Executive Compensation

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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.

Annual Base Salary(73%) Stock-linked compensation(12%) Stock-linked compensation(15%)

In the event that an Outside Director assumes the role of chairperson of the Board of Directors’ Meeting or chairperson of a 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】

Annual Base Salary(27%) Performance-linked compensation(10%) Stock-linked compensation(63%)

【Executive Vice President, "Fuku-Shacho"】

Annual Base Salary(40%) Performance-linked compensation(15%) Stock-linked compensation(45%)

【Executive Vice President, "Senmu"】

Annual Base Salary(57%) Performance-linked compensation(14%) Stock-linked compensation(29%)

The above chart shows the compensation composition ratio that reflects the special measures for the Fiscal Year ended March 2021. Performance-linked compensation indicates the standard amount, and stock-linked compensation indicates the amount granted, which is different from the actual amount paid. For Executive Vice President (“Senmu”), the composition ratio is the median value for the Fiscal Year ended March 2021, excluding one officer residing in Singapore.

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.

Performance-linked Compensation = Base amount of Performance-linked compensation × Payout rate according to achievement of performance targets
  • 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.
  • Business targets achievement rates shall be set by calculating the ratio based on the actual figures disclosed in the Annual Securities Report versus the forecast figures disclosed in the summary financial statements or the like at the beginning of each period. If there is more than one business target, the achievement of each target is multiplied by the percentage of each target in the total performance target, and then aggregated. For the the Fiscal Year ending March 2022, it shall be calculated based upon the achievement rates of return on invested capital (ROIC), CE, and net profit for the period belonging to the owners of the parent company (net income).
  • The payout rate according to the achievement level of performance targets is shown in the chart below.
Payout rate and Achieving rate of business targets

(Claw back, etc.)
If the financial statements have been retroactively corrected due to a material accounting mistake or malpractice in the process of account settlement by the Company, the Compensation Committee shall conduct a review based on such event for revisions of performance-linked compensation already paid and/or due to be paid in the future to the relevant Executive Officer, and can decide to request the return of performance-linked compensation already paid to the Executive Officer and/or amend performance-linked compensation to be paid. Furthermore, the Compensation Committee may adjust the method of calculating performance-linked compensation if an event occurs that was not expected at the beginning of the evaluation period after considering both such event and the Executive Officer's management responsibility in a comprehensive manner, based on internal fact-finding and, where necessary, the views of external specialized agencies.

【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 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.

Grant date⇒Holding Period⇒Vesting date

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 type, and number of officers receiving

The following is the contents for the Fiscal Year ended March 2021.

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
Directors
(excluding Outside
Directors)		 34 18 - 16 3
Executive Officers 2,153
（Note3）		 429 293 1,250 8
Outside Directors 154 120 - 34 9
Total 2,341 567 293 1,300 20

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 2,096 million yen (177 million yen for the 11 Directors and 1,919 million yen for the 8 Executive Officers).

  • The total compensation amount for Executive Officers includes additional payments of 181 million yen as cost-of-living allowances and income tax allowances, and therefore does not match the total amount of the compensation by type.

  • The amount of compensation for Outside Directors includes chairperson allowances.

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

The following is the contents for the fiscal year ended March 2021.

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 *1
Kinya Seto Executive Officer LIXIL Corporation 598 80 60 458
Sachio Matsumoto Executive Officer LIXIL Corporation 243 50 38 155
Hwa Jin Song Montesano *2 Executive Officer LIXIL Corporation 282 59 30 74
Bijoy Mohan *2 Executive Officer LIXIL Corporation 527 55 84 372
Director LIXIL International Pte. Ltd 72 26 - -
Yugo kanazawa Executive Officer LIXIL Corporation 71 16 16 39
Director Former LIXIL Corporation *3 63 31 8 24
Satoshi Yoshida Executive Officer LIXIL Corporation 56 13 13 30
Director Former LIXIL Corporation *3 50 24 7 19
Hiroyuki Onishi Executive Officer LIXIL Corporation 54 12 13 29
Director Former LIXIL Corporation *3 48 24 6 18

Notes:

  • The Stock-linked compensation is an accounting allowance for the cumulative number of grants since the fiscal year ended March 2020, and therefore is not the amount paid for the fiscal year ended March 2021.

  • The total compensation amount includes additional payments of 181 million yen (119 million yen for Ms. Montesano, 62 million yen for Mr. Mohan (LIXIL Corporation: 16 million yen, LIXIL International Pte. Ltd: 46 million yen)) as cost-of-living allowances and income tax allowances, and therefore does not match the total amount of the compensation by type.

  • On December 1, 2020, LIXIL Corporation carried out an absorption-type merger with its consolidated subsidiary LIXIL Corporation ("Former LIXIL Corporation") as an extinguished company. This is the total amount of compensation from April 1, 2020 to November 30, 2020 at Former LIXIL Corporation.

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.

For details of the exetive compensation, please refer to the "Report for the 79th Fiscal Year".

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