Committees

As internal organizations of the Board of Directors, we have the Nomination Committee, Compensation Committee, Audit Committee; and Healthcare Compliance Committee, each of which is composed exclusively of outside 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 officers, 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 outside directors’ overseeing executive officers. The outline of the Standard for Election of Candidates for Director is as follows:

■Independence criteria for outside director candidates

To ensure the independence of candidates for outside 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 has 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 nine meetings during fiscal 2022, in which the attendance ratio of all members was 100%. At these meetings, the Committee deliberated on the qualifications and skills expected of candidates for directors; diversity; and executive succession plans.

Compensation Committee
The objective of the Compensation Committee is to establish a remuneration system that incentivizes directors and executive officers according to their roles 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 seven meetings during fiscal 2022, in which the attendance ratio of all members was 100%. During these meetings, the Committee held in-depth deliberations, particularly on how to link ESG indicators to director and executive remuneration.

■Policy concerning remuneration for Directors
The remuneration of directors consists of a fixed salary and a medium- to long-term incentive. 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, the levels set by other companies as determined by a survey conducted by an outside professional organization, and the positions and responsibilities of each director. As a medium- to long-term incentive, the Company has introduced the Restricted Stock Unit (RSU), which delivers shares prescribed in accordance with the period employed as an outside director of the Company. The RSU will be granted annually in order for directors to share a common viewpoint with shareholders regarding the share price and to share interests with shareholders on a medium- to long-term basis. Every year, the Company announces a basic deliverable number of shares equivalent to fixed remuneration to outside directors for a three-year period from that year. After the end of the period in question, the Company determines, for each outside director, a basic compensation amount which is the market value of the Company's shares for the basic deliverable number of shares. The Company will pay to the outside directors 50% of the basic compensation amount as claims for monetary remuneration. Independent directors shall invest the monetary claims in kind and shall be granted a number of Company shares, which is equal to the amount of monetary claims in question divided by paid-in amount per Company share. From the viewpoint of ensuring payment of tax, the Company shall pay the remainder of the basic compensation amount in cash. However, the heirs of outside directors who died during their tenure and outside directors who retire due to injury or illness shall receive the entire basic compensation amount in cash. Also, the Company plans to issue RSU for periods of three years starting from the following fiscal year, and continuing thereafter.

In fiscal 2022, the Compensation Committee deliberated on appropriate composition and levels of remuneration, taking into consideration basic policies, the Company’s business environment, and levels, positions and responsibilities at other companies as discovered in surveys by outside specialist organizations. The Compensation Committee determined the remuneration for each director, based on the judgement that remuneration levels were composed in accordance with Company policy and appropriate for directors’ positions and responsibilities. As such, the Compensation Committee further judged that the details of remuneration of individual directors in the fiscal year under review were in accordance with Company policy.

For the purpose of holding a common viewpoint with shareholders regarding the share price and sharing interests with shareholders on a medium- to long-term basis, fixed numbers of stock options were granted to newly appointed and reappointed directors until fiscal 2021. After a waiting period of approximately one year, the exercisable portion of the stock options in each of the years following thereafter is 25% of the total number granted. The period during which the stock options may be exercised is 10 years.

■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 (PSU)). 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 in connection to their overseas postings (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 performance-based bonus 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 are selected.

■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. Of note, as indicators of performance during three fiscal years, HOYA has selected net sales, earnings per share (EPS) and return on equity (ROE) in the Consolidated Financial Statements, and in fiscal 2022, newly introduced an ESG indicator. The objective of the PSU is to boost the motivation and morale of HOYA’s executive officers with respect to medium- to long-term business performance and higher corporate value, and secure 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, 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.

*1 The targets above are set in consideration of, among others, the Company’s business environment and market consensus and do not constitute the Company’s financial forecasts.

*2 Evaluations by three companies, namely, CDP, Sustainalytics and DJSI, will be used.
The above are target figures for the three fiscal years from fiscal 2023 to fiscal 2025.

Total amount of remuneration, etc. of Directors and Executive Officers for the fiscal year under review

1. At the end of the fiscal year under review, there were eight directors (six outside directors and two internal directors) and four executive officers. These are different from the figures presented in the table above because one internal director and one outside director who retired at the conclusion of the 84th Ordinary General Meeting of Shareholders are included.

2. Fixed salary for executive officers includes overseas executive officers’ benefit as expatriate of 77 million yen.

3. For stock options, the fair value of stock acquisition rights was calculated and amounts to be recorded as expenses for the fiscal year under review are shown in the table above. For executive officers, no stock options were newly granted in the fiscal year under review due to the introduction of PSU in place of stock options from fiscal 2019. Also, for independent outside directors, from fiscal 2022 RSU is introduced in place of stock options. Although no stock options were granted in fiscal 2022, the table above shows stock options granted in past fiscal years in amounts to be recorded as expenses for the fiscal year under review. Also, share remuneration expenses for internal directors are reversed.

4. For PSU, the table above shows amounts to be recorded as expenses for the fiscal year under review. Share remuneration expenses for internal directors are reversed.

Amount of consolidated remuneration for each Director

Chief Executive Officer (CEO)

Executive Officers (whose consolidated remuneration, etc. totaled 100 million yen or more during the consolidated fiscal year)

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 2022. One member’s attendance ratio was 88.9%; for all other members, attendance ratio was 100%.

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 and the Audit Department, while providing advice and suggestions to the executive team with regard to any issues that came to light.

Healthcare Compliance Committee

The HOYA Group established the Healthcare Compliance Committee with the objective of obtaining thorough compliance with laws, ordinances, standards and norms, both in Japan and overseas, required of healthcare products. Composed of three outside directors who are knowledgeable about the healthcare field, the Healthcare Compliance Committee conducts monitoring of the status of the relevant business divisions’ responses to regulations and other matters.

The Healthcare Compliance Committee met eight times in fiscal 2022. Obtaining advice as necessary from specialists with expert knowledge of the laws and ordinances in each country with respect to healthcare products, each member of the Healthcare Compliance Committee offers proposals and advice to each business division in charge of regulatory affairs.