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:

[For both internal and outside 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 outside 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 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 six meetings during fiscal 2023, in which the attendance ratio of all members was 100%. At these meetings, the Committee deliberated in particular on 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 eight meetings during fiscal 2023, in which the attendance ratio of all members was 100%. During these meetings, the Committee held in-depth deliberations, particularly on the composition and level of compensation for directors and executives and linking incentives to targets.

■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.

[Composition ratio of compensation for directors]
Fixed salary : Medium- to long-term incentive (RSU) = Approximately 1:1

  1. A rough guide assuming that the share price in three years’ time is about the same as the share price when the RSU was granted.

  2. Clawback and malus clauses:
    In the following cases, clawback and malus clauses shall be set forth, whereby the unpaid portion of the compensation under the RSU shall be reduced or disallowed, and a claim for return of all or part of such paid portion shall be made.
    (1) The case in which the recipient resigns for personal reasons, for whatever reason
    (2) The case in which the recipient is dismissed as a director of the Company
    (3) The case in which Board of Directors resolves to revise the financial statements as a result of material accounting error or fraud
    (4) The case in which an unlawful act, such as significant negligence of duties or violation of laws and regulations, a breach of the
       
    internal rules of HOYA Group, or a significant breach of contract, during the director’s term of office, is revealed.

In fiscal 2023, 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.

■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 benefits granted to expatriates in connection to their overseas postings (such as housing) are 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. Since 2003, the Company has abolished retirement benefits for executive officers, but in exceptional cases, severance pay may be paid as a condition at the time of retirement, as determined by the Compensation Committee. The amount of severance pay and other details will be determined on a holistic basis by the Compensation Committee on a case-by-case basis, taking into consideration the position, reason for leaving the position, and other factors.

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.

[Composition ratio of executive officers’ compensation]
CEO
Fixed salary : Annual incentive (performance-based bonus) : Medium- and long-term incentive (PSU) = Approximately 1:1:1.25

Other executive officers’
Fixed salary : Annual incentive (performance-based bonus) : Medium- and long-term incentive (PSU) = Approximately 1:1:1

  1. A rough guide assuming all targets are met 100% and that the share price in three years’ time is about the same as the share price when the PSU was granted.

  2. Clawback and malus clauses:
    In the following cases, clawback and malus clauses shall be set forth, whereby the unpaid portion of the compensation under the PSU shall be reduced or disallowed, and a claim for return of all or part of such paid portion shall be made.
    (1) The case in which the recipient resigns for personal reasons, for whatever reason
    (2) The case in which the recipient is dismissed as an executive officer of the Company
    (3) The case in which Board of Directors resolves to revise the financial statements as a result of material accounting error or fraud
    (4) The case in which an unlawful act, such as significant negligence of duties or violation of laws and regulations, a breach of the
       
    internal rules of HOYA Group, or a significant breach of contract, during the Executive Officer’s term of office, is revealed.

■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. Furthermore, in fiscal 2022, an ESG indicator was newly introduced as a non-financial 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.

Basic deliverable number
of shares

Position/
responsibilities

Basic deliverable number of shares

CEO

7,300

CFO

3,400

CSO

2,500

Medium- to long-term performance targets

Indicator

Target
(consolidated)

Weight

Reason for the selection of the indicator

Financial Indicators *1

Net sales

830 billion yen

25%

Selected as an indicator to measure growth potential of the HOYA Group in the domestic and overseas markets

Earnings per share (EPS)

570 yen

25%

Selected as an indicator to measure growth of the Company from the same perspective as shareholders

ROE

20.0%

25%

Selected as an indicator to measure whether the Company has generated return on shareholders’ investment effectively

ESG indicator

IT governance (50%), promotion of diversity in management (30%), and expansion of learning opportunities for employees (20%) were selected as individual indicators*2

25%

Selected as indicators to measure the initiatives relating to sustainability from an ESG standpoint

*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 The above are target figures for the three fiscal years from fiscal 2024 to fiscal 2026.

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

Classification

Number of payees

Total amount of
remuneration, etc.

Total amount of remuneration by type

Fixed salary

Performance-based bonuses

Stock options

PSU

RSU

Directors

Independent

7 persons

115 million yen

77 million yen

(3) million yen

41 million yen

Internal

2 persons

10 million yen

10 million yen

Total

9 persons

125 million yen

87 million yen

(3) million yen

41 million yen

Executive Officers

4 persons

613 million yen

242 million yen

212 million yen

159 million yen

Total

13 persons

738 million yen

328 million yen

212 million yen

(3) million yen

159 million yen

41 million yen

  1. At the end of the fiscal year under review, there were seven directors (five independent directors and two internal directors) and three executive officers (two are concurrently directors). These are different from the figures presented in the table above because one internal director and two independent directors who retired at the conclusion of the 85th Ordinary General Meeting of Shareholders are included.

  2. Fixed salary for executive officers includes overseas executive officers’ benefit as expatriate of 47 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 directors, from fiscal 2022 RSU is introduced in place of stock options. Although no stock options were granted in fiscal 2023, 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)

Name

Executive
classification

Total
amount

Fixed
salary

Performance-
based bonuses

Stock
options

PSU

Eiichiro Ikeda
Representative Executive Officer
President & CEO

Director

5 million yen

5 million yen

Representative
Executive Officer

322 million yen

120 million yen

99 million yen

102 million yen

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

Name

Executive
classification

Total
amount

Fixed
salary

Performance-
based bonuses

Stock
options

PSU

Ryo Hirooka
Representative Executive
Officer & CFO

Director

5 million yen

5 million yen

Representative
Executive Officer

199 million yen

66 million yen

64 million yen

69 million yen

Tomoko Nakagawa
Executive Officer, Chief
Sustainability (ESG) Officer (CSO)

Executive
Officer

124 million yen

40 million yen

49 million yen

35 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 2023. The attendance ratio for all members 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. In addition, independent directors, who are members of the Audit Committee, were presented with opportunities to visit production plants and inspect the front lines to exchange opinions, make recommendations, and offer advice.

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 nine times in fiscal 2023. The Committee received reports from each business division in charge of regulatory affairs and offered proposals and advice while obtaining advice as necessary from specialists with expert knowledge of the laws and ordinances in each country with respect to healthcare products.