Policy on Calculating and Determining Executive Compensation
Our basic policy is to structure executive compensation so that it serves as a sound incentive for Directors to contribute to the Company’s sustainable growth. Executive compensation consists of fixed monetary compensation, performance-based bonuses linked to annual performance and other factors, and non-monetary stock-based compensation. Compensation is provided at an appropriate level based on each Director’s position and responsibilities, as well as the Company’s performance.
Fixed compensation is calculated in accordance with guidelines that establish criteria based on each Director’s position, responsibilities, and other relevant factors. To ensure the objectivity and transparency of compensation decisions, the Board of Directors approves compensation after considering the recommendations of the Compensation Advisory Committee, which is chaired by an External Director.
The method for calculating performance-based compensation has been changed so that the compensation amount is adjusted based not only on financial indicators but also on the level of achievement of the SDGs, which the Group has identified as specific ESG-related non-financial targets and has increasingly focused on over the long term. The calculation method and the resulting compensation amount are reviewed by the Compensation Advisory Committee and approved by the Board of Directors.
As part of its efforts to strengthen the executive management structure and enhance the supervisory function of the Board of Directors, the Company grants restricted shares as non-monetary stock-based compensation to Directors, excluding External Directors. The purpose of this stock-based compensation is to align Directors’ interests more closely with those of shareholders by sharing both the benefits and risks of stock price movements over the medium- to long-term, thereby further motivating Directors to contribute to share price appreciation and enhanced corporate value. The number of shares granted is determined within allocation limits established in advance based on each Director’s position and responsibilities. The number of shares granted to each Director is reviewed by the Compensation Advisory Committee and approved by the Board of Directors. In principle, the transfer restrictions on the allocated restricted shares are lifted upon a Director's retirement following a resolution of the Board of Directors.
The Board of Directors has confirmed that the compensation for Directors for the current fiscal year is consistent with, and has been determined in accordance with, the policy on executive compensation approved by the Board of Directors.
Total compensation by executive category, breakdown by compensation type, and number of recipients