Remuneration

Directors' Remuneration Policy/System

Policy for determining directors' remuneration

Company Policy for Decisions on the contents of individual remuneration for directors[224KB]

Remuneration Advisory Committee

MOL follows objective, transparent procedures to determine the individual remuneration of directors, according to resolutions by the Board of Directors based on deliberation/report of the Remuneration Advisory Committee chaired by an outside director. In addition, the committee reviews the directors' and executive officers' remuneration system appropriately to examine the ideal form for directors' remuneration, including incentives for long-term enhancement of corporate value, from an objective standpoint focusing on "stakeholders' viewpoint."

Overview of the Remuneration Advisory Committee (Fiscal 2023)

Percentage of outside directors: 75%
Review frequency: 7 times/year
Chairman: Outside Director Masaru Onishi
Members: Chairman Junichiro Ikeda
President & CEO Takeshi Hashimoto
Outside Director Hideto Fujii
Outside Director Etsuko Katsu
Outside Director Mitsunobu Koshiba

Main Agenda Items in Fiscal 2023

Inclusion of Core KPIs from the BLUE ACTION 2035 management plan in the remuneration plan for directors;
Single fiscal year performance-based compensation for directors in FY2023 and long-term target contribution-based compensation;
Peer group review to ensure the appropriateness of remuneration levels; and other matters

Remuneration for executive directors

Overall structure

The structure of remuneration for executive directors including the MOL chairman and president & CEO is prescribed as follows.

Standard remuneration structure
(Model remuneration upon achievement of performance target)

Image of directors' remuneration payment by achievement

* "Upon achievement of performance target" is defined as reaching ¥100 billion in consolidated ordinary profit, which is the assumption used in designing the MOL directors' remuneration system, and as an achievement level is "standard" in long-term target contribution-based remuneration.
* The above diagrams illustrate calculations based on a certain level of the Company's business performance and share price.

Remuneration classification	Weight	Period	Time of payment	Outline/Calculation method
Fixed remuneration	Monthly Remuneration (Cash)	60%	1 month	Next month	Monthly remuneration is paid as fixed remuneration based on responsibilities to encourage robust business execution.
Variable remuneration	Single Fiscal Year Performance-Linked Remuneration (Cash)	20%	1 year	June of next year	Single fiscal year performance-based remuneration (cash) is paid as variable remuneration reflecting short-term performance. Consolidated profit before tax^1 [Environment] GHG emissions intensity reduction rate^1 [Safety] 4 Zeros and Safety Operations KPI^{1 2} [Human capital] Head Office land-based employees: Percentage of female manager/MGKP^3 incumbency rate^1 [Digital Transformation (DX)] Conversion rate to value-creating and safety operations^1 Achievement level for profit plan of the business division the director is in charge of 1 From the perspective of motivating the achievement of "BLUE ACTION 2035," consolidated profit before tax is linked to both financial and non-financial indicators set forth in the plan. 2 KPI and Benchmarks are set to further foster safety awareness at MOL. For details on the index, please refer to "Safe Operation Management Structure". 3 MGKP stands for "MOL Group Key Positions" and refers to posts designated as Head Office general managers, regardless of group or global position.
Long-Term Target Contribution-Based Remuneration (Stock)	20%	As shown in the chart below	As shown in the chart below	Performance-based remuneration (stock) system is adopted with the objectives of linking mid-to-long-term stock prices and business performance, and further share value with shareholders through increased shares held by directors (excl. outside directors) and executive officers. In this system, the remuneration is paid by share according to achievement level of a predetermined stock price index and performance index/target in a certain evaluation period of time. In addition, part of the remuneration is paid in cash with the objective of providing funds needed to pay taxes.

Remuneration classification

Weight

Period

Time of payment

Outline/Calculation method

Fixed
remuneration

Monthly Remuneration (Cash)

60%

1 month

Next month

Monthly remuneration is paid as fixed remuneration based on responsibilities to encourage robust business execution.

Variable
remuneration

Single Fiscal Year Performance-Linked Remuneration (Cash)

20%

1 year

June of next year

Single fiscal year performance-based remuneration (cash) is paid as variable remuneration reflecting short-term performance.

Consolidated profit before tax^*1
[Environment] GHG emissions intensity reduction rate^*1
[Safety] 4 Zeros and Safety Operations KPI^{*1 *2}
[Human capital] Head Office land-based employees: Percentage of female manager/MGKP^*3 incumbency rate^*1
[Digital Transformation (DX)] Conversion rate to value-creating and safety operations^*1
Achievement level for profit plan of the business division the director is in charge of

*1 From the perspective of motivating the achievement of "BLUE ACTION 2035," consolidated profit before tax is linked to both financial and non-financial indicators set forth in the plan.
*2 KPI and Benchmarks are set to further foster safety awareness at MOL. For details on the index, please refer to "Safe Operation Management Structure".
*3 MGKP stands for "MOL Group Key Positions" and refers to posts designated as Head Office general managers, regardless of group or global position.

Long-Term Target Contribution-Based Remuneration (Stock)

20%

As shown in the chart below

Performance-based remuneration (stock) system is adopted with the objectives of linking mid-to-long-term stock prices and business performance, and further share value with shareholders through increased shares held by directors (excl. outside directors) and executive officers.
In this system, the remuneration is paid by share according to achievement level of a predetermined stock price index and performance index/target in a certain evaluation period of time. In addition, part of the remuneration is paid in cash with the objective of providing funds needed to pay taxes.

Evaluation Indicators for Long-term Target Contribution-based Remuneration

Long-term target contribution-based remuneration (performance-based remuneration (stock))

Indicators	Weight	Period	Payment time	Reason for choosing this indicator and details of evaluation
(a) Comparison of the Company's Total Shareholder Return (TSR) and growth rate of Tokyo Stock Price Index (b) Comparison of the Company's TSR growth rate to competitors' TSR growth rates	30%	3 years	At the time of retirement	Incentive to increase share price
ROE	40%	1 year	At the time of retirement	Incentive to improve profit attributable to owners of parent and increase efficiency of shareholders' equity
Individual medium- to long-term contribution targets	30%	1 year	At the time of retirement	Promote initiatives in the current fiscal year that will show results in future years, in order to enhance corporate value The evaluation of the Chief Executive Officer and other executive directors of the Board reflects the progress of climate change measures and other ESG-related initiatives.

Remuneration for non-executive directors

Remuneration for non-executive directors, including outside directors, consists of basic compensation (monetary compensation) and stock compensation (restricted stock) not linked to performance (both fixed compensation), in order to implement shared shareholder value in addition to supervising business execution.
This remuneration system was newly introduced from fiscal year 2022, with a change to a structure in which 10% of the existing fixed monetary compensation amount of 100% is replaced by restricted stock (approximate).

(*) The above chart is a guide to the compensation ratio based on the assumption of a certain unit price of the company's shares.

Remuneration for Audit & Supervisory Board Members

Remuneration for Audit & Supervisory Board members is determined based on discussions between the members within the limits approved at the General Meeting of Shareholders, with consideration given to whether or not an Audit & Supervisory Board member serves in a full-time capacity, the amount of auditing work assigned, and the levels of director remuneration. Bonuses and stock options are not provided to Audit & Supervisory Board members.

Remuneration Performance

For details of executive remuneration, please refer to "Sustainability Data".

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