Compensation for Corporate Executives

Compensation paid to directors and corporate officers is determined by the Compensation Committee. All 3 members of the Company’s Compensation Committee, including the chair, are outside directors, and the Compensation Committee places emphasis on an objective perspective and transparency. The Compensation Committee has the authority to determine the content of compensation of individual directors and corporate officers of the Company. It determines (1) policy concerning decisions on the content of compensation of individual directors and corporate officers, (2) the content of compensation of individual directors and corporate officers, and (3) the evaluation of the level of attainment of Company-wide performance targets and the individual performance targets of each corporate officer for the performance-based compensation of corporate officers.
The Compensation Committee may also deliberate on compensation, etc., for directors and corporate officers separately and take exceptional measures in cases where it deems such action necessary.

The Compensation Committee has established the following Basic Policy concerning compensation paid to directors and corporate officers in the Rules for the Operation of the Compensation Committee.

The Compensation Committee examines various issues concerning the compensation paid to directors and corporate officers, confirms the level of compensation each year, and determines the compensation system for the following year.
The Compensation Committee actively incorporates and utilizes data, etc., from outside specialized organizations when examining various issues related to compensation and investigating and examining the level of compensation.

Compensation paid to directors is only a fixed base compensation. The duty of directors is to supervise management, and a fixed rate not incorporating performance-based compensation is used to ensure that directors are able to properly perform their oversight functions. The level of compensation is intended to be set at the upper middle range for the industry.

Compensation paid to corporate officers is determined in accordance with these basic policies by the Compensation Committee with an aim to enable the Company to attract excellent personnel to the Company’s management cadre and to strongly motivate corporate officers in the performance of their duties, thereby contributing substantially to the Company, and with a recognition of the differences in the levels and mechanisms of compensation, etc., in each country or region.
Compensation paid to corporate officers is composed of base compensation, bonuses, and stock-based compensation, as shown in the following figure. The level of compensation paid to corporate officers is intended to be set at the upper middle range for the industry.

The compensation paid to corporate officers is composed of base compensation, bonuses, and stock-based compensation at a ratio of 6:3:1, and performance-based compensation accounts for 40% of total compensation.

In the case of compensation, etc., for corporate officers who have been appointed from an overseas subsidiary and corporate officers who have advanced specializations or qualifications, etc., the compensation paid is deliberated on and determined on an individual basis considering differences in local compensation systems, compensation levels, and specializations of duties, although the process of determining compensation is the same. In particular, the performance-based compensation of corporate officers who have been appointed from an overseas subsidiary adopts a medium- to long-term incentive system instead of a stock-based compensation system.
The Company’s stock-based compensation system is a medium- to long-term incentive plan that provides stock-based compensation to corporate officers through a trust based on the degree of attainment of Company-wide performance objectives.
It is designed to motivate the Company’s corporate officers to share the profit-consciousness of shareholders, and to perform duties from a medium- to long-term perspective on performance and stock prices.

Stock-based compensation provided to corporate officers increases or decreases each year according to Company-wide performance. In addition, in the medium and long term, when stock prices fluctuate, the actual value of the compensation fluctuates accordingly. The Company believes that maintaining this mechanism will strengthen the motivation of corporate officers to take the perspective of shareholders and strive to increase corporate value.
Company regulations prohibit corporate officers from selling Eisai stock while in office and until at least 1 year after the individual has left that position.

The Compensation Committee deliberates on and determines the performance evaluations of corporate officers and the amount and number of shares granted to each person as performance-based compensation (bonuses and stock-based compensation). The bonuses and stock-based compensation of corporate officers are calculated based on the degree of attainment of Company-wide performance objectives and the degree of attainment of individual performance objectives using the above formula.
The degree of attainment of Company-wide performance objectives is determined based on an evaluation of consolidated revenue, consolidated operating profit, consolidated profit for the year (attributable to the parent company), and consolidated ROE. Each fiscal year, the Compensation Committee evaluates the achievement of Company-wide performance objectives in a range of 0% to 150%, based on the degree of achievement of each item.
The Company decided to adopt these 4 evaluation indicators because first of all, they represent management indicators to share with shareholders as published numerical targets for achieving the business plan for the corresponding fiscal year, and because the Company considers consolidated ROE an important indicator of the sustained creation of value for shareholders. The Compensation Committee has deemed the 4 indicators appropriate for evaluating the performance of duties.
As for the degree of attainment of individual performance objectives, the Compensation Committee determines the individual evaluations proposed by the Representative Corporate Officer and CEO after evaluation, in accordance with the degree of achievement of the specific individual performance objectives given by each corporate officer. Further, weighted points are assigned to the performance objectives in accordance with the priority of the objectives, and after deliberation with the Representative Corporate Officer and CEO, the individual performance objectives are proposed to the Compensation Committee. The objectives are determined by the Compensation Committee after evaluation of their suitability.
As a result, bonus payments to corporate officers are paid in the range of 0% to 225% of the bonus base value, and stock-based compensation is provided in the range of 0% to 150% of the base number of granted shares.

The grand total of compensation paid by the Company to its directors and corporate officers in FY2021 (from April 1, 2021, to March 31, 2022) was as indicated below.

(Notes) 1 As the compensation of directors also serving as corporate officers is only the compensation for corporate officers, the compensation of the Director, Representative Corporate Officer and CEO is included in the amount for corporate officers.

2 Figures for base compensation are the total figures for base compensation paid to each applicable director and corporate officer for the respective terms in FY2021.

3 Figures for bonus payments to corporate officers are the total figures representing the total value of planned accrued bonuses to be paid in July 2022 to eligible corporate officers for the period from April 2021 through March 2022, together with the total value of bonus payments* paid in July 2021 to eligible corporate officers for the period from April 2020 through March 2021, less the value of the reserve for bonus payments disclosed in the business report for FY2020.
＊Because it was found that the degree of attainment of Company-wide performance objectives for FY2020 did not reach the level for payment of performance-based compensation, the Compensation Committee formulated exceptional measures in accordance with internal rules and paid an exceptional bonus.

4 Figures for stock-based compensation of corporate officers are the total figures representing the total value of planned accrued stock-based compensation to be granted in July 2022 to eligible corporate officers for the period from April 2021 through March 2022, together with the total value of stock-based compensation, etc., granted in July 2021 for the period from April 2020 through March 2021, less the value of the reserve for stock-based compensation disclosed in the business report for FY2020. The stock-based compensation of corporate officers indicated is based on the total amount obtained by multiplying the total number of the Company’s common stock granted or scheduled to be granted to the relevant corporate officer by the unit price of the Company’s shares held by a trust.

5 Stock options have been abolished since the transition to the stock-based compensation system in June 2013, and no necessary expenses for accounting were recorded beginning in FY2015, and are therefore not shown in the table.

6 In regard to the stock-based compensation of corporate officers, half of the shares granted based on the decision of the Compensation Committee according to the degree of attainment of Company-wide performance objectives is granted as stock, and half is converted within the trust then paid as a monetary amount equivalent to the shares converted to cash. No shares were granted for the period from April 2020 through March 2021 during the fiscal year in question in accordance with the decision of the Compensation Committee.