Compensation of Officers

Under the Company’s system for the compensation of officers, compensation comprises basic compensation, which is fixed; bonuses linked to the Company’s performance in each fiscal year; and share-based stock options, which provide medium- to long-term incentives. Given that they are not involved in the execution of duties, independent outside directors and Audit & Supervisory Board members only receive fixed basic
remuneration.

For fiscal 2019, a breakdown of the fixed basic compensation, performance-based bonuses, and share-based stock options as percentages of the compensation of officers is shown below.

Basic Compensation

The amount of basic compensation is set according to the positions of officers. With respect to officers in the same position, however, the basic compensation of a particular officer can be higher than that of other officers as a result of an increase, within a certain range, in basic compensation that reflects the officer’s degree of contribution to business results in the previous fiscal year.
With reference to the results of a compensation survey conducted by an external organization, every year the Company verifies the range of appropriate levels of compensation for companies in the same industry as well as for companies of a similar size and then sets a level of compensation commensurate with the Company’s business results and size.
Further, a resolution of the Ordinary General Meeting of Shareholders convened on June 29, 2005, set upper limits of ¥350 million for the aggregate annual basic compensation of all directors (excluding employee salaries of directors who concurrently serve as employees) and ¥75 million for the aggregate annual basic compensation of all Audit & Supervisory Board members.

Performance-Based Bonuses

To increase the degree of the linkage between bonuses and consolidated business performance, the aggregate amount of performance-based bonuses is determined for each fiscal year based on the percentage achievement of a reference value of consolidated operating income and, to a lesser extent, based on certain other business results. With reference to past business results and other factors, the reference value of consolidated operating income has been set at ¥13.5 billion.

Share-Based Stock Options

The amount of share-based stock options is determined by a resolution of the Board of Directors in consideration of the monthly amount of the basic compensation and the fair value of stocks, which are determined based on reports issued by the Executive Compensation Advisory Committee.
Further, a resolution of the Ordinary General Meeting of Shareholders convened on June 27, 2008, set an upper limit of ¥70 million for aggregate annual share-based stock options.

Compensation of Officers in FY2019

Classification Total amount of remuneration, etc. (¥ million) Total amount of remuneration, etc., by type (¥ million) Number of eligible recipients
Basic compensation Performance-based bonuses Share-based stock options
Directors (excluding outside directors) 313 230 40 43 5
Audit & Supervisory Board members (excluding outside members) 38 38 2
Outside directors and outside Audit & Supervisory Board members 46 46 8

Note: As of March 31, 2019, there were five directors, two Audit & Supervisory Board members, and six outside officers. The number of outside officers differs from the number of outside officers in the above table because the number in the table includes two outside officers who retired upon the conclusion of the 70th Ordinary General Meeting of Shareholders, convened on June 28, 2018.

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