Director compensation is decided by the Board of Directors, and Audit & Supervisory Board member compensation is
decided by the Audit & Supervisory Board, based on the results of consultation with the Compensation Advisory Committee.
Compensation is set within the limits decided by resolution of the Shareholders Meeting. Compensation for directors (excluding external directors) consists of fixed monthly compensation and performance-linked compensation (bonuses and stock-based compensation).
Compensation for external directors and Audit & Supervisory Board members consists only of fixed monthly compensation. Total compensation is determined for directors and Audit & Supervisory Board members based on their individual roles and responsibilities using survey data from specialized external institutions as an objective benchmark.
The compensation of each director (excluding external directors) comprises approximately 50% fixed compensation and 50% performance-linked compensation (30% bonus and 20% stock-based compensation). The proportion of performance-linked compensation is increased in step with the individual’s rank and revised as needed. Once per year, fixed monthly compensation is raised or lowered following an appraisal of how well the director has executed their duties and supervised management. Performance-linked compensation is calculated based on the degree to which performance targets are met in each fiscal year and paid out individually in a designated period after the end of the relevant fiscal year.
Within performance-linked compensation, the total amount of bonuses allocated to directors (rounded down to the nearest ¥10,000) is the sum of 50% of 0.5% of core operating income and 50% of 0.75% of profit attributable to owners of parent for the relevant fiscal year. The upper limit on this total is ¥250 million. However, if core operating income or profit attributable to owners of parent are negative (a loss), the value for that item used in the formula will be zero.
Performance-linked stock-based compensation consists of a fixed portion granted each fiscal year and a performance-linked portion granted based on the degree to which earnings targets outlined in the medium-term management plan have been achieved for each fiscal year during the period of said plan. The fixed portion and the performance-linked portion form equal halves of the stock-based compensation base amount specified for each rank.
With regard to stock-based compensation, in the event that a director commits a serious breach of duty or violation of internal regulations, the Company may seize share granting points already granted or require the return of cash in an amount equivalent to the value of the Company’s shares, etc., already granted.
The above basic policy on director and Audit & Supervisory Board member compensation and a summary of its contents are approved by the Board of Directors following consultation with the Compensation Advisory Committee and disclosed in the Company’s Business Report and Securities Report.