Investor Relations | Management Policy | Corporate Governance

Remuneration for Directors and Audit & Supervisory Board Members

Policy on remuneration

1. Purpose of remuneration system

The Company has designed its remuneration system for the purpose of promoting as much as possible behavior on the part of Directors and Corporate Officers geared towards enhancing corporate results and stock value and constantly increasing the corporate value of the overall TDK by constantly pursuing the formulation of a competitive remuneration system to secure diverse and excellent human resources that focuses on linkage with short-term as well as medium- to long-term results.

2. Remuneration level

The Company aims to set remuneration at levels enabling the maintenance of competitiveness compared with other companies of similar scale, mainly in the same business category. The adequacy of its level is examined by the Compensation Advisory Committee based on studies, etc., on corporate management remuneration performed periodically by third parties.

3. Composition of remuneration

1)Remuneration for Directors who serve concurrently as Corporate Officers
Composed of basic remuneration, results-linked bonuses and stock-linked compensation stock options.

2)Remuneration of Directors who do not serve concurrently as Corporate Officers
Composed of basic remuneration and stock-linked compensation stock options.

3)Remuneration for Outside Directors
Basic remuneration only.

4)Remuneration for Audit & Supervisory Board Members
Basic remuneration only.

4. Results linkage system

a. Short-term results linkage system (results-linked bonus)
A system whereby remuneration fluctuates within a range of 0% to 200% of the standard payment amount depending on the consolidated results for the year (operating income, ROE) and the degree of attainment of targets set for each division in charge.

b. Mid- to long-term results linkage system (stock-linked compensation stock options)
Under this system, recipients share the same advantage of a rising stock value of the Company and the same risk of it falling as shareholders. The introduction of such a system is intended to increase the ambition and morale of eligible Directors and Corporate Officers with respect to the enhancement of results and stock value. To further strengthen the link between executive remuneration and mid- to long-term results and corporate value, some stock-linked compensation stock options have a results achievement condition attached to them. The results achievement condition takes consolidated results under the medium-term management plan (operating income, ROE) as an index, and varies the number of exercisable options between 0% and 100% of the number of options granted, depending on the degree of attainment of targets.

The Company has established Corporate Stock Ownership Guidelines. The Company makes an effort to ensure that eligible Directors and Corporate Officers hold at least a certain number of shares in the Company pursuant to their rank, including stock-linked compensation stock options.

[Remuneration determination process (establishment and operation of the Compensation Advisory Committee) ]
In order to achieve the purpose of the aforementioned remuneration system, the Company has in place a “Compensation Advisory Committee” acting as an advisory body to the Board of Directors which is chaired by an Independent Outside Director and of which majority of the members are composed of Independent Outside Directors.

The Committee examines the remuneration system and the level of remuneration pertaining to Directors and Corporate Officers and reports its findings to the Board of Directors in order to review the transparency of the remuneration decision-making process and help to ensure that the individual remuneration is reasonable in light of corporate business performance, individual performance and general industry standards, among other factors.

Remuneration for Directors and Audit & Supervisory Board Members

Total Amount of Remuneration for the Fiscal Year Under Review

Classification Total amount of remuneration
(¥ in millions)
Remuneration breakdown
Basic remuneration Results-linked bonus Stock-linked compensation stock options
Number of payees Amount paid
(¥ in millions)
Number of payees Amount paid
(¥ in millions)
Number of payees Amount paid
(¥ in millions)
Directors Directors
8
361 8 246 3 97 4 18
Outside Directors
(4)
(46) (4) (46) Not eligible for the above remuneration
Audit & Supervisory Board Members Audit & Supervisory Board Members
5
81 5 81 Not eligible for the above remuneration
Outside Audit & Supervisory Board Members
(3)
(24) (3) (24)
Total 442 13 327 3 97 4 18

Notes:

  1. The number of Directors and Audit & Supervisory Board Members at the end of the fiscal year under review were 7 and 4, respectively. The total number of payees, the total amount of remuneration and the basic remuneration in the breakdown thereof regarding Directors and Audit & Supervisory Board Members as shown above include 1 Director who retired at the close of the 122nd Ordinary General Meeting of Shareholders held on June 28, 2018 and 1 Outside Audit & Supervisory Board Member who retired upon the appointment of Outside Director at the said General Meeting, and the amount of remuneration paid to them.
  2. As Mr. Makoto Sumita served as an Outside Director until his appointment as Chairman & Director on June 28, 2018, his remuneration while serving as an Outside Director is included the aforementioned total number of payees, total amount of remuneration and breakdown of basic remuneration for Outside Directors.
  3. The ceiling amount of remuneration
    (1) The ceiling amount of remuneration for Directors
    1) Basic remuneration: The ceiling amount of remuneration for Directors as a group was resolved as less than ¥25 million per month at the 106th Ordinary General Meeting of Shareholders held on June 27, 2002.
    2) Results-linked bonus: The ceiling amount of results-linked bonuses was resolved as less than ¥350 million per year at the 119th Ordinary General Meeting of Shareholders held on June 26, 2015.
    3) Stock-linked compensation stock options: The ceiling amount of remuneration related to stock acquisition rights allocated as stock options was resolved as less than ¥457 million per year at the 119th Ordinary General Meeting of Shareholders held on June 26, 2015.

    (2) The ceiling amount of remuneration for Audit & Supervisory Board Members
    Basic remuneration: The ceiling amount of remuneration for Audit & Supervisory Board Members as a group was resolved as less than ¥8 million per month at the 106th Ordinary General Meeting of Shareholders held on June 27, 2002.
  4. As for the amount of results-linked bonuses and stock-linked compensation stock options for Directors for the fiscal year under review, it has been recorded as an expense.

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