Disclosures of Policies on Determination of the Amount of Remuneration for Officers or the Calculation Method Thereof
1.Directors
(1) Basic policy
The Company’s remuneration plan for Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee Members; the same shall apply hereinafter) consists of basic remuneration, which is fixed remuneration, and year-end remuneration and share-based remuneration, which are linked to business performance in each fiscal year. The Company’s basic policy is to calculate basic remuneration based on the Remuneration Standards Table for Officers in accordance with the duties and responsibilities of each Officer, to determine year-end remuneration, which is linked to the Company’s business performance, by resolution of the Board of Directors after consultation with the Nomination and Remuneration Advisory Committee within the remuneration limit approved by resolution at a general meeting of shareholders, and to determine share-based remuneration in accordance with the Share Delivery Rules within the limit on the amount of remuneration and the number of shares approved by resolution at a general meeting of shareholders. Outside Directors and Directors who are Audit and Supervisory Committee Members are paid only basic remuneration from the perspective of their roles and independence, and the amount of remuneration for Directors who are Audit and Supervisory Committee Members is determined through discussions by the Directors who are Audit and Supervisory Committee Members.
(2) Policy for determining the amount of basic remuneration (monetary remuneration) for individual Directors
The basic remuneration shall be a monthly fixed remuneration, and the amount of the remuneration shall be determined in accordance with the position, and responsibilities, taking into consideration the level at other companies, the Company’s business performance, the level of employee salaries, and other factors comprehensively.
(3) Policy for determining the details of performance-linked remuneration, etc. and non-monetary remuneration, etc., and the method for calculating the amount or number of such remunerations
The performance-linked remuneration consists of year-end remuneration (monetary remuneration) and share-based remuneration (non-monetary remuneration). The Company calculates the amount of year-end remuneration in line with the degree of achievement of the consolidated net sales and consolidated operating margin targets. Year-end remuneration is paid around the same time each year. The amount of share-based remuneration is determined in consideration of consolidated net sales, consolidated operating profit, and consolidated ROE, as well as social value indices for each fiscal year, in accordance with the provisions of the Share Delivery Rules. In principle, shares calculated in accordance with performance are delivered after the completion of the Medium-Term Management Plan. In addition, the number of the share-based remuneration to be delivered to individual Directors will be determined in accordance with the Share Delivery Rules, and the share-based remuneration will be returned if the prescribed conditions stipulated in the Share Delivery Rules, such as an occurrence of misconduct, are recognized.
The performance indicators are selected for the purpose of making each Officer more aware of the overall consolidated management.
(4) Policy for determining the ratio to the amount of remuneration, etc. for individual Directors
Remuneration for Directors is set based mainly on the Group's business environment and analysis and comparison with the remuneration paid by benchmark companies, which are done using a database from an external organization. The ratio of remuneration for Directors by type is determined by referencing companies with businesses of the same scale as the Company or that belong to related industries. The structure is designed so that higher positions have a greater weight of performance-linked remuneration. The approximate ratio of remuneration, etc. by type (in the case of the Representative Director and President) is as follows: the ratio of basic remuneration to year-end remuneration to share-based remuneration is 40:30:30 (when 100% of Medium-Term Management Plan financial targets are achieved).
(5) Policy for determining the details of remuneration, etc. for individual Directors
The Representative Director and President shall be delegated the authority to determine the specific details of the amount of individual remuneration in accordance with a resolution of the Board of Directors, and the scope of such authority shall include the amount of basic remuneration for each Director and the evaluation and allocation of year-end remuneration based on the performance of the business for which each Director is responsible. The Representative Director and President shall consult the Nomination and Remuneration Advisory Committee on the draft and obtain its report to ensure that such authority is appropriately exercised by the Representative Director and President, and the Representative Director and President who has received the above delegation shall make decisions in accordance with the content of such report. As for share-based remuneration, a certain number of points will be granted in accordance with the provisions of the Share Delivery Rules established by resolution of the Board of Directors after consultation with and with the report from the Nomination and Remuneration Advisory Committee, up to the maximum amount resolved at the general meeting of shareholders separately from the limit of monetary remuneration.
2.Executive Officers
(1) Composition of remuneration
The remuneration plan for Executive Officers is similar to that for Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee Members; the same shall apply hereinafter). The plan consists of basic remuneration, which is a fixed remuneration, and year-end remuneration and share-based remuneration, which are linked to the business performance of each fiscal year.
(2) Decision-making process
The Company calculates the basic remuneration for executives based on their duties using a standard remuneration table. Year-end remuneration is decided by the Representative Director and President based on the Company's performance and the results of the Medium-Term Management Plan. The amount of the share-based remuneration is determined based mainly on the business results for each fiscal year in accordance with the provisions of the Share Delivery Rules.
(3) Indicators associated with performance-linked remuneration
Year-end remuneration is linked to consolidated operating profit and other indicators. The amount of share-based remuneration is determined in consideration of the consolidated net sales, consolidated operating profit, consolidated ROE, and social value indices for each fiscal year, and in principle, shares calculated in accordance with performance are delivered after the completion of the Medium-Term Management Plan. In addition, the number of the share-based remuneration to be delivered to individual Directors will be determined in accordance with the Share Delivery Rules, and the share-based remuneration will be returned if the prescribed conditions stipulated in the Share Delivery Rules, such as an occurrence of misconduct, are recognized.