LIXIL makes pioneering water and housing products that solve everyday, real-life challenges, making better homes a reality for everyone, everywhere.
As the Company is a company with a nomination committee, etc., the Compensation Committee (the “Committee”), comprised solely of Outside Directors, determines compensation policy for Directors and Executive Officers received from the Company as consideration for their duties and the individual compensation for Directors and Executive Officers.
The Committee manages the overall executive compensation as described below based on the belief that strong motivations for Executive Officers to achieve management goals and thorough corporate governance for all Directors and Executive Officers are important for achieving LIXIL's Purpose “Make better homes a reality for everyone everywhere” sustainably.
The Compensation for Directors and Executive Officers shall be determined in accordance with the following basic policies.
(a) Foster improvement of short-, medium-, and long-term business results and sustainable corporate
value.
(b) Attract and retain the best talent who are necessary to foster business growth globally.
(c) Ensure a fair and reasonable decision process with regards to compensation that will provide
accountability to shareholders, employees, and all stakeholders.
(d) Consider and discuss based on the economic and social circumstances, our business condition and
objective indexes and advice of external specialized agencies at the Committee.
(e) Individual compensation shall be managed in consideration of role and responsibility, business
performance, experience and difficulty of securing personnel, etc.
The compensation structure for Directors who monitor and supervise the Company’s management, and for Executive Officers who are responsible for the performance of business, shall be separate. When a Director concurrently serves as an Executive Officer, the compensation system for the Executive Officers shall be applied.
The compensation system for Directors consists of Annual Base Salary and Stock-linked compensation as they are required to act to contribute to increase the sustainable corporate value while they are monitoring and supervising the management during their statutory terms. In the event that an Outside Director assumes the role of chairperson of the Board of Directors or chairperson of a Committee, an allowance shall be paid for such duties (the “Chairperson Allowance”).
The above chart shows the compensation mix (median value) of Outside Directors for the Fiscal Year ended March 2023. The base amount is indicated for Stock-linked compensation, which is different from the actual amount paid.
The compensation system for Executive Officers consists of Annual Base Salary, Performance-linked compensation and Stock-linked compensation, based on the policy of retaining talented human resources that are essential for accelerating business growth, providing strong motivation to achieve management goals and rewarding fairly and equitably in accordance with the results of such efforts and properly reflecting the trust and evaluation of shareholders and other stakeholders in the compensation. Regarding the details of the individual compensation for Executive Officers, the Committee determines the compensation level and compensation mix based on the role and responsibility, business performance, experience and difficulty of securing personnel, etc. of each Executive Officer, as well as the performance targets and ESG action targets, etc. for each of them. In particular, for Executive Officers who are expected to contribute significantly to improving corporate value from a medium- to long-term perspective, the Committee takes measures such as increasing the ratio of Stock-linked compensation to total compensation, etc.
The above chart shows the compensation mix for the Fiscal Year ended March 2023, and the compensation mix of Executive Vice President, "Senmu" is median value. The base amount is indicated for Performance-linked compensation and Stock-linked compensation, which are different from the actual amount paid.
Annual Base Salary of Outside Directors shall be determined, based on the role of Outside Directors at
the Company, while referring to the compensation levels of the upper group among domestic companies as
reference information in line with the purpose of the compensation basic policies.
Annual Base
Salary of Executive Officers shall be determined individually, based on role and responsibility,
business performance, experience and difficulty of securing personnel, etc. of each Executive Officer,
while referring to the compensation levels inside and outside Japan as reference information in line
with the purpose of the compensation basic policies. As for the referenced compensation levels, the
external specialized agencies’ data for each country is compared based on criteria such as revenue and
market value, mainly in Global Industry Classification Standard categories. The Company intends to
eliminate as much as possible any differences in compensation based on the country of residence.
In order to encourage the Executive Officers to work together to achieve single-year management goals and to ensure that they are fairly equitably rewarded in accordance with the results of their performance, the calculation formula has been composed of only company-wide performance.
The Company has been applying the Phantom Stock Plan, which is a stock-linked monetary compensation
plan, to Directors and Executive Officers since the Fiscal Year ended March 2020. The Committee has
confirmed that the Phantom Stock Plan has indeed been having the desired effect from its introduction
until the present.
On the other hand, in recent years when Japan’s corporate governance reforms
have been progressing remarkably, the Committee has been deliberating on the revision of the medium- to
long-term incentive compensation plan for Executive Officers in view of the increasing emphasis on the
significance of management’s ownership of their own company’s shares.
As a result, the Committee
resolved that the current Phantom Stock Plan shall be 50% of the overall Stock-linked compensation plan
for Executive Officers and the Restricted Stock Compensation Plan shall be the remaining 50% from April
2023, in order to encourage Executive Officers to deepen their shared interests with shareholders over
their term of office and work to create value over medium- to long-term.
