TIDMMEL
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
www.MitsubishiElectric.com/news/
Notice of Revised Compensation Scheme for the Company's
Executive Officers
TOKYO, May 25, 2022 - Mitsubishi Electric Corporation ( 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
(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 Evaluation ratios Targets, etc.
indicators
President Other Executive
& CEO Officers
--------- ---------------
Corporate Consolidated 5,250 billion
results revenue 35% 25% Maximum yen
------------- --------- --------------- --------------------- -------------
Target 4,770 billion
yen
------------- --------- --------------- --------------------- -------------
Minimum (Threshold) 4,530 billion
yen
------------- --------- --------------- --------------------- -------------
Consolidated
Operating
profit
ratio 35% 25% Maximum 7.5%
------------------------ --------- --------------- --------------------- -------------
Target 5.7%
------------------------ --------- --------------- --------------------- -------------
Minimum (Threshold) 5.1%
------------------------ --------- --------------- --------------------- -------------
Set specific targets for each
Executive Officer based on the
priority measures in FY2026
Medium-Term Management Plan,
"Three Reforms" to restore trust,
Individual ESG challenges, and performance
evaluation 30% 50% 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
--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
(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 1.3 times
applied to the annual
basic compensation
----------------------- ----------
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
###
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 Yen
122=U.S.$1, the approximate rate on the Tokyo Foreign Exchange
Market on March 31, 2022
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