As internal organizations of the Board of Directors, we have the Nomination Committee, Compensation Committee, and Audit Committee; each of which is composed exclusively of independent directors

Nomination Committee

The Nomination Committee fairly and rigorously selects candidates for directors, ensuring said candidates possess knowledge, expertise, and capabilities suited to HOYA’s business environment, based on the “Standard for Election of Candidates for Director,” and proposes the candidates to the General Meeting of Shareholders for voting. The Committee also fairly and rigorously selects candidates for executive officers and the representative executive officer, based on the “Standard for Election of Candidates for Executive Officer,” and proposes the candidates to the Board of Directors for voting. In cases that meet the criteria for dismissal, the Committee makes decisions to propose the dismissal of directors to the General Meeting of Shareholders and the dismissal of executive officers to the Board of Directors for voting.

The Committee has set out independence criteria for director candidates that are stricter than the rules of the Tokyo Stock Exchange to ensure the effective functioning of independent directors’ overseeing executive officers.

The outline of the Standard for Election of Candidates for Director is as follows:

[For both internal and independent director candidates]
  • Those with appropriate personalities and insights as director
  • Those with no health problems in performing their duties
[For internal director candidates]
  • Those with a high level of knowledge and ample experience in our business
  • Excellent business decision-making ability and business execution ability
[For independent director candidates]
  • Those with extensive experience as business managers
  • Or those who are in positions as professionals in law, accounting, finance or similar fields
  • Those who are able to participate in at least 75% of the HOYA Group’s Board meetings.
  • Those who have no significant interests in the HOYA Group and are able to maintain their independence

Independence criteria for independent director candidates

To ensure the independence of candidates for independent directors, candidates must not fall under any of the categories below.

<Those who are related to the HOYA Group>
  • Those who previously worked for the HOYA Group
  • Those who have a family member (spouse, child or relatives by blood or by affinity within the second degree) who have held the position of director, executive officer, corporate auditor or management employee of the HOYA Group in the past five years.
<Major shareholder>
  • Those who are major shareholders (10% or more) of the HOYA Group, or those who are directors, executive officers, corporate auditors or employees of companies that are major shareholders of the HOYA Group or those who have a family member who holds a top management position at such companies
  • Those who execute operations of a company of which a major shareholder is the HOYA Group
<Those who are related to major business partners>
  • Those who are operating directors, executive officers or employees of any important business partner, either for the HOYA Group or the corporate groups which the candidates come from, the sales to which business partner comprises 2% or more of the consolidated net sales of the HOYA Group or the company groups for either of the past three years, or those who have a family member who is a top management of such business partner
<Those who provide professional services (lawyers, certified public accountants, certified tax accountants, patent attorneys, judicial scriveners, etc.)>
  • Those who have received remuneration of 5 million yen or more per year or those who have a family member who have received remuneration of 5 million yen or more per year, from the HOYA Group in the past three years
  • When the organization that the candidate belongs to, such as a company and association, has received cash, etc. from the HOYA Group, the amount of which exceeds 100 million yen per year or 2% of consolidated net sales of the said organization, whichever is higher
<Donation, etc.>
  • When the association or organization which the candidate belongs to as director or operating officer has received donations or grants in the past three years, the amount of which exceeds 10 million yen per year or 30% of the said organization’s average annual total costs, whichever is higher, or when the association or organization which the candidate’s family member belongs to has received donations or grants equivalent to the aforementioned amount
<Others>
  • When directors are exchanged
  • When the candidate has any other important interest in the HOYA Group

The Nomination Committee held six meetings during fiscal 2020, in which the attendance ratio of one member was 83.3% and all other members was 100%, and held discussions mainly on the following matters:

  • Future composition of the Board of Directors
  • Qualifications and skills required of future independent director candidates
  • Succession plans of executive officers

∟Clarification of required qualifications and skills amid medium- to long-term future changes in the business environment and the business portfolio
∟Identification of candidates based on the clarification above

Compensation Committee

The objective of the Compensation Committee is to establish a remuneration system that incentivizes directors and executive officers and to contribute to improved financial performance for HOYA by undertaking appropriate evaluations of their performance. The Compensation Committee decides on a remuneration package for each director and executive officer in accordance with the following policies:
The Compensation Committee held five meetings during fiscal 2020, in which the attendance ratio of all members was 100%, and held discussions especially on performance-based remuneration for executive officers.

Policy concerning remuneration for Directors

The remuneration of Directors consists of a fixed salary and a medium- and long-term incentive (stock options). The fixed salaries consist of a basic compensation and compensation for being a member or a chairperson of the Nomination, Compensation, or Audit Committee. The compensation levels are set appropriately by taking into consideration such factors as the Company’s business environment and the levels set by other companies as determined by a survey conducted by an outside professional organization.

Furthermore, fixed numbers of stock options are granted to newly appointed and reappointed officers in order that they may hold a common viewpoint with shareholders regarding the share price and share interests with shareholders on a medium- to long-term basis. Stock options become exercisable after a waiting period of approximately one year, in increments of 25% of the granted number of stock options in each subsequent year. Stock options are exercisable for a period of ten years.

[Composition ratio of compensation for directors]

Fixed salary: Medium- and long-term incentive (stock options) = Approximately 1:0.3–0.6

Note: The ratio of the above medium- and long-term incentive shall fluctuate with changes in the Company’s share price and other factors.

