Meetings of the Board of Directors and Corporate Officer Compensation

Results of FYE 2020 under the corporate governance system is as follows.

Meetings of Management Bodies in FYE 2020

 

FYE2018

FYE2019

FYE2020

Board of Directors

15 times

17 times

15 times

Outside Director attendance at Board of Directors' meetings

100%

100%

100%

Outside Audit & Supervisory Board Member attendance at Board of Directors' meetings

98%

98%

96%

Board of Audit & Supervisory Board Members

14 times

13 times

13 times

Outside Audit & Supervisory Board Members attendance at Board of Audit & Supervisory Board Members' meetings

98%

100%

100%

Actual Corporate Officer Remuneration for FYE2020

Type Number
of
people
Amount paid
(Millions of Yen)
Details Maximum remuneration paid
Directors
(Outside directors)

10
(4)

2,298
(59)

  • (1) Monthly remuneration ¥591 million
  • (2) Performance-linked bonuses ¥1,273 million
  • (3) Share price-linked bonuses ¥105 million
  • (4) Special benefits
    ¥180 million
  • (5) Stock remuneration ¥149 million
  • - ¥0.8 billion per year as total monthly remuneration
    (including ¥0.1 billion per year as a portion to outside directors)
  • - ¥2.0 billion per year as total bonuses paid to all directors (excluding outside directors)
    (Resolved at the General Meeting of Shareholders on June 21, 2019)
Audit & Supervisory Board Members
(Outside Audit & Supervisory Board Members)

5
(3)

131
(45)

  • (1) Monthly remuneration only
  • (1) ¥13 million per month
    (Resolved at the General Meeting of Shareholders on June 29, 2005)
Total
(Outside directors and Audit & Supervisory Board Members)

15
(7)

2,429
(104)

   
  • Following deliberation by the Governance and Remuneration Committee, at a meeting of the Board of Directors held on May 13, 2020 ITOCHU Corporation resolved to pay special benefits. This will be paid within the limit of bonuses for Directors, and is based on ITOCHU Corporation’s record profits despite the increasingly severe business environment.
  • The amounts of the share price-linked bonuses are calculated at the end of FY2021.
  • The retirement benefits system for directors and Audit & Supervisory Board Members was abolished on the date of the 81st Ordinary General Meeting of Shareholders held on June 29, 2005, and it was resolved that directors and Audit & Supervisory Board Members retaining their positions after the conclusion of the said General Meeting of Shareholders shall be presented with retirement benefits on the date of their retirement for the period up to the time the retirement benefits system was abolished.

FYE 2021 Corporate Officer Remuneration System

ITOCHU Corporation’s current remuneration plan for Directors is designed to be an incentive to grow business performance. Performance-linked bonus has a high proportion of overall remuneration, and this remuneration plan, including the calculation method, has been previously disclosed publicly, making it highly transparent. In order to increase awareness of contribution to raising business performance and enlarging corporate value over the medium- to long-term, we are including stock remuneration as part of the remuneration plan.


Remuneration Plan for Directors for FY2021 consists of (1) monthly remuneration, (2) performance-linked bonuses, (3) share price-linked bonuses, and (4) performance-linked stock remuneration (trust type). Of these, (3) share price-linked bonuses is a revision of the market capitalization-linked bonuses, which were introduced in FY2019, and the share price-linked bonuses are not designed on the single year base used when the market capitalization-linked bonuses was introduced. The bonus amount is calculated based on the evaluation of the relative growth rate of ITOCHU Corporation’s share price during the period from FYE 2019 to FYE 2021 versus the growth rate of Tokyo Stock Price Index (TOPIX). The share price-linked bonuses are, like the stock remuneration, also for further strengthening awareness of enlarging corporate value from a medium- to long-term perspective.


Net profit (consolidated) is of high interest on the stock market because it is an easy-to-understand indicator of capital for growth-oriented investment and returns to shareholders and we have an unshakeable belief in its importance as an indicator going forward. In addition, bonuses for employees are linked to net profit (consolidated) so we have net profit attributable to ITOCHU (consolidated) as the linked indicator for performance-linked bonuses ((2), above) and performance-linked stock remuneration ((4), above). Also, regarding share price-linked bonuses ((3), above), as stated above we have the growth rate of ITOCHU Corporation’s share price during the period from FYE 2019 to FYE 2021 as the linked indicator, but for the calculation of the growth rate of the share price, we use the simple average of the daily closing price for each fiscal year.

[写真]

Type of remuneration Content Remuneration limit Resolution of General Meeting of Shareholders
Directors
  • (1)Monthly remuneration
    (Fixed)
  • Determined according to factors that include degree of contribution to ITOCHU, based on a standard amount for each position
  • ¥0.8 billion per year as total monthly remuneration (including ¥0.1 billion per year as a portion to the outside directors)
  • June 21, 2019
  • (2) Performance-linked bonuses
    (Variable(Single Year))
  • Total amount is determined based on net profit (consolidated), and individual amount is determined in relation to the position points for the Director, etc.
    *Formula is described below
  • ¥2.0 billion per year as total bonuses paid to all directors (excluding outside directors)
  • (3) Share price-linked bonuses
    (Variable(Medium- to Long-term))
  • Calculated based on an evaluation of the relative growth rate of ITOCHU's share price during the period from FYE 2019 to FYE 2021 versus the growth rate of TOPIX (*1)
    *Formula is described below
  • (4) Performance-linked stock remuneration
    (Variable(Medium- to Long-term))
  • Total amount is determined based on net profit (consolidated), and individual amount is determined in relation to the position points for the Director used in calculating the individual performance-linked bonus (*2)
    *Formula is described below
  • The following is the limit for a two-year period for directors and executive officers
    ·Upper limit for contribution to trust from ITOCHU: ¥1.5 billion
    ·Total points awarded to persons eligible for the plan: 1.3 million points (conversion at 1 point = 1 share)
    *Not paid to Outside Directors
  • June 24, 2016
Corporate Auditors
  • Only monthly
    remuneration
  • ¥13 million per month
  • June 29, 2005

