After a draft proposal was deliberated by the Nomination and Remuneration Committee, the majority of which are independent External Directors and Auditors, a policy for determining the details of remuneration of individual Directors was approved by the Board of Directors. The Board of Directors has also determined that the remuneration of individual Directors for FY 2023 was in line with the determination policy mentioned above because the policy for determining the details of remuneration and the details of remuneration determined were based on the determination policy approved by the Board of Directors and were determined after they were deliberated by the Nomination and Remuneration Committee.
In order to determine the remuneration of Directors, the Company has established basic amounts for each position, based on a design that has been developed by using data provided by specialized external organizations as well as publicly available data and taking into consideration the remuneration levels of industry peers and companies in other industries. More specifically, our basic policy is to ensure that the remuneration of Directors other than External Directors functions as an incentive for them to pursue sustainable improvement of the Company’s corporate value by adopting a remuneration package that includes performance-based remuneration based on the financial results of the Company for each fiscal year and non-monetary remuneration (restricted stock), as well as fixed remuneration. On the other hand, the remuneration of External Directors consists only of fixed remuneration in view of their roles and independence.
The remuneration of Auditors consists only of fixed remuneration (monthly fixed remuneration), which is deliberated by the Nomination and Remuneration Committee and determined through consultation within the Board of Auditors within the limit on their remuneration approved by the General Meeting of Shareholders.
The fixed remuneration of the Directors of the Company shall be fixed monthly remuneration and shall be determined in accordance with each individual’s position, contribution, etc., and in comprehensive consideration of the levels of salaries and other remuneration of the employees of the Company as well as public standards.
Performance-based remuneration shall be paid in cash. Its amount shall be determined in accordance with the degree of achievement of the consolidated operating income budget for each fiscal year and based on the basic amount established for each position after adjusting the amount for each Director’s contribution in the fiscal year. Any performance-based remuneration shall be paid at the same time each year. We have chosen consolidated operating income as the indicator for performance-based remuneration because we recognize the importance of improving motivation to pursue profit in our core business.
Non-monetary remuneration shall be provided in the form of restricted stock to the Directors of the Company other than External Directors for the purpose of providing them with an incentive to achieve the sustainable growth of the Company’s corporate value and to promote further value sharing with shareholders. Restricted stock shall be granted in exchange for contribution in kind of monetary remuneration claims determined based on the basic amount established for each position within the upper limit on such remuneration approved by the General Meeting of Shareholders. The timing of the grant shall be determined as necessary by the Board of Directors in comprehensive consideration of the composition of the Board of Directors, the purpose as an incentive, the management conditions of the Company, and any other relevant matters.
In principle, the restricted period of the restricted stock shall be the period until such Directors resign or retire from all of their positions as an officer or employee of the Company or its subsidiary that are specified in advance by the Board of Directors of the Company.
The Company has voluntarily established the Nomination and Remuneration Committee as an advisory body to ensure objectivity and transparency for the remuneration of Directors. The percentage of each component of the remuneration of Directors is determined by the Nomination and Remuneration Committee after examining the remuneration of companies of a similar scale in the same industry and considering the Company’s financial results each time such remuneration is paid.
The determination of the specific amount of remuneration of each Director shall be left to the discretion of Representative Director & President Katsunori Sugiura by resolution of the Board of Directors. Under the delegation, the Representative Director & President shall determine the amounts of fixed remuneration and performance-based remuneration within the limit on such remuneration approved by the General Meeting of Shareholders.
In order to ensure that the authority delegated as described above is exercised properly, the Company requires the Representative Director & President to respect the deliberation results of the Nomination and Remuneration Committee, the majority of which consists of independent External Directors and Auditors, in determining the specific amount of remuneration of each Director.
The authority mentioned above is delegated to the Representative Director & President because the Company has determined that he is able to determine the specific amount of remuneration of each Director in a comprehensive manner as he is more familiar with the management conditions of the Company than anybody else and is the most suitable person to evaluate the areas of responsibility and job responsibilities of each Director, while examining the environment surrounding the Company and the overall financial results of the Company from a high-level viewpoint.
Regarding restricted stock as non-monetary remuneration, the specific number of shares allotted to each Director and other necessary matters are determined by the Board of Directors based on the deliberation results of the Nomination and Remuneration Committee.
| Category | Total amount (million yen) |
Total amount by type (million yen) | Number of persons | ||
|---|---|---|---|---|---|
| Fixed remuneration | Performance-based remuneration | Non-monetary remuneration | |||
| Directors (of which, External Directors) |
177 (13) |
118 (13) |
52 (−) |
7 (−) |
5 (2) |
| Auditor (of which, External Auditors) |
17 (17) |
17 (17) |
− (−) |
− (−) |
3 (3) |
| Total (of which, External Directors and External Auditors) |
194 (31) |
135 (31) |
52 (−) |
7 (−) |
8 (5) |
(Notes)
1 The total amount of remuneration paid to Directors excludes the portion of employee salary of Directors who concurrently serve as employees.
2
The upper limit on remuneration of Directors was resolved at 400 million yen per year (not including salaries received as employees) at the 25th Ordinary General Meeting of Shareholders held on May 24, 2007. At the time of the resolution, the number of Directors was 12.
In addition to the aforementioned amount of remuneration, the total amount of monetary remuneration claims provided as restricted stock remuneration to Directors (excluding External Directors) was resolved to be within 80 million yen per year (not including salaries received as employees) and the total number of shares of common stock to be issued or disposed of was resolved to be within 10,000 per year at the 40th Ordinary General Meeting of Shareholders held on May 20, 2022. At the time of the resolution, the number of Directors was 3 (excluding External Directors).
3 The upper limit on remuneration of Auditors was resolved at 30 million yen per year at the 25th Ordinary General Meeting of Shareholders held on May 24, 2007. At the time of the resolution, the number of Auditors was 3.
4 The non-monetary remuneration consists of the shares of the Company, and the terms and conditions of allotment are as stated in “Policy for determining the contents of remuneration of individual Directors” above.