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Remuneration for Directors and Executive Officers
NEC's Compensation Committee decides matters related to policies concerning the amount of remuneration, etc. for Directors and Executive Officers or the method of calculation thereof. In conjunction with the corporate governance reforms triggered by the transition to a Company with a Nominating Committee, etc. as of June 22, 2023, NEC has reviewed its remuneration system for Directors and Executive Officers to make it more conducive to the sustainable growth of corporate value and the realization of shareholder value management. In order to improve objectivity, fairness, and transparency of remuneration, etc. for Directors and Executive Officers, the Compensation Committee deliberates by utilizing, as necessary, executive compensation survey data, etc., from an outside third-party professional compensation consulting firm.
(i) NEC's basic policy on remuneration, etc. for Directors and Executive Officers
- The remuneration system is highly objective and transparent, with content which leads to sustainable growth with the aim of maximizing corporate value, and which allows shareholders to confirm that management is linked to shareholder value.
- The remuneration system is linked to the Mid-term Management Plan target indicators and provide incentives for Executive Officers to achieve the management targets indicated in the Mid-term Management Plan.
- As a technology company with global operations, the remuneration system is competitive in the human resources market in terms of both remuneration structure and level.
(ii) Concept of remuneration
| Type | Concept | |
|---|---|---|
| Fixed | Basic remuneration | Fixed remuneration with the amount paid determined based on market competitiveness in accordance with the role, authority, and responsibility of each job title. [Monetary remuneration.] |
| Variable (Performance-linked) |
Short-term incentive (Bonuses) | Incentive remuneration where the payment amount is determined by the degree of achievement of performance targets for each fiscal year linked to the indicators set forth in the Mid-term Management Plan. [Monetary remuneration] |
| Mid- to long-term incentive (Stock compensation) | Incentive remuneration linked to the maximization of corporate value, in which the number of shares to be delivered is determined based on an evaluation relative to an index that is aware of shareholder value (stock price appreciation). [Stock compensation] | |
(iii) Remuneration system and level
| Job Title | Remuneration system and level |
|---|---|
| Directors | Remuneration for Directors shall, in principle, be basic remuneration, which is fixed remuneration. However, from the viewpoint of increasing shareholder value, inside Directors will be paid mid- to long-term incentive (Stock Compensation), which is variable (performance-linked) remuneration, up to a maximum of approximately 30% of their total remuneration. For Directors who concurrently serve as Executive Officers, the remuneration system for Executive Officers shall apply. The level of remuneration shall be determined in accordance with the responsibilities of each Director, taking into consideration the level of remuneration at competing companies, etc. |
| Executive Officers | Remuneration for Executive Officers consists of basic remuneration, which is fixed remuneration, short-term incentive (Bonuses) and mid- to long-term incentive (Stock Compensation), which are variable (performance-linked) remuneration. The ratio of each type of remuneration to the amounts of remuneration for individual Executive Officers is shown in the following. The level of remuneration and the composition ratio of each type of remuneration, etc. shall be determined in accordance with the responsibilities of each Executive Officer, taking into consideration the level and composition ratio of remuneration at competing companies, etc. |