Director Nomination and Remuneration
Nomination and Remuneration Advisory Committee - Involvement of Independent External Directors
We have established the Nomination and Remuneration Advisory Committee as a voluntary committee to ensure transparency and objectivity in matters relating to the nomination policy and the appointment and dismissal of Directors as well as in decisions on the remuneration system and the amount of remuneration received by Directors (excluding those who serve as member of the Audit and Supervisory Committee). The majority of the members of the Nomination and Remuneration Advisory Committee are Independent External Directors who are appropriately involved in the decision making process of the Board of Directors, a process through which their opinions are reflected.
Policy and Procedures for Nominating Directors
Individuals with proven ability and experience in corporate management, as well as excellent character and insight, are appointed as candidates for Directorship. In addition to these qualities, each candidate for External Director must also meet our “Criteria for Independence of External Directors” and be capable of auditing and supervising company management and operations from a variety of perspectives. In accordance with the above policy, the Board of Directors decides on the candidates after deliberating with and receiving the recommendations from the Nomination and Remuneration Advisory Committee. The approval of the Audit and Supervisory Committee is obtained for the nomination of Director candidates who are members of the Audit and Supervisory Committee. The composition of the Board of Directors reflects our consideration of the size and nature of the business to ensure that the Board of Directors is optimally suited to the company and that the Board of Directors reflects a balance and diversity of knowledge, experience, and skills. We appointed our first female Director in FY2022 and our first foreign Director in FY2023. The Nomination and Remuneration Advisory Committee regularly discusses the succession plan for the CEO and the future management structure, and in February 2024 a resolution was passed to change the Representative Director.
* Reasons for appointing Individual Directors and EIZO’s “Criteria for Independence of External Directors” are disclosed in the Reference Documents for the Ordinary General Meeting of Shareholders, where they were presented for approval.
Policy for Director Remuneration
The Board of Directors of the Company shall adopt a resolution on the policy for determining the content of remuneration, etc., for individual directors. Before making the resolution, the Company consults the Nomination and Remuneration Advisory Committee on the details of the resolution and receives its report. In addition, the Company has been reviewing its executive remuneration system, and following a resolution passed at the 55th Ordinary General Meeting of Shareholders (held in June 2022), share-based remuneration was introduced for executive directors. We will provide incentives to sustainably increase corporate value and promote further value sharing with shareholders.
Basic Policy
Our basic policy is to set the remuneration of Directors at an appropriate level based on the responsibilities and duties of each Director, taking into consideration the following items. The remuneration system shall consist of fixed remuneration, performance-linked remuneration (both as monetary remuneration), and stock-based remuneration as non-monetary remuneration. Performance-linked remuneration and stock-based remuneration shall be paid to Executive Directors.
- 1) Motivation for medium- and long-term growth of our company and sustainable enhancement of corporate value
- 2) Role to fulfill corporate social responsibility
- 3) Business environment, performance, and execution of duties
- 4) Securing human resources with excellent management skills
- 5) Our company’s business content and scale
The method of determining remuneration, etc., and the level of remuneration for each position shall be set forth in internal rules to be decided by the Board of Directors after deliberation and report by the Nomination and Remuneration Advisory Committee, in which Independent External Directors constitute the majority. The specific amount to be paid and the number of shares to be granted for each fiscal year shall also be determined to the extent determined by the Board of Directors after deliberation and report by the Nomination and Remuneration Advisory Committee in accordance with the relevant internal rules. In addition, the remuneration system and remuneration levels, etc. shall be reviewed in a timely and appropriate manner in response to changes in the business environment and other factors..
Policy for determining the amount of remuneration, etc. by individual for fixed remuneration (monetary remuneration) (including policy for determining the timing or conditions of granting remuneration)
The basic remuneration of our Directors shall be a monthly fixed remuneration, which shall be determined in accordance with their position, responsibilities, and years in office, taking into consideration the standards of other companies, our performance, and the level of employee salaries, as well as other factors in a comprehensive manner.
Policy for determining the details and calculation method of the amount or number of performance-linked and non-monetary remuneration, etc. (including policy for determining the timing or conditions of granting remuneration)
Our performance-linked remuneration and non-monetary stock-based remuneration shall each consist of the following.
