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FY2020 Disclosure: Executive Compensation 

(4) Executive Compensation and Related Matters 

a. Compensation for Directors/Auditors 

(i) Compensation for Directors

Compensation for Directors who concurrently serve as Executive Officers shall be described in “b. Compensation for Executive Officers” below.

Basic policy regarding compensation for Directors who do not concurrently serve as Executive Officers shall be as follows:

  • Highly transparent and objective
  • Improvement of corporate value and compensation must interlock to share awareness of profit with shareholders.
  • Contribute to ensuring and retaining global management team that satisfies accurate ability requirements to realize corporate vision

For Directors who do not concurrently serve as Executive Officers, Renesas pays base salary as fixed compensation and, for some of such Directors, in order to secure diverse and excellent human resources and to raise awareness further of their roles, stock-based compensation (1 yen stock options based on the term of office (Time-based Stock Option: TSO)), up to the compensation limit (JPY2,000million/year, of which compensation for Outside Directors is up to JPY400M within the limitation) resolved at the Annual General Meeting of Shareholders held on March 29, 2018.

The details of the TSO are described below in “b. Compensation for Executive Officers” “(ii) Details” “(a) Compensation philosophy and elements” “(ii) Stock based Compensation” “<Stock price-linked compensation (Long-term incentive (LTI))>.” Regarding stock-based compensation, Renesas plans to introduce Restricted Stock Units (RSU) in April 2021 in place of TSO.

The Representative Director, Chairman received performance-linked compensation (Short-term incentive (STI)) while he was an Executive Officer, and the amount is included in the table of “(iii) Total amount of compensation, etc. for each officer category, total amount of compensation, etc. for each type and number of eligible executives of the filing company” described below.

The compensation ratio and level, as well as mix of compensation, etc. of Directors who do not concurrently serve as Executive Officers are set for each Director taking into account the appropriate ratio and level in light of the above-mentioned basic policy, corresponding to the responsibilities of the Directors of Renesas. The Compensation Committee, who is entrusted with the distribution of individual executive compensation by the Board of Directors, makes the decisions on the compensation. Over half of the members of the Compensation Committee are occupied by Outside Officers and the committee is chaired by an Outside Director.

(ii) Compensation for Auditors

Renesas pays base salary as fixed salary that is not tied to performance for Auditors to secure their independency.

Compensation to Auditors is determined and paid within the compensation limit resolved at the Extraordinary General Meeting of Shareholders held on February 24, 2010 (up to 12 million yen per month) taking into consideration the discussion of Auditors.

(iii) Total amount of compensation, etc. for each officer category, total amount of compensation, etc. for each type and number of eligible executives of the filing company 

  Number of Incumbents Each Compensation Item Amount Total Compensation Amount
Base Salary Performance-linked Compensation Stock Price-Linked Compensation
Short-Term Incentive (STI) Long-Term Incentive (LTI)
Performance-Based Stock Options (PSO) Time-Based Stock Options (TSO)
Directors 2 86 77 0 61 225
Outside Directors 5 31 - - 0 31
Corporate Auditors 1 20 - - - 20
Outside Auditors 2 12 - - - 12
(Notes)
1) As of the end of the current consolidated fiscal year, the number of Directors is 6 (including 4 Outside Directors) and the number of Auditors is 4 (including 3 Outside Auditors).
2) The compensation of Directors includes the compensation for the CEO who also serves as an Executive Officer.
3) Payment amount is calculated with rounding off, and total compensation amount may not be the same to the total of each compensation item.
4) Regarding compensation by stock acquisition rights granted as stock-based compensation type stock options, the amounts in the table indicate the fair value of those vested during the current consolidated fiscal year calculated based on the closing price of the stock on the vesting date and certain other factors. The amount of accounting expenses recorded in the current consolidated fiscal year is 267M yen for Internal Directors and 25M yen for Outside Directors.
5) For non-Japanese resident Officers, the currency for payment is converted to Japanese yen at the average rate in the current consolidated fiscal year (1 US dollar = 107.27 yen).

