Policies and Procedures for Determining the Remuneration for Corporate Officers
Method for Deciding Policies
At Prestige International, policies regarding the remuneration for corporate officers are determined by the Board of Directors. If corporate officers other than outside directors receive remuneration from an enterprise other than Prestige International Inc., the total amount of remuneration is determined by subtracting the external amount of remuneration from the amount of remuneration from our company.
Process for Deciding Remuneration
The remuneration for individual Prestige International directors for FY2023.3 is determined by the Board of Directors based on the recommendations in the report compiled by the Nomination and Remuneration Committee, which is an advisory body to the Prestige International’s Board of Directors.
Nomination and Remuneration Committee
In order to strengthen the fairness, transparency, and objectivity of procedures regarding nomination and remuneration, as well as further enhance corporate governance, Prestige International has established a voluntary Nomination and Remuneration Committee to act as an advisory body to the Board of Directors. The committee comprises 3 or more executive members, the majority of whom must be independent officers in order to increase independence and objectivity. In FY2023.3, the committee comprises five members (2 outside directors, 2 outside auditors, and the corporate CEO). Furthermore, as a general rule, the committee chair is elected from among the independent officers on the Board of Directors.
In response to questions from directors, the Nomination and Remuneration Committee deliberates mainly on the following items and reports back to the Board of Directors.
- Items related to the nomination or dismissal of directors, auditors, executive officers, and other important officers of Prestige International Group (hereinafter referred to collectively as “Corporate Officers”)
- Items related to the remuneration of Corporate officers
- Items related to corporate officer succession plans
- Other important items related to the Prestige Group
* 〇 indicates that remuneration applies
Fixed remuneration is determined within the scope of the total amount of remuneration based on the calculation of the consolidated operating income achievement rate versus the consolidated operating income budget at the start of the term based on the criteria table, as well as the evaluation of the governance status and management performance, such as business creation.
In order to link the remuneration of directors to shareholder profits, a performance-linked remuneration system has been adopted for internal directors (who take the lead in implementing management). To ensure that management performance is reflected in the evaluations, directors are evaluated on the basis of the calculation of the consolidated operating income achievement rate versus the consolidated operating income budget at the start of the term, the governance status, and management achievements with regard to business creation, and performance-linked remuneration is decided within a range equivalent to 0–4 months of fixed remuneration.
The consolidated operating income achievement rate for FY2022.3 (used for calculating remuneration) is shown in the table below.
In order to provide incentives for continuously improving corporate value, Prestige International has adopted a system whereby corporate officers can decide for themselves how the total amount of remuneration is determined and divided between cash remuneration and restricted stock with the aim of promoting further value-sharing with shareholders. Under this restricted stock system, corporate officers are paid monetary remuneration claims applied to contributions in kind pertaining to the issuance or disposal with the payment per share determined on the basis of the closing price for Prestige International’s common stock at the Tokyo Stock Exchange on the business day prior to the day of each Board of Directors’ resolution. The Board of Directors specifies the payment period and distribution for each eligible director.