REG - Mitsubishi Elect. - Statement re (Compensation Scheme)

Mitsubishi ElectricAnnouncement

01/06/2022 10:00

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RNS Number : 5506N  Mitsubishi Electric Corporation  01 June 2022

 

 FOR IMMEDIATE RELEASE  No. 3528

                        Media Inquiries

                        Public Relations Division
                        Mitsubishi Electric Corporation

                        prd.gnews@nk.MitsubishiElectric.co.jp
                        (mailto:prd.gnews@nk.MitsubishiElectric.co.jp)
                        www.MitsubishiElectric.com/news/

 

Notice of Revised Compensation Scheme for the Company's Executive Officers

 

TOKYO, May 25, 2022 - Mitsubishi Electric Corporation
(http://www.mitsubishielectric.com/) (TOKYO Prime Market: 6503) announced
today that the Compensation Committee, at its meeting held on May 25, 2022,
decided to revise the compensation scheme for the Company's Executive Officers
and to apply the revised scheme from fiscal 2023, as follows:

 

1. Purpose of the Revision

The Company has introduced a performance-based compensation scheme, including
stock compensation, for its Executive Officers to increase their awareness of
the necessity to contribute to enhancing the medium- to long-term corporate
value of the Group and to share that value with shareholders. However, we have
decided to revise the entire compensation structure for our Executive Officers
effective from the fiscal year 2023 to further clarify the roles and
responsibilities of Directors and Executive Officers and to more rigorously
evaluate their short-, medium-, and long-term incentive compensation based on
the achievement level of the performance indices.

The key points of the new compensation scheme for the Company's Executive
Officers are as follows:

 

-     Revised its compensation scheme to make it more performance-linked
to implement and achieve the key indicators and priority measures outlined in
the Medium-Term Management Plan.

-     In addition to rigorously evaluating the achievement of the
performance indices in the business units in charge, greater emphasis on
incentive compensation to reflect performance indices in non-financial
matters, such as restoring public trust, improving employee engagement, and
sustainability and ESG-related progresses.

-     Revised the stock compensation portion of the compensation scheme
and established new stock ownership guidelines to strengthen incentives to
sustainably increase corporate value and shareholder value over the medium- to
long-term.

-     Improved compensation governance by introducing malus and clawback
provisions.

 

2. Outline of Compensation Scheme for Executive Officers

(1) Compensation levels and structure

The compensation levels and structure shall be established by selecting a
group of major Japanese manufacturing companies that are similar to the
Company in terms of size, business type, global expansion, etc. as the
compensation benchmark companies and by considering the trends in compensation
levels at the benchmark companies, our management strategy and business
environment, the objectives of incentive compensation and the degree of
difficulty in achieving the targets, the roles and responsibilities of the
Executive Officers concerned, and other relevant factors. In addition, to
ensure that compensation, etc. focuses on improving corporate and shareholder
value over the medium to long term, the following compensation structure shall
be adopted.

 

Please refer to Figure1 in the attached

http://www.rns-pdf.londonstockexchange.com/rns/5506N_1-2022-6-1.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5506N_1-2022-6-1.pdf)

 

(i) Basic compensation

Fixed compensation is set in accordance with the roles and responsibilities of
each Executive Officer and is paid monthly in cash by dividing the
position-based annual standard amount by 12.

 

(ii) Performance-based bonus

The bonus payment shall be determined by "Corporate Performance Evaluation"
and "Individual Evaluation." The payment amount will fluctuate in the range of
0% to 200% depending on the evaluation results. The amount to be paid to each
individual shall be calculated as below and paid in a lump sum in cash after
the end of each fiscal year.

 Individual payment amount = Position-based standard amount x (Corporate
 performance evaluation coefficient + Individual evaluation coefficient) (in
 the range of 0-200%)

 

■Evaluation Indicators, Ratios, and Targets for FY2022

 Evaluation indicators                       Evaluation ratios                            Targets, etc.
                    President & CEO          Other Executive Officers
 Corporate results  Consolidated revenue     35%                       25%                Maximum                                   5,250 billion yen
                    Target                                             4,770 billion yen
                    Minimum (Threshold)                                4,530 billion yen
                    Consolidated             35%                       25%                Maximum                                   7.5%

                    Operating profit ratio
                    Target                                             5.7%
                    Minimum (Threshold)                                5.1%
 Individual evaluation                       30%                       50%                Set specific targets for each Executive Officer based on the priority measures
                                                                                          in FY2026 Medium-Term Management Plan, "Three Reforms" to restore trust, ESG
                                                                                          challenges, and performance of the business unit in charge.