 

b. Compensation for Executive Officers

The following describes Renesas’s compensation program for its Executive Officers (in this section, Directors who also serve as Executive Officers and other Executive Officers are collectively referred to as "Executive Officers"), whose composition is outlined below. Executive Officers who are also Directors are remunerated as Directors.

Name Title/Responsibilities Directors Executive Officers
Hidetoshi Shibata Representative Director, President and CEO
Shuhei Shinkai Senior Vice President and CFO -
Jason Hall Senior Vice President and CLO -
Shinichi Yoshioka Senior Vice President and CTO -
Shingo Yamamoto Executive Vice President, General Manager of Automotive Solution Business Unit
Tomomitsu Maoka Senior Vice President, Deputy General Manager of Automotive Solution Business Unit (A&P Products) -
Sailesh Chittipeddi Senior Vice President, General Manager of IoT and Infrastructure Business Unit -
Chris Allexandre Senior Vice President, Head of Sales and Corporate Digital Marketing, IoT and Infrastructure Business Unit -
Hiroto Nitta Senior Vice President, Head of SoC Business, IoT and Infrastructure Business Unit -
Roger Wendelken Senior Vice President, Head of MCU Business, IoT and Infrastructure Business Unit -
Masahiko Nozaki Executive Vice President, General Manager of Production & Technology Unit

This section includes:

  • The overview of the compensation program for the current consolidated fiscal year, the philosophy behind the design;
  • The type of compensation, the amount of compensation paid by type, and the total amount of compensation for the current consolidated fiscal year for each Executive Officer, who are subject to disclosure by Renesas.

The Executive Officers of Renesas have the broadest job responsibilities and policy-making authority in the company.

We hold them accountable for the company’s performance as well as for maintaining a culture of strong ethics and compliance.

We aim to be transparent in our disclosure regarding executive compensation of not only our Directors, including the CEO, but also for our core members of the management team.

Therefore, we include in our disclosure individual compensation of the CEO, Chief Financial Officer (CFO), Chief Legal Officer (CLO), and Executive Officers in charge of ABU and IIBU, respectively, not limited to compensation of individual Directors of no less than JPY100 million, which is required to be disclosed by law.

(i) Executive summary

We regularly updates our compensation programs for Executive Officers. We view compensation as one of the essential management tools to help Renesas accelerate the strengthening of its business portfolio in the focus areas of Auto, IoT and Infrastructure, where Renesas has global presence and demonstrates strong market competitiveness.

In order to invite and retain excellent Executive Officers who can drive our business, we design compensation packages that are suitable and competitive as a global company.

Renesas' compensation program is designed to include performance-linked compensation, to encourage Executive Officers to think and act in the best interests of shareholders in the short and long term. The majority of total compensation for our Executive Officers each year is paid as performance-linked compensation and stock price-linked compensation. Short-term incentives (STI), which are performance-linked compensation, are tied to Renesas’ short-term performance, and stock price-linked compensation is tied to the long-term performance of the Company. We believe our compensation program holds our Executive Officers accountable for direct financial results and overall market competitiveness of Renesas.

<Plan for the future>

We are aiming to update our management platform to align with our business operation, which is becoming more and more global recently. As part of our innovation, we plan to update our executive compensation programs in the coming years.

As our first step, we plan to introduce in April 2021 Performance Share Units (PSU) and Restricted Stock Units (RSU), which have been widely used globally, instead of 1 yen stock options based on the performance (Performance-based Stock Option (PSO)) and the term of office (Time-based Stock Option (TSO)). In the event that an eligible Officer is liable for any misconduct stipulated by the Board of Directors of Renesas or falls under any of the circumstances stipulated by the Board of Directors, such Officer shall lose all or part of the unvested units. Further, if it is later found that any such circumstance or any conduct that caused any such circumstance existed prior to the vesting of the units and the Board of Directors deems necessary, the eligible Officer shall return all or part of the shares of Renesas’ common stock delivered upon vesting of such units or cash equivalent to the value of such shares, in each case, without any compensation.

