Matters related to policies concerning the determination of the amount of compensation, etc. for directors or the calculation method thereof
Policy for the determination of compensation amount, etc. for the Directors
The compensation system for Directors in the Company (excluding Directors who are Audit and Supervisory Committee Members and Outside Directors) consists of basic compensation as fixed compensation, and year-end compensation linked to each period's performance, and stock compensation. The Company's basic policy is to calculate the basic compensation based on the officer compensation standard table in accordance with the duties and responsibilities of each officer, to determine the year-end compensation, which is linked to the Company's business performance, by resolution of the Board of Directors after consultation with the Nomination and Compensation Committee within the limit of the compensation amount resolved at the general meeting of shareholders, and to determine the stock compensation in accordance with the Share Issuance Regulations within the limit of the amount of regulations and the number of shares resolved at the general meeting of shareholders. For outside directors and directors who are Audit and Supervisory Committee members, considering their roles and independence, compensation consists only of basic compensation. Compensation amounts for directors who are Audit and Supervisory Committee members are determined through consultation among the directors who are Audit and Supervisory Committee members.
The 20th (FY2021) Annual General Meeting of Shareholders, held on March 30, 2022, approved an annual compensation limit of 500 million yen for Directors (excluding Directors who are the Audit and Supervisory Committee Members). The limit for Outside Directors is set at 50 million yen. This compensation does not include salaries for Directors who are also employees. The approved annual compensation limit for Directors who are Audit and Supervisory Committee Members is 100 million yen. At the conclusion of this Annual General Meeting of Shareholders, the number of Directors (excluding Directors who are Audit and Supervisory Committee Members) was nine, including two Outside Directors. The number of Directors who are Audit and Supervisory Committee Members was five.
The compensation of Directors (excluding Directors who are Audit and Supervisory Committee Members) is determined by the Representative Director and President, who was authorized to make decisions regarding compensation at a Board of Directors meeting held on March 28, 2024. The President determines compensation within the above limit, using the officer compensation standard table as a reference. The compensation of individual Directors is determined based on their roles and responsibilities, the Company's performance, and their contributions to the organization. The amount of remuneration of the directors who serve as Audit and Supervisory Committee members is determined through consultation with the directors serving as Audit and Supervisory Committee members.
The Company has established the Nomination and Compensation Committee as an advisory body to the Board of Directors. The committee aims to ensure the transparency and objectivity of the determination of the compensation of Directors and enhance the supervisory function of the Board of Directors. The Committee deliberates on matters referred to it by the Board of Directors, such as directors' compensation, and submits its recommendations to the Board.
Basic compensation
Monthly fixed compensation is determined in a comprehensive manner, taking into account position, responsibilities, years of service, compensation levels at other companies, our company's performance, and employee salary levels.
Performance-linked compensation
Performance indicators for year-end compensation and share-based compensation are based on consolidated figures, to encourage officers to focus on overall consolidated business performance. The compensation ratio by director type is determined with reference to companies of similar business scale and in related industries. The structure is designed so that higher positions have a greater weight of performance-linked compensation, with the target ratio by compensation type (for the President) being Basic Compensation : Year-end Compensation : Stock Compensation = 6:2:2 (when consolidated performance forecast is 100% achieved). Details are as follows.
Year-end compensation
The Company determines year-end remuneration using a base amount for year-end remuneration based on consolidated ordinary profit, taking into account consolidated net sales and operating profit.
Share-based compensation
At the 19th Annual General Meeting of Shareholders held on March 30, 2021, the Company resolved to introduce a performance-linked share-based remuneration system (the "system") for Directors (excluding Outside Directors and non-residents of Japan) in addition to basic remuneration and performance-linked year-end remuneration. The Company has introduced the system as an officer remuneration system that is highly linked to company performance and characterized by transparency and objectivity, with the aim of raising Director awareness of the importance of contributing to improving the Company's performance and enhancing corporate value in the medium to long term.
