Executive compensation
Basic policy of executive remuneration system and our company's initiatives
Our company's executive remuneration system is designed to clarify the responsibility of executives for improving business performance and corporate value, and to increase their motivation and morale to improve business performance and corporate value.
Executive remuneration consists of fixed remuneration, bonuses as short-term incentive remuneration, and stock remuneration as long-term incentive remuneration. Stock remuneration (long-term incentive) is based on the link between Member of the Board remuneration and the company's performance and stock value. The purpose is to raise awareness of contributing to improving medium- to long-term business performance and increasing corporate value by having Member of the Board and others share not only the benefits of rising stock prices but also the risks of falling stock prices with shareholders.
In order to promote the improvement of corporate value through non-financial information, we have incorporated ESG indicators into executive commitment targets from fiscal 2022.
ESG indicators require employee engagement survey scores and set issues such as climate change, sustainable procurement, sustainable product development, and diversity, equity, and inclusion based on the characteristics of each department.
Composition of remuneration and payment targets
Executive compensation consists of fixed compensation and Performance-based remuneration.
Overview of executive remuneration system
| Fixed remuneration | Performance-based remuneration | ||
|---|---|---|---|
| Bonus (short-term incentive) | Stock compensation (long-term incentive) | ||
| Linkage with performance | Fixed | Linked to short-term performance | Linked to medium- and long-term performance |
| Performance evaluation period | － | 1 year | 6th year |
| Calculation method | The execution amount is set by position Member of the Board portion is set for Member of the Board 's responsibilities. The representative authority portion is set for the responsibilities regarding the representative authority. |
Standard amount by position based on consolidated operating income budget at the beginning of the year × (Relative to the operating income budget at the beginning of the year) Company-wide performance target achievement rate ×Distribution by position *1 + Commitment goal *2 Achievement rate × Distribution by position *1) |
Points awarded by position × Achievement rate for each index each year <Indicators> Consolidated operating income, ROIC, ROE, EPS |
| Performance-linked range | － | 0～200% | 0～200% |
| Payment period | Monthly | Once a year | Upon retirement of each officer |
| Payment method | Cash | Cash (There is a clause for reducing the amount in the event of a scandal, etc.) *3) |
70% stocks, 30% cash (Subject to Mars clawback clause *4) |
(As of July 2023)
*1 The company-wide performance target is set by the representative Member of the Board 80% Member of the Board concurrently Executive Officer 70%, and the commitment target is set by the representative Member of the Board 20% Member of the Board concurrently Executive Officer 30%.
*2 Of the initiatives that the company will focus on, especially those committed by the executive officers themselves. initiatives
*3 In the event of quality problems, serious accidents or scandals, the amount paid may be reduced.
*4 The amount will not be reduced or paid in the event of any irregularity, etc. during the term of office, and in the event of the occurrence of any of the stipulated matters even after receiving the benefits or delegation, the company may demand the return of the equivalent amount of shares or cash that has been paid.
Compensation composition ratio by payment target
Determination of compensation
Determination of executive compensation
In order to clarify the independence, objectivity, and accountability of Board of Directors' functions, executive compensation is determined by Board of Directors following deliberation by Compensation Advisory Committee.
Compensation Advisory Committee is chaired by an independent Member of the Board(Outside Director) and is composed of a majority of outside officers. It met a total of eight times in fiscal year 2023 (July 2023 to June 2024) to deliberate on the following:
- Performance target evaluation and bonus payment
- Verification and comparison of remuneration levels with external data
- Revision of compensation system including short-term incentives and long-term incentives
FY2023 Total amount of remuneration by officer category, total amount by type and number of eligible officers
| Officer classification | Total amount of remuneration, etc. (One million yen) |
Total amount of compensation by type (million yen) | Subject to number of officers (Persons) |
||
|---|---|---|---|---|---|
| Fixed remuneration | Performance-based remuneration | ||||
| Bonus (Monetary compensation) |
Stock compensation (Non-monetary compensation, etc.) |
||||
| Member of the Board (excluding Member of the Board(Outside Director)) | 236 | 99 | 50 | 86 | 3 |
| Audit and Supervisory Board Member (excluding Outside Audit and Supervisory Board Member) | 32 | 32 | ― | ― | 2 |
| Outside officer | 57 | 57 | ― | ― | 5 |
(Note 1) The amount of stock compensation is the amount recorded as an expense during the current fiscal year for the Stock Benefit Trust (BBT). (Note 2) The amount of bonus is the amount to be paid. ( Note 3) The three Member of the Board(Outside Director) (including one Member of the Board(Outside Director) who retired at the conclusion of the 21st Ordinary The General Meeting of Stockholders held on June 26, 2023) are not included as they do not receive compensation.