The Company has been applying the Phantom Stock Plan since the Fiscal Year ended March 2020, with the aim of encouraging Directors and Executive Officers to monitor, supervise and make management decisions for achieving improvement of the sustainable corporate value of the Company over the medium- to long-term, further promoting shared corporate values with shareholders of the Company, and attracting and retaining superior personnel from around the globe by standardizing global officers’ compensation system.
Note: The average of closing price of the Company's stock for the previous 30 business days is applied at both grant and vesting.
The Committee resolved that 50% of the entire Stock-linked compensation plan for Executive Officers shall be the Restricted Stock Compensation Plan from April 2023. Executive Officers subject to this plan include Executive Officers who concurrently serve as Directors and exclude non-residents of Japan. For non-residents of Japan, the Phantom Stock Plan shall be applied.
The Company has established Stock Ownership Guidelines from the Fiscal Year ending March 2024, which indicate the number of the Company’s shares recommended to be held by Executive Officers during their term of office.
Representative Executive
Officers: Three times the amount of Annual Base Salary; other Executive Officers: One time the amount of
Annual Base Salary
In Performance-linked compensation and Stock-linked compensation, if there has been any material accounting mistake with the Company or the Board of Directors determines that there has been a material violation, etc. by the officer concerned, the Committee may decide to reduce or extinguish pre-vested compensation and to return post-vested compensation based on such reasons.
The following is the contents for the Fiscal Year ended March 2023.
Officer category | Total amount of the compensation (million yen) |
Total amount of the compensation by type (million yen) | Number of Officers receiving | |||
---|---|---|---|---|---|---|
Annual Base Salary | Performance-linked compensation |
Stock-linked compensation |
Various allowances |
|||
Outside Directors | 175 | 140 | - | 35 | - | 8 |
Executive Officers | 1,222 | 575 | - | 423 | 224 | 8 |
Total | 1,397 | 715 | - | 458 | 224 | 16 |
Notes:
Amounts based on Japan standard.
The compensation amounts shown above include compensation paid by the Company’s subsidiaries, in addition to compensation paid by the Company. Of the above amounts, the amount paid by the Company is 1,301 million yen (175 million yen for the 8 Outside Directors and 1,126 million yen for the 8 Executive Officers).
The amount of Annual Base Salary for Outside Directors includes the Chairperson Allowance.
Regarding Performance-linked compensation and Stock-linked compensation, the amounts that should be recorded as expenses for the Fiscal Year ended March 2023 are stated.
Cost-of-living allowances and income tax allowances, etc. were paid as Various allowances.
The following is the contents for the Fiscal Year ended March 2023.
Name | Officer category | Company name | Total amount of the compensation (million yen) |
Total amount of the compensation by type (million yen) | |||
---|---|---|---|---|---|---|---|
Annual Base Salary | Performance-linked compensation |
Stock-linked compensation |
Various allowances | ||||
Kinya Seto | Executive Officer | LIXIL | 343 | 125 | - | 213 | 5 |
Hwa Jin Song Montesano | Executive Officer | LIXIL | 277 | 81 | - | 18 | 178 |
Bijoy Mohan | Executive Officer | LIXIL | 165 | 44 | - | 86 | 35 |
Director | LIXIL International Pte. Ltd | 96 | 96 | - | - | - |
Notes:
Amounts based on Japan standard.
Annual Base Salary is the amount paid as determined by the Compensation Committee.
Performance-linked compensation is the expensed amount calculated based on the target amount of Performance-linked compensation determined by the Compensation Committee with the business forecast as of March 31, 2023.
Stock-linked compensation is not the actual amount paid but the expensed amount calculated based on the number of stocks granted as Phantom Stock, which is determined by the Compensation Committee, for the four fiscal years from the Fiscal Year ended March 2020 to the Fiscal Year ended March 2023. The expensed amount is calculated by adding up the following three items.
1) The amount which is calculated by multiplying the number of stocks granted in the Fiscal Year ended March 2023 by the stock price at the end date of the Fiscal Year ended March 2023
2) The amount which is calculated by multiplying the number of stocks granted in the Fiscal Year ended March 2022 by the difference of the stock prices between the Fiscal Year ended March 2022 and the Fiscal Year ended March 2023 (The difference value is a positive value if the stock price goes up, and a negative value if it goes down.)
3) The amount which is calculated by multiplying the number of stocks granted in the Fiscal Year ended March 2020 and the Fiscal Year ended March 2021 by the difference between the stock price at the end date of the Fiscal Year ended March 2022 and each stock price at the vesting (The difference value is a positive value if the stock price goes up, and a negative value if it goes down.)
Various allowances are paid for cost-of-living allowances, income tax allowances and others based on the resolution of the Compensation Committee, and include the difference between the expensed amount of Performance-linked compensation in the Fiscal Year ended March 2022 and the actual amount paid in July 2022.
For details of the executive compensation, please refer to the "Report for the 81st Fiscal Year".
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