In addition, based on a resolution at the 20th Annual General Meeting of Shareholders held on March 30, 2022, in line with the Company's transition to a company with an Audit and Supervisory Committee, the remuneration framework for Directors prior to the transition has been abolished, and a new remuneration framework for Directors (excluding Directors who are Audit and Supervisory Committee Members, Outside Directors, and non-residents of Japan) has been established based on this system. Furthermore, based on a resolution at the 23rd Annual General Meeting of Shareholders held on March 28, 2025, the Company has added Executive Officers (excluding non-residents of Japan) who do not concurrently serve as Directors the list of eligible people under this system, expanding it to include Directors and Executive Officers (excluding Directors who are Audit and Supervisory Committee Members, Outside Directors, and non-residents of Japan), and has continued this system with certain revisions.
The system employs a scheme called the Board Incentive Plan Trust (hereinafter “the BIP Trust”). The BIP trust is an incentive plan for officers introduced by reference to the performance share plan and the restricted stock plan in the United States. In the system, the Company delivers shares of the Company or cash of equivalent value to these shares ("Shares of the Company, etc."), which are contributed to the BIP trust, to individuals serving as Directors during the fiscal years covered by the Medium-Term Management Plan (the "Applicable Period") in accordance with their positions, the degree of achievement of performance targets during the trust period, and other factors. Directors will receive the Delivery, etc. of the Shares of the Company, etc. during a certain period after the termination of the applicable period.
The outlines of the system are presented below.
| Eligible people for the stock compensation system |
Directors of the Company (excluding Directors who are Audit and Supervisory Committee Members, Outside Directors and non-residents of Japan)
Executive Officers (excluding non-residents of Japan) |
| Upper limit of money to be contributed by the Company to the Trust |
130 million yen multiplied by the number of fiscal years in the Medium-Term Management Plan |
| Method of acquisition of the Company’s shares by the Trust |
Market purchase or disposal of treasury stock |
| Maximum number of shares (including the shares converted to cash) obtained by eligible people |
23,000 shares multiplied by the number of fiscal years in the Medium-Term Management Plan |
| Performance achievement requirements |
The requirements vary depending on consolidated net sales and operating income in each fiscal year |
| Timing of delivery of Shares of the Company, etc., to eligible people |
During their term of office (in principle, after the end of the Medium-Term Management Plan) |
| Voting rights pertaining to the Company’s shares under the Trust |
Voting rights pertaining to the Company’s shares under the Trust will not be exercised during the trust period to ensure the neutrality of the Company’s management. |
The Company awards fixed points and performance-linked points each March during the trust period for the previous fiscal year, which runs from January 1 to December 31. These points are determined by the Company's performance during that fiscal year and the number of months the Director has served during the Applicable Period. Performance-linked points are awarded within a range of 0% to 150% based on consolidated net sales and operating income for each fiscal year. The number of Shares of the Company, etc. awarded to officers is based on their fixed points plus their performance-linked points during the Medium-Term Management Plan period.
In line with a resolution passed at the 23rd Annual General Meeting of Shareholders held on March 28, 2025, performance-linked points will vary based on consolidated net sales, operating income, ROE, and social value indices.
Matters concerning the delegation of decisions on compensation, etc. paid individually to Directors
Having consulted with and received from the Nomination and Compensation Committee, the Board of Directors has granted Representative Director and President Fumio Fujisaski the authority to decide on basic remuneration for each Director who is not an Audit and Supervisory Committee Member and the distribution of year-end remuneration to each Director who is not an Audit and Supervisory Committee Member or an Outside Director, based on the evaluation of the performance of departments that they are in charge of. The Board of Directors delegated authority based on the judgment that the Representative Director is the right person to evaluate the performance of the departments each Director is responsible for whilst taking into consideration the performance of the Company as a whole and other pertinent factors. The Nomination and Compensation Committee reviews the appropriateness of the determination of remuneration under the delegated authority prior to decisions coming into effect. The Board of Directors also confirms that the methods for determining the details of remuneration, etc. and the determined remuneration, etc., for individual Directors for the fiscal year under review are consistent with the policy resolved by the Board of Directors and that reports from the Nomination and Compensation Committee are respected, and believes that the remuneration, etc. is in line with the policy.
Total amount of remuneration for each officer category, total amount of remuneration by type, and number of eligible officers