Omron 2014 Annual Report Download - page 37

 Compensation for Directors and Executive Officers shall be based on the implementation of the Company’s motto
and corporate principles (the Omron Principles).
 The Company shall pay compensation sufficient to recruit, hire and maintain exceptional personnel as managers.
 The compensation structure shall contribute to long-term maximization of corporate value by providing motivation
for Directors and Executive Officers.
 The compensation structure shall maintain a high level of transparency, fairness and rationality, to ensure account
ability to shareholders and other stakeholders.
 To ensure transparency, fairness and rationality in the compensation for individuals, each Director / Executive
Officer’s compensation shall be set by consultation with the Compensation Advisory Committee.
 The purpose of compensation shall be made clear, and a compensation plan shall be created according to the roles
and responsibilities of each Director / Executive Officer.
 Compensation for Directors shall consist of a base salary, yearly performance-linked bonuses, and medium-to-long-term,
performance-linked compensation.
 The Company shall provide base salaries sufficient to recruit, hire and maintain exceptional personnel capable of
*1 The guidelines for stock compensation shall consist of a fixed amount of compensation given each month to Directors, who will use it to make monthly
purchases of the Company’s stock (through the officers’ stockholding association) and hold this stock during their term of office.
*2 The performance-linked stock acquisition rights are issued with charge at a price equivalent to the fair value of the stock acquisition rights, thus the amount to
be paid in exchange for stock acquisition rights is not favorable for individuals who are allotted the stock acquisition rights. Because of this, the stock acquisition
rights do not fall under the category of compensation for Directors, and thus they shall be issued via a resolution by the Company’s Board of Directors.
■ Fiscal 2013 Director and Audit & Supervisory Board Member Remuneration
Notes: 1. Director compensation consists of basic compensation, bonus, and stock-based compensation.
2. Outside director compensation consists of basic compensation.
3. The above basic compensation of Directors includes the amount paid as stock compensation to Directors, excluding Outside Directors.
4. Audit & Supervisory Board member compensation consists of basic compensation.
To increase objectivity and transparency, the Compensation Advisory Committee, chaired by an outside director, is consulted on
the compensation of directors. This committee discusses the compensation of each individual and makes recommendations.
After receiving these recommendations, the amount of compensation for each director is determined by a resolution of the
Board of Directors, and the amount of compensation for each Audit & Supervisory Board member is determined by discussions
among the Audit & Supervisory Board members (resolution of the Board of Corporate Auditors).
The following amounts are within the scope of all directors and all Audit & Supervisory Board members, as each has been set
by a resolution of the General Meeting of Shareholders.
Classification Number of People Basic Compensation Bonuses Total Remuneration
Director
(Outside Directors)
9
3
344
23
194

538
23
Audit & Supervisory Board members
(Independent)
6
3
82
18


82
18
Total
(Outside Executives)
15
6
426
41
194

620
41
(Millions of yen)
 Compensation for Audit & Supervisory Board Members shall consist only of a base salary that reflects their roles.
It shall be sufficient to recruit, hire and maintain excellent personnel.
 No retirement bonuses shall be paid.
 The level of compensation shall be determined by taking into account the levels of other companies surveyed
by a specialized outside organization.
implementing the Company’s motto and the Omron Principles.
 The Company shall provide yearly performance-linked bonuses as performance incentives with emphasis on yearly results.
- The amount of yearly performance-linked bonuses shall be based on a standard amount for each position, and shall be
determined according to the degree of achievement and growth rate for evaluation indicators for bonuses, including
income before income taxes, return on invested capital (ROIC), net income attributable to shareholders, and cash
dividends per share.
 To ensure thorough implementation of the Company’s long-term management plan, the Company shall provide the
following two types of compensation linked to medium-to-long-term performance as incentives for meeting medium-
term management targets.
- The Company shall pay medium-term, performance-linked bonuses depending on the achievement of medium-term
management targets.
- The Company shall grant stock compensation*1 as compensation linked to maximization of corporate value (share-
holders’ value).
 Separate from the compensation stated above, the Company shall issue performance-linked stock acquisition rights*2.
- Performance-linked stock acquisition rights shall be issued under the condition of the achievement of medium-term
management targets by Directors and a rise of the Company’s stock price. The objectives are to create medium-to-
long-term shareholder value and encourage Directors to own shares of the Company.
 Compensation for outside directors shall consist of a base salary only, reflecting their roles and the need for
maintaining independence.
 No retirement bonuses shall be paid.
 The level of compensation shall be determined by taking into account the levels of other companies surveyed
by a specialized outside organization.
As part of its drive to strengthen the governance of
compensation for its Directors, in June 2014 the
Company introduced medium-term, performance-linked
bonuses in an effort to give Directors incentive to
achieve medium-term management targets. This
incentive was also accompanied by the issuing of
performance-linked stock acquisition rights to Directors.
The medium-term, performance-linked bonuses shall
be paid to Directors based on the level of achievement
of performance targets set forth in the medium-term
management plan for the EARTH-1 STAGE. The target
value is ¥90 billion in consolidated operating income
for fiscal 2016, the final year of the medium-term
management plan. Along with this target value,
minimum and maximum target values were set to
further increase Directors’ motivation toward meeting
the medium-term performance targets.
The performance-linked stock acquisition rights
were issued under the condition of the achievement
of medium-term management targets and a rise in the
Company’s stock price. The objectives are to create
medium-to-long-term shareholder value, and to
encourage Directors to own shares of the Company. The
target value to be used as the basis for conditions for
exercising stock acquisition rights shall be ¥900 billion in
consolidated net sales set for fiscal 2016, the final year
of the Company’s medium-term management plan. In
addition to this target value, the Company set forth
minimum and maximum target values, varying the
percentage of exercisable stock acquisition rights in a
gradual manner, in order to increase the Directors’
motivation to attain the performance targets.
The performance-linked stock acquisition rights are
issued with charge, and are exercisable only when the
pre-assigned criteria of the Company’s consolidated
financial results are met, and according to the extent to
which the performance targets are achieved. Because
the stock acquisition rights are not favorable for
individuals who are allotted these rights, they do not fall
under the category of compensation for Directors.
Through the introduction of these new initiatives, the
Company’s governance system regarding compensation
for Directors and other incentive plans covers: 1) a base
salary paid for the roles and responsibilities as Directors;
2) yearly performance-linked bonuses based on the level
of achievement of short-term management plan targets;
and 3) incentives linked with increases in corporate
value and awarded according to the level of achieve-
ment of performance targets set forth in the medium-
term management plan, which was established to meet
the goals of the VG2020 long-term strategy. These
include medium-term performance-linked bonuses,
performance-linked stock acquisition rights, and stock
compensation. Through this compensation structure, the
Company intends to enhance Directors’ motivation to
attain management goals in the short, medium, and
long terms.
The basic principles and policy for compensation for
Directors and Executive Officers are as follows:
Financial Incentives for Directors and Audit & Supervisory Board Members
Compensation Policy for Directors
Compensation Policy for Audit & Supervisory Board Members
Basic Principles of Compensation for Directors and Executive Officers
<Revised in June 2014>
About Omron Where We’re Headed Corporate Value Initiatives Corporate Value Foundation Financial Section
70 Omron Corporation Integrated Report 2014 71