1) Performance-linked remuneration shall be based on the amount of consolidated operating income for the fiscal year for which it is paid, in order to motivate Directors to improve their performance and to appropriately reflect the results of each fiscal year. The amount of performance-linked remuneration shall be calculated by multiplying 2% of consolidated operating income by the number of points stipulated in the internal rules for each position of Executive Directors eligible for payment. However, the maximum total amount shall be 150 million yen. Performance-linked remuneration shall not be paid if the ratio of consolidated operating income to net sales is less than 2% or if the amount of consolidated net income is less than 1,000 million yen. The calculated amount of performance-linked remuneration shall be paid as Directors' bonuses each year after the Ordinary General Meeting of Shareholders following the end of the fiscal year.
2) Stock-based remuneration shall be granted to executive Directors who are determined by the Board of Directors as restricted stock with a certain Transfer Restriction Period in order to share value with shareholders and to provide an incentive to continuously improve corporate value. The total amount and total number of shares of stock-based remuneration per fiscal year shall be determined by the Board of Directors, with the maximum amount of 50 million yen and 40,000 shares (after the share split effective 1 October 2024). The specific amount of stock-based remuneration shall be calculated based on the points stipulated in the internal rules for each position of executive Directors who are eligible for payment. The number of shares to be granted shall be calculated based on the trading price on the stock exchange so that the amount to be paid per share will not be particularly favorable to the executive Directors. The timing of the granting of stock-based remuneration shall be determined by a resolution of the Board of Directors after the Ordinary General Meeting of Shareholders following the end of the fiscal year. Directors who have been granted shares of stock shall not transfer, grant a security interest in, or otherwise dispose of such shares until they retire from their positions as officers or employees of the Company or its group companies, as previously determined by the Board of Directors.
Policy on determining the ratio of the amounts of fixed remuneration, performance-linked remuneration, and stock-based remuneration to the amount of remuneration, etc. for individual Directors
Performance-linked remuneration shall be based on the amount of consolidated operating income for the fiscal year for which the remuneration is paid, and the higher the position, the higher the weight of the performance-linked remuneration. The Board of Directors will determine the appropriate allocation of stock-based remuneration as long-term incentive remuneration. The specific calculation method of the amount of performance-linked remuneration and the amount of stock-based remuneration is described in the previous section. Depending on performance, the ratio of performance-linked remuneration to the total amount of fixed remuneration, performance-linked remuneration and stock-based remuneration (total amount of remuneration) generally ranges from 0% to 50%, and the ratio of stock-based remuneration to the total amount of remuneration generally ranges from 0% to 25%.
Other important matters concerning the determination of the details of remuneration, etc. for individual Directors
The details, calculation method and amount of remuneration, etc. for each individual Director shall all be in accordance with internal rules established by the Board of Directors after deliberation and report by the Nomination and Remuneration Advisory Committee. The determination of the specific amount of fixed remuneration for each individual shall be delegated to and finally determined by the CEO in accordance with the relevant internal rules. The scope of delegation to the CEO shall be determined by the Board of Directors, subject to the report of the Nomination and Remuneration Advisory Committee.
Procedures for Director Remuneration
The method for determining remuneration and related matters as well as remuneration criteria by rank are set forth in the internal regulations, which are determined by the Board of Directors after deliberating with and recommendations from the Nomination and Remuneration Advisory Committee. The specific amount to be paid for each fiscal year is also determined in accordance with the relevant internal regulations and within the scope determined by the Board of Directors after deliberating with and receiving the recommendations from the Nomination and Remuneration Advisory Committee. The Audit and Supervisory Committee holds discussions on the remuneration system, method of calculation, and amount of remuneration for Directors who are members of the Audit and Supervisory Committee.
Introduction of ESG Performance Criteria
In FY2025, we introduced ESG evaluation criteria into our executive compensation program. These criteria include employee engagement (S), environmental impact reduction targets such as carbon neutrality (E), and external evaluation scores (G), all derived from our materiality KPIs. By incorporating these measures into long-term incentive compensation, we aim to strengthen the alignment between our management strategy and executive remuneration.
Director Remuneration – e.g., CEO Remuneration Structure
* The evaluation criteria will be established appropriately in accordance with the review of our material issues (materiality).
Composition of Director Remuneration (FY2024)