 

 

Please refer to Figure2 in the attached

http://www.rns-pdf.londonstockexchange.com/rns/5506N_1-2022-6-1.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5506N_1-2022-6-1.pdf)

 

 

■Determination of individual evaluation coefficients

The targets for the President and CEO shall be determined through the
deliberation of the Compensation Committee at the beginning of the fiscal
year. Evaluations shall be made after the end of the fiscal year, by
deliberation and decision by the Compensation Committee following a
self-evaluation by the President and CEO.

Goals and evaluations of other Executive Officers are discussed and approved
by the Compensation Committee after a meeting between the President and CEO
and each Executive Officer.

 

(iii) Performance-based stock compensation (Performance Share Units (PSU))

In principle, the number of shares to be issued as performance-based stock
compensation (PSU) varies between 0% and 200%, depending on the comparison
result (in percentile) between the Company's TSR (total shareholder return)
for the three years and the TSR of a pre-selected group of comparable
companies. The comparable companies are selected from domestic and overseas
companies in the business areas in which the Company operates. The number of
shares to be delivered to each individual is calculated as follows:

 Number of shares delivery to each individual ＝ Standard PSU points for the
 position × PSU grant rate (0-200%)

 

Please refer to Figure3 in the attached

http://www.rns-pdf.londonstockexchange.com/rns/5506N_1-2022-6-1.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5506N_1-2022-6-1.pdf)

 

(iv) Restricted Stock Units (RSU)

In order to promote continuous shareholding and shareholder value during the
term of office, the Restricted Stock Unit (RSU) program shall, in principle,
deliver shares, with transfer restrictions, equivalent to the standard amount
for the position at the end of each fiscal year. The transfer restrictions
shall be lifted at retirement (when the Company's Director or Executive
Officer retires from his/her position).

 

(2) Stock ownership guidelines

We believe it is important to ensure that our Executive Officers share the
same value with our shareholders on a long-term and sustainable basis. To this
end, we have established the following stock ownership guidelines and require
Executive Officers to continuously hold the Company's stock during their term
of office, even after the target amount has been reached.

 

 [Stock Ownership Guidelines]

Targeted holdings to be achieved within four years of assuming the position

 Position               Target amount
 President & CEO        The multiple to be applied to the annual basic compensation  1.3 times
 Senior Vice President                                                               1.0 times
 Executive Officer                                                                   0.8 times

 

(3) Malus and clawback provisions

The Company shall introduce "malus and clawback provisions" so that, in the
event of any material misconduct or violation by an Executive Officer, or in
the event of any material revision to the financial results of prior fiscal
years, the Compensation Committee may, by resolution, demand that such
Executive Officer forfeit his/her right to receive incentive compensation
(malus) or return his/her paid compensation (clawback). The compensation that
may be subject to these provisions shall be performance-based bonuses to be
paid or already paid, points granted before the delivery of shares and shares
before the lifting of transfer restrictions, and some or all of the shares
already delivered.

http://www.rns-pdf.londonstockexchange.com/rns/5506N_2-2022-6-1.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5506N_2-2022-6-1.pdf)

 

###

 

About Mitsubishi Electric Corporation

With more than 100 years of experience in providing reliable, high-quality
products, Mitsubishi Electric Corporation (TOKYO: 6503) is a recognized world
leader in the manufacture, marketing and sales of electrical and electronic
equipment used in information processing and communications, space development
and satellite communications, consumer electronics, industrial technology,
energy, transportation and building equipment. Mitsubishi Electric enriches
society with technology in the spirit of its "Changes for the Better." The
company recorded a revenue of 4,476.7 billion yen (U.S.$ 36.7 billion*) in the
fiscal year ended March 31, 2022. For more information, please visit
www.MitsubishiElectric.com

*U.S. dollar amounts are translated from yen at the rate of ¥ 122=U.S.$1, the
approximate rate on the Tokyo Foreign Exchange Market on March 31, 2022

 

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