Remuneration for Executive Members

As the outside director chairing the Remuneration Advisory Committee, I submit this report.
The committee deliberates general compensation for directors and Audit & Supervisory Board members. In the fi scal year ended March 31, 2020, the Remuneration Advisory Committee met three times and conducted deliberations related to compensation systems for directors suited to KDDI from various perspectives. As a result, we were able to propose the introduction of stock price-linked bonuses. A general outline of that debate follows.

1. Level of compensation for KDDI's directors

First, regarding the level of compensation for KDDI's directors, we assessed whether it was commensurate with the expectations and responsibilities of directors and whether it was fair in comparison with the benchmark group of companies while referencing objective survey data from external specialist organizations. We also deliberated about the appropriate level. As a result, based mainly on comparisons with other companies of similar size and in the same industry in Japan, we advised that compensation be revised to a composition that is appropriate for the work duties of directors who are responsible for executing business in response to a mandate from shareholders.

2. Composition of compensation for KDDI's directors and selection of KPIs

Compensation for KDDI's directors had been composed of basic compensation, performance-linked bonuses, and performance-linked stock compensation. When revising the composition, we considered it from the direction of introducing a new compensation system that is more directly linked to the stock price and enhancement of medium-to long-term corporate value.
As a result, we advised adopting the following two KPIs.

• (1)

  EPS growth rate

  In the medium-term management plan, we target growth of 1.5 times in EPS by the fiscal year ending March 31, 2025, compared with the level in the fiscal year ended March 31, 2019. We established an indicator of year-on-year EPS growth rate as an incentive to support the achievement of this plan.

• (2)

  Stock price change rate

  We established the indicator of stock price change rate to incorporate market evaluations of operating results and corporate activities and enhance the connection with stock price. Furthermore, "stock change rate" means relative evaluation with the TOPIX growth rate, not the change rate of KDDI's stock price. In this way, we can make fair evaluations based on overall changes in the stock market.

This is how we introduced stock price-linked bonuses with the aim of strongly motivating achievement of the medium-term management plan goals and enhancing the connection between stock price and compensation for directors.
I believe the mission of this committee is to consider forms of compensation that are connected with sustainably enhancing corporate value over the medium to long term. We will continue to contribute to the sustainable growth of the KDDI Group.