With respect to remuneration for Member of the Board of Directors, the Company makes it a basic policy to provide a system and level of remuneration that is considered suitable for executive-level managers of a globally competitive electronic equipment and component manufacturer in order to ensure recruitment of human talent considered to be excellent based on a comparison with same-industry competitors, to raise the morale and motivation to improve financial results and to contribute to the maximization of corporate value.
Remuneration for Members of the Board of Directors who are not Audit and Supervisory Committee Members is made up of (i) monthly remuneration, (ii) bonus with the aim of giving a short-term incentive, and (iii) share-based remuneration (non-monetary remuneration) with the aim of making them further share values with our shareholders by giving a medium- to long-term incentive. The remuneration paid to Outside Directors who are not Audit and Supervisory Committee Members or members of the Board of Directors who are Audit and Supervisory Committee Members is only monthly remuneration.
(i) Monthly remuneration:
The monthly remuneration is a fixed remuneration of an amount individually decided for each Member of the Board of Directors based on a fixed amount for service as Member of the Board of Directors, and an amount that is decided based on consideration of the level of importance of each Member of the Board of Directors’ business execution allocation and responsibility. Payment is made on a monthly basis.
(ii) Bonus:
The bonus is cash remuneration that is provided as an incentive to create economic value in each fiscal year and, in principle, is paid in June after the end of the fiscal year. The amount is calculated by multiplying a reference amount for each position by a factor (variable within a range of 0% to 200%) according to the level of achievement of the targets for the performance evaluation indicators. The performance evaluation indicators are consolidated operating income and ROIC (pre-tax basis), which are indicators related to the Group-wide management targets for economic value in the Mid-term Direction 2024. The Company selected these indicators in order to provide an incentive to increase net sales, which are associated with profit margins that the Company emphasizes, and efficiently generate profits from invested capital.
(iii) Share-based remuneration:
The Company’s share-based remuneration aims to motivate the willingness to contribute to the continuous enhancement of share values and corporate value spanning the long term between the Company’s Members of the Board of Directors and shareholders. According to the reference amount set for each position of each Member of the Board of Directors, restricted shares will be allotted every July. Furthermore, because a portion of the share-based remuneration (approximately 20% of the total share-based remuneration) is based on an evaluation of initiatives related to the creation of medium- to long-term social value and ESGs, every fiscal year the Remuneration Advisory Committee evaluates the progress of the initiatives for achieving the Group-wide management targets related to social value (Environment, Diversity, ES) in the Mid-term Direction 2024 and adjusts the amount of such portion within a range of ±20% of the reference amount set for each position.
In addition, restrictions of the allotted restricted shares will be lifted when eligible Members of the Board of Directors’ term of both positions as Member of the Board of Directors and Vice President expires, or retires due to the compulsory retirement age or resigns.
Each standard and composition ratio of monthly remuneration, bonus, and share-based remuneration is based on the “Executive Compensation Database” operated by the external consultant WTW (Willis Towers Watson) and will be determined by performing benchmarks on corporations similar to the Company’s type of industry and scale and verifying the validity.
Furthermore, the composition ratio of remuneration elements of remuneration of the President and Representative Director is largely as follows. The composition ratio of remuneration elements for other inside Members of the Board of Directors who are not Audit and Supervisory Committee Members is set so that the ratio of bonuses and share-based remuneration is higher for upper ranking positions according to the responsibilities, etc. of each position.
Composition of remuneration for Members of the Board of Directors who are not Audit and Supervisory Committee Members
- *In the case of the President and Representative Director
- **Bonuses are variable within a range of 0% to 200% of the reference amount of each position.
Amount of remuneration for each type of executive (Fiscal year ended March 31, 2023)
(Notes)
- The above figures include three Members of the Board of Directors who are not Audit and Supervisory Committee Members and retired during the fiscal year ended March 31, 2023.
- Out of the total shown above, total compensation, etc., provided to six Outside Directors, is 81 million yen (only monthly remuneration).