When establishing compensation programs and levels, we consider global and Japanese semiconductors and other companies in related industries as our peer companies for benchmarking. We compare our executive compensation packages with the market executive compensation programs annually and update them according to the results of such comparison. Corresponding to global trend of strengthening corporate governance for listed companies, we will continue to update the executive compensation programs to align to the practices of global companies, and seek to have our management team and shareholders recognize that our compensation programs is suited to the market and supports a positive effect on our business performance.

(ii) Details

  1. Compensation philosophy and elements

Our basic philosophy regarding compensation for Executive Officers is as follows:

  • Highly linked to company performance, and highly transparent and objective.
  • Improvement of corporate value and compensation must interlock to share awareness of profit with shareholders.
  • Contribute to ensuring and retaining global management team that satisfies accurate ability requirements to realize corporate vision.

Current compensation mix is composed of:

  • Base salary as fixed compensation
  • Performance-linked compensation focused on achievement of nearer-term financial and strategic objectives (Short-term incentives)
  • Stock options as stock price-linked compensation, where management is motivated to increase shareholder value (Long-term incentives)

We believe our current programs are aligned with global and Japanese market practices and interests of our stakeholders. The ratio of each type of compensation in the total amount of compensation is set in consideration of the appropriate ratio, according to market comparisons, global trends, and the roles and achievements of each Executive Officer. In addition, in order to tie long-term performance to our executive compensation and create strong alignment between shareholders and the management team, Renesas has been promoting a compensation strategy that emphasizes long-term incentives in comparison with many Japanese companies, therefore, we have set the ratio of stock compensation at such a level that it will comprise a majority of the total amount of compensation.

i) Cash compensation

<Base salary>

Base salary is the core compensation that reflects the market value for particular roles and responsibilities in the organization. It is a reward for actual responsibilities, competencies, and experience of each Executive Officer.

Base salary is paid as a fixed amount based on scope of responsibilities and the expected contribution to the company. This is the fundamental component of executive compensation, and is set at a level that invites and ensures retention of competent executive officers, and motivates them to drive global business expansion.

Base salary will be adjusted annually considering market salary increase rates, company/BU performance and individual performance.

<Performance-linked compensation (Short-term incentive (STI))>

Short-term incentive (STI) is offered to the Executive Officers in order to motivate and reward them for overall company financial results, as well as an assessment of the individual performance of Executive Officers each fiscal year. STI is an essential element of the executive compensation program and is focused on motivating Executive Officers’ to contribution to the performance objectives for the company.

The STI program is based on one-year company performance, composed of performance of the Automotive solution Business Unit and the IoT and Infrastructure Business Unit, and evaluation is conducted using certain measures including the following to evaluate business expansion and its profitability.

  • Revenue (growth rate)
  • Operating margin

Evaluation measures and goals are set annually after review by the Compensation Committee, as well as the amounts of payment in response to business performance.

ii) Stock based compensation

<Stock price-linked compensation (Long-term incentive (LTI))>

Long-term incentive (LTI) refers to variable pay based on measures that extend for a period of more than one year, and typically align payouts with value results experienced by shareholders. The role of long-term incentives is to link financial incentives to Executive Officers with organization’s long-term performance, and shareholder’s long-term focus.

Our current long-term incentive is provided by Stock Options, and the actual profits received by Executive Officers are determined based on stock price growth, and/or 3-year total shareholder return (TSR).