Policy concerning remuneration for Executive Officers

The remuneration of Executive Officers consists of a fixed salary, an annual incentive (performance-based bonuses), and a medium- and long-term incentive (Performance Share Unit). For fixed salaries, basic compensation is set appropriately according to the office and responsibility of each Executive Officer (Representative Executive Officer, CFO, etc.) and by taking into consideration such factors as the Company’s business environment and the levels set by other companies as determined by a survey conducted by an outside professional organization. Other than basic compensation described above, benefits granted to expatriates (such as housing) are also set at appropriate levels in consideration of the Company’s business environment and the levels set by other companies as determined by a survey conducted by an outside professional organization.

The annual incentive is determined according to quantitative results and qualitative evaluations and varies within the range roughly from 0% to 200%. As indicators of quantitative results, net sales, profit attributable to owners of the Company, and basic earnings per share (EPS) stated in the Consolidated Financial Statements of the Company have been adopted.

As a medium- and long-term incentive, the Company introduced the Performance Share Unit.

Performance Share Unit

The Company has introduced the Performance Share Unit (PSU) in place of the existing stock option plan since fiscal 2019. The PSU is a system for granting shares at a number that is in proportion to the level of achievement of the predetermined performance conditions. The payment ratio that corresponds to the level of achievement of the performance targets will range from 0% to 200%, based on performance during three fiscal years. The Company has selected net sales, earnings per share (EPS) and return on equity (ROE) in the Consolidated Financial Statements as indicators of performance during three fiscal years.

The objective of the PSU is to further increase the motivation and drive of the Company’s Executive Officers to medium- to long-term business performance goals and enhance the corporate value of the HOYA Group, and also to serve as a mechanism for retention of highly talented human resources by setting a competitive compensation level.

Under this plan, after determining the basic deliverable number of shares according to the position and responsibilities of each eligible recipient (CEO, CFO, and others), the Company grants compensation in an amount equivalent to the market price of the Company’s shares according to the degree of achievement of the medium- to long-term performance targets shown in the table below.

The Company also plans to issue new PSU covering the next three fiscal years in the following fiscal year onward.

Total amount of remuneration, etc. of Directors and Executive Officers for fiscal 2020
Classification Number of payees Total amount of
remuneration, etc.
Total amount of
remuneration by type
Fixed salary Performance-based bonuses Stock options PSU
Directors Independent 5 persons 94 million yen 50 million yen 43 million yen
Internal 1 persons 11 million yen 8 million yen 3 million yen
Total 6 persons 105 million yen 58 million yen 46 million yen
Executive Officers 4 persons 573 million yen 243 million yen 220 million yen 30 million yen 81 million yen
Total 10 persons 678 million yen 301 million yen 220 million yen 76 million yen 81 million yen

Notes:

  1. At the end of the fiscal year under review, there were six Directors and four Executive Officers. One of the four Executive Officers served concurrently as Internal Director.
  2. Fixed salary for Executive Officers includes overseas Executive Officer’s benefit as expatriate of 72 million yen.
  3. For the stock options, fair values of stock acquisition rights were calculated and the table above shows amounts to be recorded as expenses for the fiscal year under review. For Executive Officers, no new stock options were granted in the fiscal year under review due to the introduction of PSU in place of the stock option plan from fiscal 2019. The table above shows stock options granted in past fiscal years in amounts to be recorded as expenses for the fiscal year under review.
  4. For PSU, the table above shows amounts to be recorded as expenses for the fiscal year under review based on the share price at the time of the granting of shares.
Amount of consolidated remuneration for each Executive Officer
Name Executive classification Total amount Fixed salary Performance-based bonuses Stock options PSU
Hiroshi Suzuki,
Representative Executive Officer
President & CEO
Director 11
million yen
8
million yen
3
million yen
Representative Executive Officer 217
million yen
85
million yen
76
million yen
12
million yen
44
million yen
Ryo Hirooka
Representative Executive
Officer & CFO
Representative Executive Officer 127
million yen
55
million yen
54
million yen
5
million yen
13
million yen
Eiichiro Ikeda
Executive Officer, Chief Technology Officer (CTO)
Executive Officer 112
million yen
50
million yen
44
million yen
6
million yen
12
million yen
Augustine Yee
Executive Officer, Chief Legal Officer (CLO) and Head of Corporate Development and Affairs
Executive Officer 118
million yen
53
million yen
47
million yen
6
million yen
12
million yen

Audit Committee

The Audit Committee formulates the audit policies and audit plans for each fiscal year and verifies financial statements, etc., based on the quarterly reports, year-end reports, and timely reports received from the accounting auditor according to such policies and plans. It also interviews the Audit Department and the Internal Control Department to obtain the results of operational audits, and verifies the soundness, legality, efficiency, etc., of management. All important matters are reported to the Board of Directors, and countermeasures are taken as necessary.

Audit Committee meetings were convened nine times in fiscal 2020, in which the attendance ratio of four directors was 100% and one director was 88.9%.

The Committee discussed mainly the following agenda items:

  • Agreement on the accounting auditor of the HOYA Group and its remuneration
  • Resolution on the audit report of the Audit Committee
  • Review reporting from the accounting auditor (five times in total per year)
  • Quarterly reporting from the Audit Department and the Help Line

Deliberations during the fiscal year under review also focused on reports from the accounting auditor, the Audit Department, and the Internal Control Department, while providing advice and suggestions to the executive team with regard to any issues that came to light.

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