In line with the Basic Policy on Corporate Governance, MC has established a remuneration package for Directors and Audit & Supervisory Board Members to ensure a sustainable increase in corporate value, and to ensure that their respective roles are fulfilled properly according to business execution and management supervision functions. The basic approaches behind the package are as follows.
The Compensation Committee deliberates and the Board of Directors decides the policy for setting Directors’ remuneration and the remuneration amount (actual payment amount).
The total remuneration amount (actual payment amount) and individual payment amounts for Directors, excluding individual performance-linked remuneration, are determined by a resolution of the Board of Directors within the upper limits for each type of remuneration decided by resolution of the Ordinary General Meeting of Shareholders held on June 21, 2024. Base salary and annual deferral for retirement remuneration, forms of fixed remuneration, are paid in amounts determined by the Board of Directors. As for variable remuneration, payments of performance-linked bonuses (short term), performance-linked bonuses (medium to long term) and stock-based remuneration linked to medium- to long-term share performance are determined, while reflecting key performance indicators, based on a formula set by the Board of Directors following deliberation by theCompensation Committee.
MC has adopted a clawback policy*In the event that an executive officer causes any loss or damage to the company from willful misconduct or negligence, a serious violation of a delegation agreement, or a serious accounting error/ex-post revision of a financial report due to misconduct resolved by the Board of Directors, non-payment or reduction of the amount/reclaiming of the paid amount is possible by resolution of the Board of Directors. The Compensation Committee continuously deliberates and monitors the appropriateness of remuneration compositions, including remuneration items which are subject to the clawback policy.*, applicable to the individual performance-linked remuneration, performance-linked bonuses (short term) and performance-linked bonuses (medium to long term) of Executive Directors, revising the regulations for executive officers by resolution at the Board of Directors’ meeting held on February 18, 2022.
The payment amounts of individual performance-linked remuneration paid to Directors based on their individual performance assessment, including qualitative assessment, are determined and paid on an individual basis, reflecting the President’s yearly assesment of performance in both financial and non-financial terms of each Director for the relevant fiscal year (it is appropriate that yearly assessment is conducted by the President who is the Chief Executive Offier of the Company and therefore the Board of Directors delegates authority to the President for deciding the individual payment amounts). Performance evaluations of Executive Directors comprehensively take into account their contributions to the organizations and businesses they oversee; their contributions to the management of the entire Company, Corporate Staff Section, Business Groups and offices; and the initiatives related to value creation that leads to sustainability.
The annual assessment on the President’s performance is decided by the Compensation Committee (in addition to four members of the Compensation Committee, all Independent Directors (including Independent Audit and Supervisory Committee Members) participate in deliberations and decisions) .
Results of the performance assessment are reported to the Board of Directors and the Compensation Committee to ensure objectivity, fairness, and transparency.
Based on the policy for determining remuneration packages (including methods for calculating performance-linked bonuses) that was approved at the extraordinary meeting of the Board of Directors held on June 21, 2024, each year, the Compensation Committee deliberates and the Board of Directors makes a resolution determining that the total amount of director remuneration packages and methods for deciding payments to individual directors are consistent with said policy for determining remuneration packages.
Each year the Compensation Committee deliberates and monitors the fairness of the remuneration levels and compositions (including remuneration items which are subject to the clawback policy) as well as the operational status of remuneration systems. This is done with the reference to data on remuneration levels and composition ratios provided by an external consulting firm (Willis Towers Watson).
To ensure the independence of the Chairman of the Board and Independent Directors (excluding Direcotrs who are Audit & Supervisory Committee Members), who undertake functions of management oversight, and Audit & Supervisory Committee Members, who undertake audits and functions of management oversight, MC only pays them fixed monthly remuneration.
Total and individual amounts of remuneration paid to Audit & Supervisory Committee Members are determined following deliberations by the Audit & Supervisory Committee within the scope of remuneration for Audit & Supervisory Committee Members approved at the Ordinary General Meeting of Shareholders, held on June 21, 2024.
Note:
1) to 5) in the table indicate the number of limits on remuneration that correspond to each remuneration item.
