Corporate Governance

Compensation for Executives

Basic Policy on Executive Compensation

Our company's basic policies regarding remuneration for its Directors and Executive Officers (Directors, etc.) are twofold:
1) to increase corporate performance and corporate value over the medium to long term to realize its management vision;
2) to establish a remuneration system and decision-making process that is transparent, rational and fair so that the company can fulfill its accountability to customers, society, the environment, shareholders, business partners, employees, and other stakeholders. Based on this policy, our company's executive compensation system is as follows.
出光昭和シェル, DFF Inc.

Compensation Standard

Compensation levels for Directors and others shall be reviewed as appropriate in light of changes in the business environment and external survey data.
出光昭和シェル, DFF Inc.

Compensation Structure

Our company and Showa Shell Sekiyu K.K. merged on April 1, 2019. Starting in FY2019, the compensation structures for the Directors (excluding Outside Directors) and Executive Officers will be based on new arrangements, with the emphasis being placed on contributing to the maximization of synergy creation, business portfolio rearrangement, and enhancement of initiatives for the environment, society and governance, which in turn will lead to further improvement of corporate value, and will consist of (1) fixed compensation, (2) performance-based bonuses (shift from performance linked monetary compensation (periodic equal pay) to performance-based bonuses for the purpose of clarifying the incentive structure), and (3) performance-linked stock compensation.
The ratios of fixed compensation, performance-based bonuses, and performance-linked stock compensation at the time of standard payment are set at approximately 70%, 15%, and 15%. Compensation for Outside Directors consists solely of fixed compensation from the perspective of objectively assessing the appropriateness of business execution and ensuring appropriate supervisory functions.

  1. Fixed compensation
    Fixed compensation shall be paid on a monthly basis in an amount determined according to the role.
  2. Performance-based bonus
    Performance-based bonuses are designed to fluctuate within a range of 0 - 200% according to achievement levels (such as roles and company performance (hereinafter “net income”) and consolidated operating income attributable to shareholders of the parent company).
  3. Performance-linked stock compensation
    From the perspective of sharing value with shareholders, performance-linked stock compensation is designed to fluctuate within the range of 0 - 200% in accordance with the achievement of corporate performance (net income and consolidated operating income) for all executives. This is a medium- to long-term incentive in which the value of assets fluctuates due to stock price fluctuations during the term of office as stock is given to Directors, etc., after their resignation.

Our company uses net income and consolidated operating income as indicators to share value with shareholders and investors, and believes that they are appropriate indicators to strengthen profitability and increase our corporate value.
The weight of each indicator is determined in accordance with the duties of each director.

出光昭和シェル, DFF Inc.

The Date of Resolution at the Shareholders General Meeting Concerning remuneration, etc. for Executives and the Details of Such Resolution

At the 91th Ordinary General Meeting of Shareholders held on June 27, 2006, the amount of compensation for Directors and Audit & Supervisory Board Members was set at 1.2 billion yen or less per year for Directors and 120 million yen or less per year for Audit & Supervisory Board Members. At the time of the resolution, there were 12 Directors and 5 Audit & Supervisory Board Members.
At the 104th Ordinary General Meeting of Shareholders held on June 27, 2019, it was resolved that in addition to the above compensation limits, our company would contribute up to 1.9 billion yen (provided, however, that in the case of a trust that has already commenced in FY2018, the total amount of 2.3 billion yen shall be calculated for the four business years from FY2018 to FY2021.) in total to a trust that would be covered by the performance-linked stock compensation system for Directors and others during the 3 consecutive fiscal years. At the time of resolution, the number of Directors (excluding Outside Directors) covered by this system is 6 and the number of Executive Officers who do not concurrently serve as Directors is 31.
Individual compensation for Directors is determined by the Board of Directors based on the recommendations of the Nomination and Compensation Advisory Committee, which is composed of Independent Outside Directors and Independent Outside Audit & Supervisory Board Members. Individual compensation for Audit & Supervisory Board Members is determined through discussions between Audit & Supervisory Board Members. The Nomination and Compensation Advisory Committee met a total of 11 times in FY2018, including deliberation on executive compensation.
出光昭和シェル, DFF Inc.

Total Amount of Compensation, etc. by Executive Category

In FY2018, Directors' and Audit & Supervisory Board Members' salaries totaled 1.19 billion yen and 100 million yen,
respectively.
Category People
(number)
Fixed
Compensation
(1 million yen)
Performance-linked
compensation(1 million yen)
Other Compensation
(Response to the
transition to the new company system)
(1 million yen)
Total
compensation
(1 million yen)
Cash
Compensation
(periodic
equal pay)
Stock
compensation
Directors
(excluding Outside Directors)
7 393 136 132 472 1,135
Audit & Supervisory Board Members
(excluding Independent Outside Audit
& Supervisory Board Members )
3 59 4 - 12 77
Outside Directors and Independent
Outside Audit & Supervisory Board
Members
6 69 - - 9 78
Total 16 522 141 132 494 1,290
  • * Our company's current executive compensation plan consists of fixed compensation as well as performance-linked cash compensation (periodic equal payment) and performance-linked stock compensation. In FY2019, to clarify the composition of incentives, we shifted from performance-linked cash compensation (periodic equal payment) to bonus payments. "Other Compensation" refers to the extraordinary payment of the portion corresponding to the transition to bonus payments and the adjustment of executive compensation accompanying the management integration.
出光昭和シェル, DFF Inc.