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Remuneration System for Executive Officers

Basic Policy for the Remuneration of Executive Officers

  • The Nomination and Remuneration Advisory Committee will discuss the remuneration of Directors and Executive Officers, and report to the Board based on the following policy.
    The Committee will consider levels of the remuneration and linkage with performance by comparing them objectively with officers’ remuneration survey data of an external research body, and incorporate findings in its report to the Board of Directors.

<Basic policy on remuneration for officers>

  1. The Company shall establish a remuneration structure that emphasizes the linkage of remuneration with business performance and medium- to long-term corporate value and share value with the shareholders.
  2. Remuneration levels shall be appropriate for the roles and responsibilities of the Kirin Group’s officers.
  3. Remuneration shall be deliberated by the Nomination and Remuneration Advisory Committee, in which Outside Directors constitute a majority, in order to ensure objectivity and transparency.

Composition of the Remuneration

  • In order to encourage awareness of achieving short-term performance targets and enhancing medium to long term corporate value, remuneration for Directors of the Board is composed of three parts: basic remuneration (fixed remuneration), bonus (short-term incentive remuneration), and Restricted Stock Compensation (medium- to long-term incentive remuneration). The specific composition of remuneration is as follows according to the classification of officers eligible for the payment.
Classification of Officers Basic Remuneration Yearly Bonus Restricted stock compensation Purpose
Directors
(excluding outside directors)
Because they are responsible for the execution of business, Kirin Holdings have established remuneration structure that takes into account the achievement of short-term consolidated performance targets and the improvement of corporate value over the medium to long term.
Outside directors --- --- Because they are responsible for supervising and advising Company and Group management from an objective position, only basic remuneration (fixed remuneration) is provided.
Audit & Supervisory Board Members --- --- Because of their role of auditing the performance of directors’ execution of their business from an objective position, only basic remuneration (fixed remuneration) is provided.

Structure of performance-linked remuneration

1. Yearly Bonus

  • The performance indicators are our consolidated performance indicators (consolidated normalized operating profit for the FY2019) and individual performance evaluation indicators. For the Chairman of the Board and the President & CEO, only the consolidated performance indicators will apply. The amount of paid ranges from 0% to 200% where 100% indicates the achievement of targets.

Calculation Formula of individual remuneration

(NOTE)

  1. A standard bonus is set for each officer based on internal regulations.
  2. “A” is the ratio of the part that is linked to company performance, and “B” is the ratio of the part that is linked to individual performance. Each ratio is set for each position based on internal regulations.

2. Stock-based remuneration

  • Stock-based remuneration is a restricted stock compensation (performance-based), and the company will allocate restricted stock each fiscal year.
  • The transfer restrictions will be terminated for all or part of the allotted shares upon expiration of the transfer restrictions based on the degree of achievement of the targets in the first year of the transfer restriction period with respect to the indicators specified by the Board of the main management indicators listed in Medium-Term Business Plan.
  • However, from the viewpoint of promoting shareholding by the director of the board, the restricted stock compensation will be terminated at the expiration of the restriction period, in principle, with respect to a certain percentage of the restricted stock regardless of the degree of achievement of the target. The percentage of shares for which the restriction is lifted at the expiry of the restriction period is set within the range of 33%-100%.
  • For FY2019, the two performance indicators, ROIC and Normalized EPS, are set and evaluated equally.

Mechanism of the restricted stock compensation (performance-based)

Calculation formula for the rate of lifting the restrictions

Procedures for determining the remunerations of executive officers

  • In order to ensure fair and reasonable application of the process in line with the above-mentioned basic policy for executive remuneration, the executive remuneration shall be deliberated at the Nomination and Remuneration Advisory Committee of which the majority of the members are Outside Directors and whose Chairperson is also an Outside Director, and the result is reported to the Board of Directors.
  • As for determining the specific amount of remuneration, remuneration for Directors shall be decided at the Board and that for Audit & Supervisory Board members upon consultation with Audit & Supervisory Board based on the report from the Nomination and Remuneration Advisory Committee and within the limits of the remuneration amount determined in advance at the general meeting of shareholders.
  • Nomination and Remuneration Advisory Committee regularly deliberates on the setting of remuneration levels, the ratio of performance-linked remuneration and its mechanisms, and meets in response to changes in the the environment of laws and regulations related to executive remuneration, and submits a report to the the Board.

Record of Remuneration (fiscal year 2018)

Officer classification Remuneration totals
(million yen)
Remuneration type totals (million yen)
and
receiving officers (in numbers)
Basic Remuneration Yearly Bonus Restricted Stock Compensation
Total# of officersTotal# of officersTotal# of officers
Inside Directors4772256153599 5
Inside Auditors71713----
Outside Directors58584----
Outside Auditors43434----
Total649397171535995

Note:

  1. Nine (9) Directors of the Board and five (5) Audit & Supervisory Board Members remain in their positions as of the end of this fiscal year. The amounts above include the remuneration to one (1) Director of the Board and two (2) Audit & Supervisory Board Members who resigned from office as of March 29, 2018.
  2. Standing Audit & Supervisory Board Member Mr. Akihiro Ito assumed office as Audit & Supervisory Board Member after he resigned from Director of the Board as of March 29, 2018. For the number of persons and the amount, he was included in Directors of the Board during his term of office as Director and in Audit & Supervisory Board Members during his term of office as Audit & Supervisory Board Member.
  3. The remuneration limit for Directors of the Board (basic remuneration plus bonus) is ¥950 million per year (Resolved at the 178th Ordinary General Meeting of Shareholders on March 30, 2017). In addition to this, the remuneration limit regarding the Restricted Stock Compensation System for Directors of the Board excluding Outside Directors is ¥250 million per year (Resolved at the 178th Ordinary General Meeting of Shareholders on March 30, 2017).
  4. The remuneration limit for Audit & Supervisory Board Members is ¥130 million per year (Resolved at the 178th Ordinary General Meeting of Shareholders on March 30, 2017).
  5. The above stock compensation, with regard to shares granted to Directors of the Board excluding Outside Directors as Restricted Stock Compensation in this fiscal year, is the amount calculated by multiplying the number of granted shares by the percentage of shares for which the restriction is lifted for cases where Eligible Directors have maintained certain positions at the Company during the Restriction Period and the amount to be paid per share for the relevant shares. However, for those Directors of the Board who resign from their positions due to expiration of their term of office, the percentage of the shares for which the restriction is lifted has been adjusted.

Remuneration totals by officer (fiscal year 2018)

Name Officer
classification
Remuneration
totals (million yen)
Remuneration type (million yen)
Basic Remuneration Yearly Bonus Restricted Stock Compensation
Yoshinori IsozakiPresident & CEO179756143
Keisuke NishimuraRepresentative Director of the Board, Executive Vice President119563726

Note:We disclose persons whose total amount of remuneration is 100 million yen or more.

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