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Situation of Corporate Governance
6. Remuneration for Directors and Audit & Supervisory Board Members

6. Remuneration for Directors and Audit & Supervisory Board Members

Matters concerning a policy regarding determinations and calculation methods of remuneration amounts, etc., for directors

At a meeting held on May 20, 2021, the board of directors determined the Company policy for determining the remuneration amounts, etc., for directors. In addition, the board of directors approved a resolution on July 11, 2024, to change the evaluation indicators for director compensation. The board of directors consults the Nomination and Compensation Committee on the details of any resolutions to be adopted prior to the meeting in question.
The board of directors also confirms that the method and details of determining remuneration amounts, etc. for each individual director for the current fiscal year are consistent with the decision-making policy approved by the board of directors. The board also confirms that Nomination and Compensation Committee deliberations are respected and in line with such policy.
The following is a summary of the policy details regarding determinations and calculation methods of remuneration amounts, etc., for directors.

  1. Director compensation shall reflect the results of performance based on fair standards and according to the extent to which the director fulfills their role, achieves management goals, and engages in initiatives to enhance the Company's medium-term corporate value.
  2. Director remuneration consists of basic compensation, performance-linked compensation, and stock options.
    1. Basic Compensation
      Basic compensation is paid on a monthly basis, as determined by individual evaluation and within the standard amount established for each title.
    2. Performance-Linked Compensation
      Performance-linked compensation shall be based on company earnings-based compensation and an individual performance evaluation. Company earnings-based compensation is calculated using a coefficient based on the percentage of achievement of the Company's performance budget. The individual performance evaluation is based on an assessment of the degree to which each individual has achieved their personal goals under the medium-term management plan. Performance-linked compensation is weighted at approximately 30% of total cash compensation (basic compensation plus performance-linked compensation), weighted according to individual responsibility.
      Individual performance evaluations are made by the president and based a performance report for each director. After discussions in the Nomination and Compensation Committee, the committee submits a report to the board of directors, which then makes a final decision. Performance-linked compensation is paid once a year within three months after the end of the fiscal year.
    3. Stock Options
      Our aim is to increase the motivation and morale toward sustained earnings and corporate value improvement through the allocation of stock acquisition rights as stock options reflecting corporate earnings. We accomplish this by strengthening the relationship between share prices, earnings, and compensation, ensuring directors share the same benefits of share price increases and risk of share price decreases with shareholders. The percentage of total compensation is set at around 10%, with a higher weighting depending on the responsibility. The number of stock options allocated is determined based on the standard number of stock options for each position, the percentage of achievement of the Company's business results budget, and the degree of achievement of the individual's goals under the medium-term management plan. The fair value of stock options is limited to 100 million yen per year as approved by the general meeting of shareholders (resolution of the 96th Annual general meeting of shareholders held on May 17, 2007). The timing of allotment is determined at the board of directors meeting held in April each year.
  3. Outside directors are paid a fixed compensation only. Company earnings and individual performance evaluations are not considered as part of this compensation.
  4. The remuneration limit for directors as the combined monetary total of basic compensation and performance-linked remuneration was limited to a maximum ¥600 million per fiscal year as approved at the 96th regular meeting of shareholders, held May 17, 2007. The company had a total of 20 directors serving at the time of the resolution.
  5. The board of directors determines the amount of each director's individual remuneration. The content of the authority and the scope of discretion will be the portion relating to the amount of each director individual remuneration (base remuneration + performance remuneration). The board of directors approved the establishment of the Nomination and Compensation Advisory Committee at November 2018 meeting and the committee began operating in January 2019. The Nomination and Compensation Committee consists of five independent outside directors as of February 29, 2024. Performance compensation is determined by the board of directors within a determined range after receiving a report from the committee based on a proposal by the president related to the Company's performance and an evaluation of each director's individual target achievement.
  6. Given their independent position in supervising the execution of duties by directors, members of the Audit & Supervisory Committee are paid only fixed compensation. This level of remuneration is necessary to ensure the appropriate people play a central role in establishing and operating high-quality corporate governance. The remuneration limit for directors was limited to a maximum ¥50 million per fiscal year as approved at the 91st regular meeting of general shareholders, held May 8, 2002, finalized subsequent to negotiations with the members of the Audit & Supervisory Board. The company had a total of four members of the Audit & Supervisory Board serving at the time of the resolution.
    The following outlines policies related to remuneration of members of the Audit & Supervisory Board:
    1. Basic Compensation
      The company pays a fixed amount according to the experience, insight, and title of each member of the Audit & Supervisory Board.
    2. Performance-Linked Compensation
      The company does not offer performance-linked compensation to members of the Audit & Supervisory Board.
    3. Stock Options
      The company does not offer stock options to members of the Audit & Supervisory Board.

Ratio of Remuneration by Type for Directors According to Title

Title Composition ratio of executive remuneration Total
Basic compensation Performance-linked compensation
Performance compensation Medium- and long-term
incentive stock options
Executive Directors 61% to 69% 22% to 30% 9% 100%
Directors 68% to 72% 22% to 25% 6% to 7%
Outside Directors 100% 0% 0%

(Note)

  1. This model represents 100% achievement of targets related to performance-linked compensation. The ratios above will change according to changes in company earnings performance, share price fluctuations, etc.
  2. Different compensation tables are applied depending on director role and grade. Therefore, ratio of compensation by type may differ for individuals, even those who have the same title.

<Board of Director Activities>
The AEON MALL board of directors made the following deliberations and decisions related to director remuneration during the current fiscal year:

  1. April 11, 2023: Issuance of stock acquisition rights as 16th Performance-Linked Stock Options
  2. April 11, 2023: Allocation of stock acquisition rights as 16th Performance-Linked Stock Options
  3. April 11, 2023: Decision regarding performance-based remuneration for directors
  4. May 17, 2023: Decision regarding basic compensation for directors for fiscal 2023

<Role and Activities of the Nomination and Compensation Committee>
The Nomination and Compensation Committee serves as an advisory organ to the board of directors. The committee deliberates, exchanges opinions, and provides advice and reports to the board of directors regarding the propriety of basic compensation and performance-linked compensation paid to directors, as well as the validity of performance evaluations of said directors.

  1. April 5, 2023: Matters related to reporting of individual director performance evaluation results and performance-based remuneration payment rates
  2. June 19, 2023: Stock options for stock-based compensation
  3. October 24, 2023: Progress in the plan for the development of the next management personnel
  4. February 14, 2024: Reassignment of representatives
  5. February 20, 2024: Individual director performance evaluation schedule

Total Amount of remuneration, etc. by Each Director Title, Total Amount by Type of Remuneration, etc., and Number of Directors Eligible

Director Title Total Amount of Remuneration, etc.
(million yen)
Total Amount of Remuneration by Type (million yen) Number of Eligible Directors
Stock Options Basic Compensation Performance-Linked Compensation Non-monetary compensation, etc.
(excluding in the left column)
Directors
(Excluding Outside Directors)
124 94 10 20 10 8
Members of the Audit & Supervisory Board
(Excluding Outside Members)
- - - - - -
Outside Directors 60 60 - - - 10

(Note)

  1. The above does not include one unpaid director and one unpaid member of the Audit & Supervisory Board.
  2. The breakdown of the total amount of non-monetary compensation, etc., to directors (excluding outside directors) is ¥10 million in stock options.

Total Amount of Consolidated Remuneration, etc. for Each Director

Not provided, as no individual is paid total consolidated remuneration of more than ¥100 million.

Important Matters Related to Salaries of Directors Also Serving as Employees

No applicable items.