Specifically, our stock compensation consists of Performance-based Stock Options (PSO), where the number of stock acquisition rights exercised is determined according to the total shareholder return (TSR) and Time-based Stock Options (TSO) without such conditions. Of these, PSO is designed with our TSR as the performance measures in order to connect further to strengthening awareness and activities aimed at maximizing corporate value over the medium-to-long term and contributing to stock prices. The number of stock options to be granted is determined based on the option price,* on the basis of the grant target amount set for each person according to their roles and responsibilities. The composition ratio of grant target amount for PSO and TSO is 50%: 50%.
*Fair value of stock options at the time of resolution of the Board of Directors regarding the issuance of each stock option calculated by a fair calculation method such as the binomial model

Type Objective Base Composition Ratio

Performance-Based Stock Option (PSO)

To improve Officers' willingness to contribute to rise in share price and corporate value TSR 50%

Time-Based Stock Option (TSO)

To attract and retain outstanding human resources by increasing the linkage between compensation and stock price and sharing profits with shareholders Tenure of Office 50%

[PSO]

  • Grantees are granted the number of stock acquisition rights calculated by the following formula:

Number of stock acquisition rights to be granted = (Grant target amount set for each person x 2) / Option price.

(*) Above grant target amount set for each person may be adjusted within the range of -10% to +10% depending on the individual performance evaluation results set each year.

(*) The definitive number of stock acquisition rights to be granted is decided by the Board of Directors.

(*) The number of stock acquisition rights that can be finally exercised will be fixed within the range of 0% to 200% of standard number which is calculated by dividing the grant target amount set for each person by option price taking into account performance condition. However, because it is impossible to grant additional stock acquisition right automatically under applicable laws and regulation, the Company grants grantee the maximum number of stock acquisition rights which the grantee can exercise in the best-case scenario, i.e. number of stock acquisition rights which is calculated by dividing the twice amount as granted target amount set for each person by option price at first. After that, when the number of stock acquisition rights which the grantee can finally exercise is fixed according to the following exercise condition, the excess number of stock acquisition rights which is determined not to be exercised will be invalidated.

  • As a general rule, after the anniversary date three years after the grant date, the final number of stock acquisition rights to be determined as follows will become exercisable, taking into account the performance requirements for the period.

Performance indicator

TSR: It is determined by comparison with the companies which constitute SOX (Philadelphia Semiconductor Index) and TOPIX (Tokyo Stock Price Index)

Performance evaluation period

Three years from April 1st of the year of grant

Growth rate of our TSR

(Average stock price for the 3 months prior to the end of the performance evaluation period

- Average stock price for the 3 months prior to the start date of the Performance Evaluation Period

+ Total amount of dividends per share in relation to the Company's dividends from surplus for which the record date is a day during of the Performance Evaluation Period)

/ Average stock price for the 3 months prior to the start date of the Performance Evaluation Period

Image
Diagram: Executive Compensation

The way to determine the exercisable number of stock acquisition rights

- When the growth rate of our TSR and the growth rate of TSR of companies constituting SOX are categorized from the lowest, check the percentage listed in the following (1) to (5) category which the growth rate of our TSR is classified ("SOX calculation rate").

- When the growth rate of our TSR and the growth rate of TSR of companies constituting TOPIX are categorized from the lowest, check the percentage listed in the following (1) to (5) category which the growth rate of our TSR is classified ("TOPIX calculation rate").

- Grantee can exercise only the number of stock acquisition rights obtained by multiplying the average number of SOX calculation rate and TOPIX calculation rate by the number of stock acquisition rights granted. Grantee cannot exercise other stock acquisition rights. Notwithstanding the foregoing, if the growth rate of our TSR is less than 0%, the average number obtained above will be limited to 50%.

Image
Table: Executive Compensation

 

[TSO]

- Grantees will be granted the number of stock acquisition rights calculated by the following formula:

The number of stock acquisition rights to be granted =

grant target amount set for each person / option price.

(*) Above grant target amount set for each person may be adjusted within the range of -10% to +10% depending on the individual performance evaluation results set each year.

(*) The definitive number of stock acquisition rights to be granted will be decided by the Board of Directors.

  • As a general rule, one-third of the rights become exercisable each time a year passes from the day following the grant date, and consequently, all granted stock acquisition rights become exercisable on and after the anniversary date three years thereafter.

