on one’s responsibilities and position.
  2. Performance-based bonus
    The Company shall provide performance-based bonus linked to consolidated financial results for each fiscal year, using consolidated profit as the relevant performance indicator to establish a clearer linkage between remuneration and factors contributing to the enhancement of corporate value and shareholder value.
    The amount of remuneration shall be designed to fluctuate based on the consolidated profit for the fiscal year under review in a manner that the ratio of basic remuneration to performance-based bonus is 1:1 at each position when the relevant goal of the Medium-term Management Plan is achieved. The final amount of bonus is determined by multiplying the performance of the Company by a coefficient representing the performance evaluation results of individual directors, including the degree of the achievement of performance goals at the organizations in his or her charge and the non-financial indicators (ESG elements) of the Medium-term Management Plan.
  3. Stock compensation-type stock options
    The Company shall grant stock compensation-type stock options to Executive Directors every year based on his or her position in the form of share acquisition rights that can be exercised on or after the day following the forfeiture of all the positions as Director or Operating Officer of the Company in order to encourage them to manage the Company focusing on the enhancement of medium- to long-term corporate value by sharing the same value with shareholders through the holding of the Company’s shares.
    The exercise of part of such share acquisition rights will be subject to certain performance achievement conditions to strengthen their function as an incentive. More specifically, they shall be designed in a manner that the number of share acquisition rights that can be exercised fluctuates within the range of 0% to 300% depending on the degree of achievement of the relevant consolidated performance indicator (ROE) of the Medium-term Management Plan.

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・Position-based Fixed Plan
stock options subject to the continuation of services for a certain period as before

・Performance-based Plan
stock options subject to performance conditions that change the number of share acquisition rights that can be exercised depending on the degree of achievement of performance indicator

When the ROE target (15%) of the Medium-term Management Plan is achieved, the ratio of the Position-based Fixed Plan to the Performance-based Plan is 1:1, and the percentage is designed to fluctuate within the range of 0% to 300% depending on the degree of achievement of the target.

Process to determine remuneration

In order to ensure the transparency, objectivity and fairness of the process to determine remuneration for Officers, the Remuneration Committee, which is an advisory panel to the Board of Directors, deliberates and reports on matters pertaining to remuneration for Officers such as basic remuneration policy, plans, calculation methods, and specific remuneration content of individual Officers.
Within the limit of remuneration resolved at the General Meeting of Shareholders, specific remuneration of Directors is deliberated on an individual basis by the Remuneration Committee based on the amounts of remuneration calculated based on the relevant rules and regulations established by the Company and are determined by the Board of Directors based on the deliberation results of the Remuneration Committee. Specific remuneration of Audit & Supervisory Board Members is discussed among them.

last revised April 1, 2022

Total remuneration paid to Directors and Audit & Supervisory Board Members for the fiscal year under review (Fiscal 2021)

Notes:1. The above remuneration is provided in accordance with the remuneration plans up to March 31, 2022.

Notes:2. The “Number of persons” refers to the number of persons subject to remuneration for the fiscal year under review, not the number of persons in office.

Notes:3. Figures are rounded down to the nearest million yen