Remuneration limits for Directors (excluding Direcotrs who are Audit & Supervisory Committee Members) and Audit & Supervisory Committee Members are approved at the 2024 Ordinary General Meeting of Shareholders for FY2023 held on June 21, 2024, as described in 1) to 4) and 5) below.
The number of Directors to whom the above amounts of Director remuneration (excluding stock-based remuneration linked to medium- to long-term share performance) applied was 10 (including 4 Independent Directors); the number of directors to whom the above amount of stock-based remuneration linked to medium- to long-term share performance applied was 5; and the number of Audit & Supervisory Committee Members to whom the above amount of Audit & Supervisory Committee Member remuneration applied was 5 (including 3 Independent members).
Details of the calculation formulas are as follows.
The upper limit will be the lower of i) ¥648 million or ii) the maximum total of individual payment amounts prescribed in (2) below.
The specific calculation formula for each position is as follows (rounded to the nearest ¥1,000). However, the payment amount will be ¥0 if the profit falls below the profit threshold resolved ahead of time by the Board of Directors based on the consolidated capital cost (¥680billion).
President and CEO:
(profit in FY2024 – ¥520 billion) × 0.025% + 0.35 (¥100 million)
Senior Executive Vice President:
(profit in FY2024 – ¥520 billion) × 0.01% + 0.14 (¥100 million)
Executive Vice President:
(profit in FY2024 – ¥520 billion) × 0.0075% + 0.105 (¥100 million)
Please check the link below for data on the maximum payment amount and its total for each position as Executive Officers of eligible Executive Directors.
The payment amount will be calculated as follows.
(Payment amount replacing the above performance-linked bonus (short term) calculation formula with the formula prescribed below) × (Results of evaluations initiatives related to sustainability factors*Sustainablity factors over three fiscal years of the performance period in both quantative and qualitative terms evaluated at a newly established subcommittee of the Compensation Committee (the members of the committee are the Chairman of the Board and all Independent Directors (including Directors who are Audit & Supervisroy Committee Members), to whom this form of remuneration does not apply, and the committee is chaired by an Independent Director.)*) [80%~120%]
The upper limit will be the lower of i) ¥648 million or ii) the maximum total of individual payment amounts prescribed below.
Please check the link below for data on the maximum payment amount and its total for each position as Executive Officers of eligible Executive Directors.
Market conditions
・Initial number of allocated stock acquisition rights for the position (based on position as of April 1, 2024) × vesting ratio
・Growth rate of at least 125% in MC’s shares: 100%
・Growth rate between 75% and 125% in MC’s shares: 40% + (MC’s shares growth rate [%] – 75 [%]) × 1.2 (amounts less than 1% rounded to the nearest whole number)
・Growth rate less than 75% in MC’s shares: 40%
Growth rate in MC’s shares = MC’s TSR (three years)/TOPIX growth rate (three years)
MC’s TSR = (A + B)/C
TOPIX growth rate = D/E
Note: The proportions shown above are based on certain values for consolidated earnings and the share price, and are for illustrative purposes only. The actual mix will vary depending on changes in Mitsubishi Corporation’s consolidated financial results and stock market conditions.
MC sets the guideline for share ownership. The basic policy of the guideline is that Executive Directors and Executive Officers are obliged to hold any shares including those acquired through the exercise of stock options while in office. Sales of such shares are restricted until their aggregate market value exceeds approximately 300% (500% for President and CEO) of the base salary.
MC resolved to revise the remuneration package for Executive Directors after continual deliberations by the Board of Directors and the Governance, Nomination and Compensation Committee. The specific review process is as follows.
Please check the link below for data on Directors’ and Audit & Supervisory Board Members’ Rmuneration: Total Amounts and Number of Eligible Persons in the Fiscal.
Please check the link below for data on Names, Titles, Total Amounts of Consolidated Remuneration and Amount by Type of Remuneration for Each Director and Audit & Supervisory Board Member.
None of MC’s Directors and Audit & Supervisory Board Members serve concurrently as employees.
MC has a performance-linked bonus system for non-executive employees, including some fixed-term contract employees.