(b) Comparator group (FY2021~)

The Compensation Committee reviewed the companies subject to comparison of compensation in order to develop an understanding of program designs and competitive compensation levels. Given that we are operating our business globally, Renesas selected the companies to be compared not only in Japan, but also in the US and Europe, which are both our main business fields, and also where global executive compensation programs are in play. We referred to the three key global regions with an appropriate balance, and set future performance goals, and established compensation programs that seek to encourage achievement of business and financial metrics globally and regionally.

Corporate groups subject to comparison of compensation included high technology companies headquartered in Japan, which fall under either the category of competitors in human resources acquisition, and/or other companies in the same industry from the viewpoint of investors. As the correlation of revenue size and executive compensation level is not so strong in Japan in the current stage, we selected Japanese companies from wider revenue size range. The disclosed personal compensation data of the companies to be compared as for compensation is supplemented by market compensation data (Mercer LLC survey). For US and Europe, we identified semiconductor companies taking into account revenue size and market capitalization.

Japan Headquartered
(Peer = 12)
US Headquartered
(Peer = 13)
Europe Headquartered
(Peer = 4)

Sony

Toshiba

Mitsubishi Electric

Tokyo Electron

Advantest

DISCO

Hitachi

Panasonic

Olympus

TrendMicro

Denso

TDK

Analog Devices

Skyworks Solutions

Texas Instruments

Microchip Technology

Advanced Micro Devices

Applied Materials

Broadcom

Lam Research

Marvell Technology Group

Maxim Integrated

Micron Technology

Qualcomm

Xilinx

STMicroelectronics

NXP Semiconductors

Infineon Technologies

ASML Holding

(c) Analysis regarding compensation determination

i) Total compensation

The Compensation Committee reviewed both package-wide and type-by-type compensation before finally determining Executive Officer compensation. The target information includes the total amount of cash compensation (base salary and STI), stock based compensation amount, and the total amount of compensation (base salary, STI and stock based compensation), and the impact of the compensation plan on other compensation elements.

In alignment with the basic philosophy of compensation, the committee reviewed each position, role, and status of service including career history, in deciding the amount, mix of compensation and incentive for the Executive Officers, in relation to company and individual performance and mid to long-term value creation of the company. The committee judged in assessing whether the total compensation was consistent with the objectives of the program.

Based on this comprehensive review, the committee determined that the level and mix of compensation was appropriate for the current consolidated fiscal year.

<Base salary>

The amount of base salary to be paid to Executive Officers for the current consolidated fiscal year was determined after review by the Compensation Committee, taking into consideration the role of each position and the relevant employment market (Japan or US).

In the current consolidated fiscal year, based on the situation of the Covid-19 epidemic, in principle, the base salary of Executive Officers was reduced by 10% from July 2020, and in addition, payments of an additional 20% of base salary for the CEO and an additional 10% of base salary for Executive Officers other than the CEO are deferred.

We have allowed Executive Officers and employees to apply for the voluntary one yen stock option program in July 2020. This program is intended for Executive Officers and employees who have agreed to a reduction of their base salary, and to whom stock options at a value equivalent to the salary reduction with a certain premium will be granted.

 

<Performance-linked compensation (Short-term incentive (STI))>

The STI target amounts for the current consolidated fiscal year for Executive Officers who are subject to disclosure by the Company are as follows.

Name Currency STI
(Target)
Base Salary
(Plan)
STI % of Base
Hidetoshi Shibata JPY 50,000,000 72,000,000 69.4%
Shuhei Shinkai JPY 25,000,000 20,400,000 122.5%
Jason Hall USD 250,000 350,000 71.4%
Shingo Yamamoto JPY 32,500,000 25,200,000 129.0%
Sailesh Chittipeddi USD 412,500 550,000 75.0%

Provisionally STI amounts for the Executive Officers who manage Automotive solution BU or IoT and Infrastructure BU are settled based on Revenue (growth rate) and operating margin (Non-GAAP basis) of each BU. The separate calculation methods are applied to each BU to take each business characteristics into consideration.

Regarding the Executive Officers who lead other Units (Production & Technology Unit and Corporate), the provisional amounts are calculated based on the weighted average of the both BUs’ payout%.

