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The compensation system for Directors, Audit & Supervisory Board Members and Executive Officers is aimed at (1) securing and retaining diverse, outstanding talent so as to establish and enhance competitive advantage, (2) promoting prioritized actions for realizing continuous increases in corporate value and (3) sharing interests in common with shareholders.
Starting in FY2017, we have introduced a performance-based share incentive plan for our Directors (excluding Outside Directors) and Executive Officers. Serving as a highly transparent and objective remuneration system that is closely linked to company performance, the performance-based share incentive plan aims to increase awareness of contributing to improvements in our financial performance and corporate value over the mid- to long-term.
Regarding Kao's share incentive plan, in order to promote the vision of "contributing to an 'enriched sustainable world' and growing the businesses of the company through proactive engagement in ESG activities and investment" which is one of the goals of K25 that was initiated in FY2021, we have made adjustments to the long-term incentive compensation indicators starting from FY2021.
As regards short-term incentive compensation, while the exact percentage varies between the President and Chief Executive Officer, Inside Directors and other Executive Officers, in all cases EVA and consolidated net sales and income are used as the evaluation indicators. EVA, which is a management indicator to which we attach great importance, has been adopted as an evaluation indicator in order to provide motivation for enhancing corporate value through the implementation of long-term strategies that contribute toward the resolution of ESG issues. With regard to the adoption of consolidated net sales and income as evaluation indicators, this represents a goal that is shared with ordinary employees. It provides motivation for realizing profitable growth through day-today business activities, and can help to foster a sense of unity with employees.
Base salary | Short-term incentive compensation | Long-term incentive compensation | ||||
---|---|---|---|---|---|---|
Bonus | Share incentive | |||||
EVA®-linked part | Consolidated net sales/ | profit-linked part|||||
Method of provision |
Amount determined in | accordance with role and rank, and provided as fxed monthly compensationAmount of bonus determined in accordance | with degree of achievement of single fiscal- year targets and providedKao 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) |
Business growth | ESG activities | Top management | activities
Evaluation criteria |
- | Degree of target | achievementDegree of target Degree of year-on-year improvement |
achievement Business | 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% of base salary |
ratio is 100%The yearly share remuneration amount when the variable component ・ About 40% 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 |
|||
Applicable period |
- | One year | Five years (2021–2025) |
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) |
||||
Variable portion (performance- linked portion) |
Fixed portion | |||||
Directors (including, in parentheses, Outside Directors) |
8 (4) | 467 (75) | 324 (75) | 39 (-) | 73 (-) | 31 (-) |
Audit & Supervisory (including, in parentheses, Outside Audit & Supervisory Board Members) Board Members |
6 (3) | 82 (30) | 82 (30) | - (-) | - (-) | - (-) |
Total (including, in parentheses, Outside Directors and Outside Audit & Supervisory Board Members) |
14 (7) | 549 (105) | 406 (105) | 39 (-) | 73 (-) | 31 (-) |
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) |
||||
Variable portion (performance-linked portion) |
Fixed portion | |||||
Michitaka Sawada (Director) |
125 | Submitting company | 99 | 0 | 18 | 8 |
Yoshihiro Hasebe (Director) |
139 | Submitting company | 82 | 22 | 24 | 11 |