Compensation Committee (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 the LIXIL Purpose “Make better homes a reality for everyone everywhere” sustainably.

Compensation basic policies for Directors and Executive Officers

The Compensation for Directors and Executive Officers is determined in accordance with the following basic policies,

(a) Foster improvement of short-, medium-, long-term and sustainable business results and 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 situation, our business condition and objective indexes and advices of external specialized agencies at the Committee.
(e) Individual compensation shall be managed in consideration of each individual duty, performance, experience, and priority of attracting and retaining personnel etc.

Compensation System

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 in principle.

■Directors’ Compensation system

The compensation system for Directors consists of Annual Base Salary and Stock-linked compensation as their acts are requested 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’ Meeting or chairperson of a Committee, or member of the Audit Committee, an allowance shall be paid for such duties as separately determined by the Committee, taking into account the responsibilities and burdens of the Director.

■Executive Officers’ Compensation system

The compensation system for Executive Officers consists of Annual Base Salary, Performance-linked compensation and Stock-linked compensation, based on the policy of attracting and retaining talented human resources that are essential for accelerating business growth, providing strong motivation to achieve management goals, rewarding Executive Officers fairly and equitably in accordance with the results of such efforts, and ensuring that the trust and reputation of shareholders and other stakeholders are properly reflected in their compensation.

【President, Executive Vice President】

【Executive Vice President (Senmu)】

Compensation system overview

【Annual Base Salary】

Annual Base Salary for Directors and Executive Officers shall be determined individually based on the above compensation basic policies, taking into consideration responsibilities, performance, experience and difficulty of securing personnel, etc., while referring to the compensation levels inside and outside Japan as reference information.

【Performance-linked compensation】

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 Base Amount of Performance-linked compensation shall be determined individually as a certain percentage of the Annual Base Salary according to responsibilities, etc., of the eligible Executive Officer in the evaluation period.
• The payout rate according to the achievement level of performance targets is shown in the chart below.

【Stock-linked compensation】

The company has been applying the stock-linked monetary compensation (the “Phantom Stock Plan”) since the fiscal year ended March 2020 with the aim of encouraging Directors and Executive Officers to monitor, supervise, manage and make management decisions for achieving the sustained improvement in the corporate value of the Company over the mid- to long-term as well as further promoting shared values between the Directors and Executive Officers and shareholders of the Company, and attracting and retaining personnel from around the globe that will contribute to further raising corporate value by standardizing global executives’ compensation in the Group.
The Company grants the Phantom Stock to Executive Officers on the first day of each business year, and to Directors on the day of each the annual general shareholders’ meeting.
The number of the PS allotted to each Director and Executive Officer shall be the number calculated by dividing the granted amount which is calculated by multiplies Annual Base Salary by the coefficient according to responsibilities, etc., of the eligible officer, by the Company’s stock price at the time of grant.
After the period from the grant date to the vesting date (the “Holding Period”) has passed, the amount calculated by multiplying the stock price at that time by the number of stocks granted shall be paid.
With the above mechanism, Directors and Executive Officers are encouraged to act with an awareness of the impact on the Company’s stock price, similar to the Restricted Stock etc.

Note: The average of closing price of the Company's stock for the previous 30 business days is applied at both grant and vest.

Total amount of compensation by officer title, by compensation system, and number of officers receiving

The following is the contents for the fiscal year ended March 2020.

Explanatory notes

• The above amounts are based on JGAAP.

• The total compensation shown above consists of both the compensation paid by the Company and the compensation paid by the Company's subsidiaries. The amount paid by the Company was 1,118 million yen (346 million yen for 19 directors and 772 million yen for 8 Executive Officers).

Compensation for the officers with total compensation of 100 million yen or more

The following is the contents for the fiscal year ended March 2020.

Explanatory notes

• "Others" are social insurance premiums borne by the company and additional benefits such as income tax allowance and cos of living allowance for expatriates.

• As compensation for duties during the period from April 1, 2019 to the Annual Shareholders’ Meeting held on June 25, 2019, the compensation as Director was paid, and thereafter, the compensation as an Executive Officer was paid.

Compensation committee overview

Compensation Committee is composed of members selected among Directors by a resolution of the Board of Directors Meeting after the Annual Shareholders’ Meeting. All members are Outside Directors from the fiscal year ended March 2020.
The Committee determines the policy regarding the compensation of Directors and Executive Officers and their individual compensation paid by the Company as consideration for their duties. From the fiscal year ended March 2020, the compensation of executives of overseas subsidiaries of the Company is managed by the Committee in order to enhance compensation governance of the entire Group.

For details of the compensation system and the committee, please refer to the securities report.