This scheme is the same as the scheme for employees, and the incentives are shared with the employees.

The Compensation Committee decides the final payment amount based on the provisional STI payment amount determined under the above scheme, the Company financial performance, various conditions other than financial results, and other elements of the financial year.

<Stock price-linked compensation (Long-term incentive (LTI))>

The grant target amount of each person used as the base for calculation of the number of stock options granted to Executive Officers who are subject to disclosure by the Company in the current consolidated fiscal year is as follows.

Name Currency Stock Price Linked Compensation
(Grant Target)
   
PSO
(Grant Target)
TSO
(Grant Target)
Hidetoshi Shibata JPY 235,000,000 117,500,000 117,500,000
Shuhei Shinkai JPY 59,000,000 29,500,000 29,500,000
Jason Hall USD 600,000 300,000 300,000
Shingo Yamamoto JPY 73,000,000 36,500,000 36,500,000
Sailesh Chittipeddi USD 3,030,000 1,515,000 1,515,000
Note: This table shows each person’s annual grant target amount. It does not include the amount granted based on the voluntary one yen stock option program. 
The amount actually vested, including the voluntary one yen stock option program, is stated in the table of “(d) Total amount of consolidated compensation, etc. for each Executive Officer subject to disclosure” below.

The compensation mix for the Executive Officers subject to disclosure by the Company for the current consolidated fiscal year is as follows.

The percentage of variable portion is larger compared to the current general situation in executive compensation in Japan, to reward Executive Officers for company and individual performance.

Image
Executive Compensation Pie Chart
(Note) Each compensation element is based on a target base amount before reflecting performance. (as of March 31, 2021)

ii) Performance evaluation for the current consolidated fiscal year (Non-GAAP basis)

Although revenue decreased in the current consolidated fiscal year, operating margin increased.

The three-year compound annual growth rate of total shareholder returns decreased by 36.3%, below the median of companies constituting TOPIX and below the median of companies constituting SOX.

Revenue

  • Renesas’s revenue was lower in 2020 than in the prior year, decreasing by 0.4%.
  • Revenue by BU are below:
  • Revenue by the Automotive Solutions BU was lower in 2020 than in the prior year, decreasing by 8.1%.
  • Revenue by the IoT and Infrastructure BU was higher in 2020 than in the prior year, increasing by 10.3%.

Operating margin

  • Renesas’s operating margin was higher in 2020 than in the prior year, increasing by 6.3pts.
  • Operating profit (margin) by BU are below:
  • Operating margin of the Automotive Solutions BU was higher in 2020 than in the prior year, increasing by 5.8pts.
  • Operating margin) of the IoT and Infrastructure BU was higher in 2020 than in the prior year, increasing by 6.8pts.

Total shareholder return (TSR)

The three-year compound annual growth rate of TSR used to assess PSO performance in FY2020 decreased by 36.3%, below the median of companies constituting TOPIX and below the median of companies constituting SOX.

Performance outline

  1-Year 3-Year
Revenue Growth -0.4%  
  Automotive Solution Business -8.1%  
  IoT and Infrastructure Business +10.3%  
Operating Margin +6.3pts  
  Automotive Solution Business +5.8pts  
  IoT and Infrastructure Business +6.8pts  
Total Shareholder Returns (TSR)   -36.3%
(Notes)
- Revenue and Operating margin: performance is disclosed on Renesas Group-consolidated, Non-GAAP basis
Calculation of TSR:

Performance Evaluation Period: April 1, 2017 to March 31, 2020
-
 (Average stock price for the 3 months prior to the end of the Performance Evaluation Period
- - Average stock price for the 3 months prior to the start date of the Performance Evaluation Period
- + Total amount of dividends* per share in relation to Renesas’s dividends from surplus for which the record date is a day during the Performance Evaluation Period)
- / Average stock price for the 3 months prior to the start date of the Performance Evaluation Period
* Renesas had no dividends from surplus during the Performance Evaluation Period.

iii) Individual performance results (MBO)

The Compensation Committee considered CEO’s individual performance. The performance of CEO was judged according to the overall contribution to performance of the company.

