Activities of the Nominating and Compensation Committee
Shimadzu established the Nominating and Compensation Committee as an optional advisory body to the Board of Directors for the purpose of strengthening the independence, objectivity, and accountability of the Board of Directors. This committee resolves and deliberates on matters related to nominating and compensation in accordance with the committee rules. During the fiscal year under review, the committee’s specific deliberations included the items in the table below.
Main Activities of the Nominating and Compensation Committee during the Last Fiscal Year
| Nominating |
|
|---|---|
| Compensation |
|
Evaluating the Effectiveness of the Nominating and Compensation Committee
In addition to evaluating the effectiveness of the Board of Directors, a survey about the effectiveness of the Nominating and Compensation Committee has been conducted annually since 2019, the year when the committee was established.
Survey questions primarily involve (1) CEO successor training plan and (2) management incentives. Evaluation results have been generally positive.
Composition of Nominating and Compensation Committee
The Nominating and Compensation Committee is composed of representative directors and outside directors, with a majority of the members consisting of outside directors. The independence of nominating and compensation is increased by generally appointing an independent outside director as the committee chair.
Members of the Nominating and Compensation Committee
| Chairperson | ： | Nobuo Hanai (Outside Director) |
| Members | ： | Yoshiyuki Nakanishi (Outside Director) Nami Hamada (Outside Director) Mie Kitano (Outside Director) Teruhisa Ueda (Representative Director, Chairman of the Board) Yasunori Yamamoto (Representative Director, President) |
Policy on Method for Deciding Director and Audit & Supervisory Board Member Compensation
Shimadzu’s executive compensation regulations stipulate the procedures for determining the compensation of directors, Audit & Supervisory Board members, and executive officers with specific duties, as well as the compensation structure. In addition, a “Policy on Method for Deciding Director and Audit & Supervisory Board Member Compensation” is also established upon resolution by the Board of Directors based on the deliberations and reports of the Nominating and Compensation Committee.
Compensation for Directors and executive officers with specific duties is decided by Nominating and Compensation Committee members appointed by the Board of Directors within the range decided at the Annual Shareholders’ Meeting. Then the results are reported to the Board of Directors. Compensation for Audit & Supervisory Board members is decided through discussion with the Audit & Supervisory Board members.
Director and Audit & Supervisory Board Member Compensation System
Compensation for directors (excluding outside directors) and executive officers with specific duties (collectively referred to as “Director or Officer” below) comprises monetary compensation that includes a base amount and a short-term performance-linked compensation amount that varies depending on performance, plus non-monetary stock compensation, while also taking into consideration the management duties of the Director or Officer with respect to expanding our business results during each fiscal year and increasing medium-and long-term corporate value.
Compensation for outside directors only includes a base compensation amount decided based on their expected roles and duties as an outside director. Compensation for Audit & Supervisory Board members only includes a base compensation amount decided based on their duties.
| Compensation Classification |
Internal Director |
Outside Director |
Audit & Supervisory Board Member |
Remarks |
|---|---|---|---|---|
| Base Compensation |
○ | ○ | ○ | From the perspective of deciding compensation based on objective information, while also providing a level that is sufficient to enable recruiting talented human resources, compensation is decided based on the candidate’s current position and intended role, using the compensation offered by similar companies (group of benchmark companies of a similar size and in a similar type of business), to be determined by a survey performed by an outside specialist company, as an important reference level. |
| Compensation Linked to Short-Term Performance |
○ | ー | ー | Compensation is decided based on overall consideration of the year-on-year growth rate of consolidated net sales and operating income, an evaluation of the performance of the specific department the executive officer with specific duties is in charge of, and a personal evaluation. |
| Stock Compensation |
○ | ー | ー | This compensation is provided to share value with the shareholders, increase the incentive for expanding performance and increasing corporate value. It comprises a short-term performance-linked portion and a medium/long-term performance-linked portion. Short-Term Performance-Linked Portion This is a portion of short-term performance-linked compensation included as stocks. It is provided to directors or others in the form of stocks that can only be transferred at a specific time each year. The transfer restriction on those stocks is canceled when the director or other recipient retires. The ratio of stocks provided is decided by the Nominating and Compensation Committee on a case-by-case basis. Medium/Long-Term Performance-Linked Portion For directors, for example, the number of shares provided for each position is decided based on the degree to which performance targets specified were achieved in the final year of the medium-term management plan. Compensation can vary within the 50 to 200% range, given the target achievement degree is determined based on target values for consolidated net sales and operating income as performance indicators. If a director or other employee commits a serious violation of their job duties or company regulations, they will forfeit their right to benefit from scheduled issues of stock and a system is established to charge a monetary amount equivalent to the stock value provided. |
Director and Audit & Supervisory Board Member Compensation Status (FY2024)
| Classification | Number of Directors and Audit & Supervisory Board Members |
Monetary Compensation (million yen) | Stock Compensation (million yen) | Total | ||
|---|---|---|---|---|---|---|
| Fixed Compensation | Performance-linked Compensation (million yen) | |||||
| Base Compensation | Short-term Performance-linked Part |
Short-term Performance-linked Part |
Medium- and Long-term Performance-linked Part2 | |||
| Director (Internal) | 4 | 200 | 141 | 16 | 15 | 374 |
| Audit & Supervisory Board Member (Internal) |
2 | 55 | - | - | - | 55 |
| Outside Director | 5 | 59 | - | - | - | 59 |
| Outside Audit & Supervisory Board Member |
2 | 24 | - | - | - | 24 |
| Total | 13 | 339 | 141 | 16 | 15 | 512 |
- 1．The above includes compensation paid to one outside director who retired on June 26, 2024.
2．The stock compensation (medium/long-term performance-linked portion) is a performance-based compensation and non-monetary compensation system that provides a quantity of stock every three years based on the extent to which the performance targets for the final year of the medium-term management plan were achieved. The compensation value indicated above is based on the recorded expense calculated by multiplying the number of points attributable to directors (excluding outside directors) for the given fiscal year by the market stock price, assuming a trust purchased Shimadzu stock. However, actual stock compensation is determined after the medium-term management plan is finished.
3．Employee salaries for officers concurrently serving as employees are not listed as there is nothing applicable.