Officers' remuneration

Decision-making Process for directors' remuneration

We have the remuneration committee that determines the remuneration system and level for directors and executive officers.
In order to ensure transparency and objectivity, this Committee is chaired by an independent external director, and the majority of the members are independent officers consisting of external directors and external corporate auditors.
This Committee is received requests by the Board of Directors, and deliberates on the remuneration system and level based on the decision policy of officers' remuneration , and reports to the Board of Directors.
The Board of Directors makes decisions on the remuneration and other programs after deliberation based on the reports of the Remuneration Committee.
Each director's amount of remuneration is calculated and determined based on the remuneration program within the total amount of remuneration of all directors determined pursuant to a resolution adopted by the General Meeting of Shareholders.

Overall Policy of Directors' Remuneration

Basic Policies
We maintain our remuneration programs that contribute to ensuring sustainable growth and improvement of corporate value of the SHI Group, and sharing of value with our shareholders.
And we set appropriate levels of remuneration for our officers, in part based on objective data from surveys by external professional organs.
Composition of Remuneration
  • Directors' remuneration consists of "basic remuneration" which is fixed remuneration, "performance-based remuneration," which fluctuates according to business performance, and "stock option remuneration," in which the company's shares are acquired and held through the Executive Shareholding Association.
  • External officers' remuneration consists solely of basic remuneration.
Decision Policy of Remuneration
The remuneration program is decided pursuant to a resolution adopted by a meeting of the Board of Directors based on deliberation and reporting of the Remuneration Committee.

Overview of the Director Remuneration Program

Remuneration Composition Ratio (estimated)
Base fee: Performance-based remuneration (short-term incentives): Stock option remuneration (long-term incentives) = 60%:30%:10%
Basic Remuneration
We make additions for directors, in addition to flat remuneration that is fixed for each position. (Fixed remuneration: 85% of the overall amount)
Performance-based Remuneration
Performance-based remuneration consists of dividend-based remuneration that fluctuates according to our annual dividends and divisional performance-based remuneration that fluctuates according to performance, and the ratio is 50%: 50%.
Performance-based remuneration for directors and executive officers of the head office is determined by our consolidated performance , and performance-based remuneration of directors and executive officers in charge of business units is determined by the performance of each division.
Dividend-based remuneration is calculated by multiplying the base amount for each executive position by a coefficient according to our annual dividends.
15% of the addition to directors is changed by multiplying the dividend-based remuneration coefficient.
Divisional performance -based remuneration is calculated by multiplying the base amount for each position by a coefficient according to ranks A to E.
The rank is decided the president as the final decision-maker, based on the four indices (ROIC, income before income taxes, orders accepted, and free cash flow) and taking into account the situation such as safety performance and compliance.
By applying these indices, we share our value with our shareholders and build a mechanism that enable us to reflect profitability, growth potential, maintenance of financial disciplines, safety, compliance, and other perspectives in the Remuneration of directors.
Stock Option Remuneration
We position the stock option remuneration as the remuneration intended for acquisition of our shares, appropriate more than a certain amount determined for each executive position for acquisition of our shares through the Executive Shareholding Association, and oblige our officers to continue to hold the shares so acquired during their respective terms of office.

Corporate Auditor Remuneration Policy

Remuneration of corporate auditors consists solely of a fixed base fee, and is determined through discussion of corporate auditors.

Total Amount of Remuneration of Directors and Corporate Auditors for FY2019
Classification of officers Total amount of remuneration (Millions of yen) Total amount of compensation (Millions of yen) and number of eligible person (#)
Basic remuneration (Millions of yen) Performance-based remuneration (Millions of yen) Stock option remuneration (Millions of yen)
Total amount Number of eligible payees Total amount Number of eligible payees Total amount Number of eligible payees
Directors who are not serving as Audit and Supervisory Committee members (excluding external directors) 384
(26)
245
(26)
11
(3)
104
(-)
8
(-)
34
(-)
8
(-)
Directors who are serving as Audit and Supervisory Committee members (excluding external directors) 88
(19)
88
(19)
4
(2)
-
(-)
-
(-)
-
(-)
-
(-)