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-Based Remuneration
- Stock-based remuneration is intended to clarify the co-movement between executive compensation and the Company’s stock value, and it seeks to raise awareness among officers that they can play a role in improving the Company’s performance and increasing its corporate value over the medium to long term by sharing with shareholders the benefits and risks associated with fluctuations in its stock price. Under this remuneration system, a trust established by the Company through monetary contributions will acquire the Company’s shares, and these shares will be distributed to each officer through the trust (with the number of shares to be distributed equivalent to the number of points granted to each officer by the Company). The number of points to be granted to each officer, which serves as the basis for calculating the number of shares to be distributed, shall be within the range of points resolved at the General Meeting of Shareholders and shall be allocated in accordance with the officer’s position.
Corporate Auditor Remuneration Policy
Remuneration of corporate auditors consists solely of a fixed base fee, and is determined through discussion of corporate auditors.
|Amount by Type of Compensation (million yen)||Number of
(excluding external directors)
(excluding external corporate auditors)