The compensation system for Directors, Audit & Supervisory Board Members and Executive Officers is aimed at: (1) securing and retaining diverse, outstanding personnel to establish and enhance our competitive advantage; (2) driving concerted initiatives to promote sustainable enhancement of corporate value; and (3) sharing interests in common with shareholders. We introduce a performance-based share remuneration plan with the aim of boosting awareness of contributing to improvements in our corporate value over the mid-to long-term.
With respect to long-term incentives, we conduct multifaceted evaluations based on three perspectives: business growth evaluation indicators and ESG activity evaluation indicators, alongside management evaluation indicators that are measured through evaluations in compliance awareness surveys and other methods.
With respect to short-term incentives we have adopted EVA as motivation for long-term enhance corporate value, and the consolidated net sales and profit indicators as motivation for carrying out our daily business activities and fostering a sense of unity with our employees. In addition, from FY2023, the individual evaluation applied to all Directors except Outside Directors will be more flexible. The Company has also decided to introduce an evaluation confirmation process by Outside Directors and Outside Audit & Supervisory Board members to ensure objectivity and transparency.
Base salary | Short-term incentive compensation | Long-term incentive compensation | |||||
---|---|---|---|---|---|---|---|
Bonus | Share incentive | ||||||
EVA®-linked part | Consolidated net sales/ | profit-linked partIndividual performance evaluation part |
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Method of provision |
Amount determined in | accordance with role and rank, and provided as fixed monthly compensationAmount of bonus determined in accordance | with degree of achievement of single fiscal- year targets and provided.Kao shares, etc., are delivered within a five-year target period covered by the ・ Fixed part: Deliver a set number of shares, etc. each year ・ Variable part: Delivery of shares, etc. when executive officers resign from their post in accordance with the results achieved in initiatives and activities undertaken as part of the mid-term planThe compensation structure is set at 70% variable and 30% fixed. |
current mid-term plan||||
Clawback | No | No | Yes (in the case of a serious compliance violation, etc. by the individual in | question, the compensation may not be paid, or may be required to be repaid)||||
Performance evaluation period |
- | One year | Five years (2021–2025) | ||||
Evaluation indicator |
- | EVA® | ・Consolidated net sales ・ Income (Gross Profit Less Selling and General and Administrative Expenses) |
Individual performance | evaluationBusiness growth | ESG activities | Top management | activities
Weight | - | 25~35% (Determined by position) |
25~35% (Determined by position) |
30~50% (Determined by position) |
40% | 40% | 20% |
Evaluation criteria |
- | Degree of target | achievementDegree of target Degree of year-on-year improvement |
achievement Degree of OKR goals | achievementBusiness | growth rate of net sales, profit, etc.Evaluation by external | indicators, and extent of achievement of internal goals (such as the Kirei Lifestyle Plan), etc.Evaluation of | management activities by Kao employees, etc.
Coefficient/ Determination of payout rate |
- | The payout ratio is determined within the | range of 0–200% in accordance with the degree of achievement of each indicator.The coefficient for the variable part is determined within the range of 0–200% | in accordance with the degree of achievement of each indicator.||||
Compensation structure |
- | Bonus amount by position when the payout ・President and Chief Executive Officer: 50% of base salary ・Executive Officers with titles: 40% of base salary (except for the President and Chief Executive Officer) ・Other Executive Officers: 30 to 35% of base salary |
ratio is 100%The yearly share remuneration amount when the variable component ・ About 30 to 50% of the base salary of the position |
coefficient is 100%||||
Eligible for provision |
・Directors ・Executive Officers ・Audit & Supervisory Board Members |
・Directors (Except for Outside Directors) ・Executive Officers |
・Directors (Except for Outside Directors) ・Executive Officers |
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Applicable period |
- | One year | Five years (2021–2025) |
(million yen)
Category | Number of Members | Aggregate Amount of Remuneration, etc. |
Components of Remuneration | |||
---|---|---|---|---|---|---|
Base Salary | Short-term incentive compensation (performance- based bonus) |
Long-term incentive compensation (Performance-based share incentive plan) |
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Variable portion | Fixed portion | |||||
Directors (including, in parentheses, Outside Directors) |
10 (5) | 600 (75) | 406 (75) | 48 (-) | 110 (-) | 36 (-) |
Audit & Supervisory (including, in parentheses, Outside Audit & Supervisory Board Members) Board Members |
5 (3) | 110 (43) | 110 (43) | - (-) | - (-) | - (-) |
Total (including, in parentheses, Outside Directors and Outside Audit & Supervisory Board Members) |
15 (8) | 710 (118) | 516 (118) | 48 (-) | 110 (-) | 36 (-) |
Name (Director classification) |
Aggregate amount of remuneration (Millions of yen) |
Corporate classification |
Amount of remuneration by type (Millions of yen) | |||
---|---|---|---|---|---|---|
Base Salary | Short-term incentive compensation (performance-based bonus) |
Long-term incentive compensation (Performance-based share incentive plan) |
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Variable portion | Fixed portion | |||||
Michitaka Sawada (Director) |
130 | Submitting company | 104 | 0 | 18 | 8 |
Yoshihiro Hasebe (Director) |
147 | Submitting company | 87 | 19 | 29 | 12 |