Formulas for Performance-linked Bonuses and Stock Remuneration

In accordance with confirmed results for FYE 2021, director bonuses for fiscal 2021 will be paid in amounts calculated according to the methods described below, following the conclusion of the 97th Ordinary General Meeting of Shareholders (in regard to stock remuneration, points will be awarded).

Total Amount Paid to all Directors

Total amount paid to all directors = (A + B + C) x Sum of Position points for all the eligible directors/55 (but not exceeding ¥1.0billion)
  A = (Of net profit attributable to ITOCHU for FYE2021, for the portion up to ¥200.0 billion) × 0.35%
  B = (Of net profit attributable to ITOCHU for FYE2021, for the portion more than ¥200.0 billion but up to ¥300.0 billion) x 0.525%
  C = (Of net profit attributable to ITOCHU for FYE2021, for the portion exceeding ¥300.0 billion) × 0.525% (0.175% for stock remuneration)

Amount Paid to an Individual Director

Amount paid to an individual director = Total amount paid to all directors × Assigned position points / Sum of position points for all the eligible directors

Chairman and Chief Executive Officer President and Chief Operating Officer Executive Vice President
(resident in Japan)
Executive Vice President
(resident outside Japan)
Senior Managing Executive Officer Managing Executive Officer

10

7.5

5

4

4

3

Of the amount paid to an individual director, the portion corresponding to A and B in the total amount paid to all directors is paid entirely in cash. In regard to the portion corresponding to C, the portion of 0.175% is paid as share-based stock remuneration and the rest paid in cash. In addition, 80% of the amount paid in cash is linked the plan achievement rate of the consolidated net profit of the assigned division/department*. In regard to share-based remuneration during the term of office, annual points are awarded (1 point = 1 share), and at the time of retirement share-based remuneration is paid from the trust in correspondence with accumulated points. Plans call for all of the shares paid from the trust to be acquired on the stock market, and accordingly there will be no dilution of shares.

A Director of non-residents in Japan is not eligible for performance-linked stock remuneration. As a substitute, such Director is eligible for the Equivalent Amount of Individual stock remuneration. The Equivalent Amount of Individual stock remuneration is calculated in accordance with the above formula (except the points assigned to such Director being 15) as if such Director were subject to performance-linked stock remuneration, and the amount will be added or subtracted according to a certain performance achievement rate. The remuneration will be determined and paid separately from the performance-linked bonus based on formula above.

*Formula for 80% of the Amount Paid in cash to an Individual Director :
(Total base amount paid to all Directors as above x Position Point/Sum of Position points for all the eligible Directors) x 80% x the Rate (defined below) determined based on plan achievement rate of the consolidated net profit of the assigned division/department
-The Rate: 100% + (plan achievement rate of the consolidated net profit of the assigned division/department -100%) x 2 (if negative, it will be 0%)
-The plan achievement rate shall be 100% for the eligible director for whom no plan achievement rate is measurable.

Formulas for Share price-linked Bonuses

By resolution of Board of Directors held on 2 February, 2018 and for the purpose of the incentive towards increasing the Company’s corporate value, ITOCHU introduced Market Capitalization-linked Bonuses structure which is linked to the increased amount of the Company’s market capitalization as compared to the last fiscal year. In order to further strengthen awareness of enhancing corporate value from a medium- to long-term perspective, the following changes were made, and the name was changed from market capitalization-linked bonus to share price-linked bonus:

- Changed a design based on 3 years rather than on a single year
- Changed a linked indicator from market capitalization to stock price in order to better align with shareholders
- In order to secure fairness, included an index relative to the absolute amount

For Share price-linked bonuses, the bonus amount for individual director is calculated for each fiscal year based on the following specific calculation formula for individual payment amounts, and when the director retires or when, in the case of taking on the position of executive officer after retirement of the director, the executive officer retires, such amount will be paid.

Amount Paid to an Individual Director (Aggregate amount after the revision to Share price-linked Bonuses (FYE 2020 and FYE 2021))

The amount paid to an individual director = ((simple average of daily closing price in FYE 2021) – (simple average of daily closing price in FYE 2019)) × 1,300,000 × (total position points of FYE 2020 and FYE 2021) / (108.8 points × 2 (years)) × Relative Stock Price Growth Rate

  • Relative Stock Price Growth Rate = (simple average of daily closing price in FYE 2021 / simple average of daily closing price in FYE 2019) / (simple average of daily TOPIX in FYE 2021 / simple average of TOPIX in FYE 2019)
  • TOPIX= Tokyo Stock Price Index, the principal index consisting of all Japanese common stocks listed on the First Section of Tokyo Stock

The Position Points assigned to each position are same as those applied for performance-linked bonuses.
Share Price-linked bonuses together with performance-linked bonuses are paid to the eligible directors within the director bonuses limit of ¥2.0 billion.

Please see Corporate Governance Report (1,094KB)[PDF] for the formula applied to amount paid to individual director in each year.