For Executive Officers other than the CEO, subject to disclosure by the Company, the CEO considered the factors described below in assessing individual performance.

- Mr. Shinkai is the CFO. CEO noted the financial management of the company.

- Mr. Hall is the CLO. CEO noted the legal management of the company, as well as operational performances of IT and procurement functions.

- Mr. Yamamoto was responsible for General Manager of Automotive Solution Business Unit. CEO noted the financial performance and strategic position of the business unit.

- Mr. Chittipeddi was responsible for General Manager of the IoT and Infrastructure Business Unit. CEO noted the financial performance and strategic position of the business unit.

(d) Total amount of consolidated compensation, etc. for each Executive Officer subject to disclosure

Name Each Compensation Item Amount Total Compensation Amount
Base Salary Performance-linked Compensation Stock Price-Linked Compensation
Short-Term Incentive (STI) Long-Term Incentive (LTI)
Performance-Based Stock Options (PSO) Time-Based Stock Options (TSO)
Hidetoshi Shibata 53 66 0 45 165
Shuhei Shinkai 19 32 0 5 56
Jason Hall 31 35 0 16 82
Shingo Yamamoto 15 33 0 22 70
Sailesh Chittipeddi 51 67 0 101 219
(Notes)
Payment amount is calculated with rounding off, and consolidated total compensation amount may not be the same to the total of each compensation item.
- Based on the situation of the Covid-19 epidemic, the base salary of the above Executive Officers has been reduced by 10%. Some Executive Officers have applied for the voluntary one yen stock option program and are granted stock  options at a value equivalent to the amount reduced from the base salary with a certain premium. The above is the amount that reflects such reduction and additional grant.
- Stock-based compensation indicates the amount vested in the current consolidated fiscal year.
- Executive Officer who is also Director (CEO) is remunerated as Director.
- For Mr. Hall, in addition to the above compensation, the Company bears allowances related to the secondment from the US subsidiary to the Company and partial supplementation of the accompanying income tax.
- For non-Japanese resident officers, the currency for payment is converted to Japanese yen at the average rate during the period (1 US dollar = 107.27 yen).

(e) Benefits

Executive Officers are eligible to receive the same benefits as other employees of the Company, except for severance benefits. Such benefits include social insurance such as health insurance and employee pensions, accident insurance, commuting expenses, and group insurance enrollment rights.

(f) Pay ratio (compensation ratio)

The median of annual total compensation of all employees of our company (other than our CEO) for the current consolidated fiscal year was 5MJPY. The annual total compensation of our CEO was 165MJPY. Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was approximately 32 to 1.

To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the employee at the median value, we used the following methodology and material assumptions:

  • We selected December 31, 2020, as the date upon which we would identify the median employee (reference date).
  • As of the reference date, our employee population consisted of approximately 19,000 employees working at the company and consolidated subsidiaries, excluding employees on leaves of absence who are not expected to return to work.
  • To identify the employee at the median value, we used base salary and incentives information, which is paid to all employees. Salaries were annualized for all permanent employees who were employees for less than the full fiscal year or who were on an unpaid leave of absence during a portion of the year.

The annual total compensation of our CEO is the amount reported in “(d) Total amount of consolidated compensation, etc. for each Executive Officer subject to disclosure” above (Base Salary + STI + LTI).

c. Voluntary Compensation Committee

In order to ensure the appropriateness of compensation and transparency of the decision-making process, Renesas has established a voluntary Compensation Committee dominated by Outside Officers and chaired by an Outside Director as an advisor to the Board of Directors. The Compensation Committee, who is entrusted with the decisions distribution of individual executive compensation, decides  the level and mix of compensation, the setting of performance-linked compensation targets and other matters of Directors and Executive Officers.

The Compensation Committee held a total of eight meetings in the current consolidated fiscal year.