TAIYO YUDEN

Remuneration Policy for Corporate Officers

Outline of the policy to determine the contents of remuneration paid to Corporate Officers

At its meeting held on March 1, 2021, the Board of Directors of the Company passed a resolution on the policy to determine the contents of remuneration paid to each Director. The Board of Directors sought and received advice from the Remuneration Committee before passing this resolution.

Policy to determine the remuneration paid to Corporate Officers

  1. The Company shall provide remuneration that emphasizes the linkage with financial results and medium- to long-term corporate value, to share the same value with shareholders.

  2. Remuneration shall be set at levels that can attract and retain excellent human resources with global competitiveness.

  3. Remuneration shall emphasize transparency and fairness to be able to fulfill accountability.

Process to determine remuneration paid to Corporate Officers and content of remuneration

In order to ensure the transparency and fairness of the process to determine remuneration for Officers, a Remuneration Committee has been established as an advisory panel to the Board of Directors.

The Remuneration Committee is composed of the President and CEO, Outside Directors, and an Audit & Supervisory Board Member and is chaired by an Independent Outside Director to ensure the objectivity of deliberations. It deliberates and reports on matters pertaining to remuneration for Officers such as remuneration policy, plan, calculation methods, and specific remuneration content of individual Officers.

Within the limit of remuneration approved 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 each Audit & Supervisory Board Member is discussed at the Audit & Supervisory Board meeting.

Remuneration structure

Type of remuneration Remuneration item Description Form of payment
Basic remuneration Fixed remuneration
  • Levels are determined in consideration of, among others, the economic climate and the growth potential of the Company.
  • Fixed monthly remuneration based on roles and responsibilities.
Cash
Performance-based bonus Performance-based remuneration (Single year)
  • Given the responsibility of Executive Directors for meeting Group performance targets each year, consolidated profit is chosen as the relevant performance indicator to establish a clearer linkage between factor contributing to the enhancement of corporate/shareholder value and remuneration.
  • The amount of bonus for each individual is determined by allocating the total theoretical capital amount calculated based on consolidated profit using the ratio determined based on one’s position and by multiplying the result by a coefficients related to performance evaluation of the organization in his or her charge and strategic behavior evaluation of the individual. The bonus is paid annually at a certain time of the year. The total theoretical capital amount is 0.76% of consolidated profit for the fiscal year under review.
Cash
Stock compensation-type stock options Stock remuneration (Medium- to long-term)
  • Introduced as an incentive toward medium- to long-term enhancement of corporate value, and to nurture shared value with shareholders and Directors’ awareness to stock price.
  • The number of share acquisition rights granted to each Director is determined based on his or her position and rank by the Board of Directors at its meeting held after the conclusion of each Ordinary General Meeting of Shareholders.
  • The holder of the share acquisition rights may exercise his or her rights only within ten (10) days from the day following the forfeiture of all the positions as Director and Operating Officer of the Company.
Shares (Share acquisition rights)

Composition of remuneration by position

Executive Directors
  • Their remuneration consists of "basic remuneration," "performance-based bonus," and "stock compensation-type stock options."
  • If they achieve the targets underlying "performance-based bonus," their remuneration will consist of 40% of basic remuneration, 40% of performance-based bonus, and 20% of stock remuneration.
Outside Directors In the interest of maintaining independence, Outside Directors receive only "basic remuneration," with no performance-based remuneration.
Audit & Supervisory Board Members In the interest of promoting audits of legality, Audit & Supervisory Board Members receive only "basic remuneration."