Governance | Compensation for Directors and Executive Officers
Compensation paid to Directors and Executive Officers
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|Total Amount Paid
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- Compensation to Directors who were concurrently serving as Executive Officers is included in that of Executive Officers.
- Basic compensation of 813 million yen includes other compensation (commuter pass allowance) of 750 thousand yen.
- In addition to basic compensation of Executive Officers, 27 million yen of corporate housing costs, such as housing allowance and related tax adjustments, were provided.
- Deferred compensation (such as stock options) granted during and prior to the fiscal year ended March 31, 2020 is recognized as expense in the financial statements for the fiscal year ended March 31, 2020.
- Subsidiaries of the Company paid 61 million yen to Outside Directors as compensation etc. for their directorship at those subsidiaries for the year ended March 31, 2020.
- The Company abolished retirement bonuses to Directors in 2001.
Adoption of Restricted Stock Unit program
From FY2017/18, we have adopted the Restricted Stock Unit (RSU) as a deferred compensation program for Directors, Executive Officers and employees of the firm and its subsidiaries, in lieu of existing compensation programs such as the issuance of stock acquisition rights.
Subject to certain conditions such as voluntary retirement etc., Nomura will deliver shares of common stock to RSU guarantees one to three years (up to seven years where required by local regulations) after the RSUs are granted mainly through disposal of treasury shares. Introduction of RSU awards is intended to integrate the principles of the Group's deferred compensation program and to further align the compensation program and the business strategy with the medium-to long-term interests of shareholders.
Matters relating to Individual Directors and Executive Officers' Compensation Determined by Compensation Committee
- Method of Determining Compensation Policies
As the Company is organized under the Committee System, the Compensation Committee has set the "Compensation Policy of Nomura Group" and "Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc."
Compensation Policy of Nomura Group
The "Compensation Policy of Nomura Group" is as follows.
Nomura Group is establishing its status firmly as a globally competitive financial services group. To support this, we recognize that our people are our most valuable asset. We have therefore developed our Compensation Policy for both executives and employees of Nomura Group to ensure we attract, retain, motivate and develop talent that enables us to achieve sustainable growth, realize a long-term increase in shareholder value, deliver client excellence, compete in a global market and enhance our reputation.
Our Compensation Policy is based around six key themes:
1) Align with Nomura Values and Strategies
- Compensation is designed to support delivery against the broader strategic aims of the Group.
- Levels and structures of compensation reflect the needs of each business line and allow the Group to effectively compete for key talent in the market.
- We develop our staff to support the Nomura values.
2) Reflect Firm, Division and Individual Performance
- "Pay for Performance" is our fundamental principle to motivate and reward our key talent regardless of personal background.
- We manage compensation on a firm-wide basis, taking into account the performance of the Group and supporting our ethos of sustainable growth, collaboration and client service. This enables us to manage strategic investments and still operate market-competitive compensation practices.
- An individual's compensation is determined by properly reflecting the Group, division and individual performance, ensuring that it is aligned with both the business strategy and market considerations.
- Individual compensation award decisions are underpinned by valid and rigorous performance management processes and supporting systems.
3) Establish Appropriate Performance Measurement with a Focus on Risk
- Compensation is not determined by reference solely to revenues. Risk-adjusted profits are being emphasized in Nomura's management information and performance systems and processes.
- In addition, qualitative factors such as cross-divisional collaboration, risk management, alignment with organizational values, and compliance are stressed when evaluating performance.
- Performance measurement reflects the business needs, taking account of risk associated with each business. Such risk includes market, credit, operational, and liquidity risk among others.
- In assessing and measuring risk for compensation, input and advice is received from the risk management and finance divisions.
4) Align Employee and Shareholder Interests
- Compensation of Group executives and higher paid employees should reflect the achievement of targets which are in line with the creation of shareholder value.
- For higher paid executives and employees, a part of their compensation is delivered in equity linked awards with appropriate vesting periods to ensure that their interests are closely aligned with those of shareholders.
5) Appropriate Compensation Structures
- The compensation structure reflects our desire to grow and develop our talent. It is merit based, reflecting performance and is regularly reviewed to ensure its fairness.
- For higher paid executives and employees, a significant portion of compensation is deferred, balancing short-term interests with longer-term stewardship of the Group.
- Deferred compensation should be subject to forfeiture or "clawback" in the event of a material restatement of earnings or other significant harm to the business of Nomura.
- The percentage of deferral increases as an employee's total compensation increases. A part of deferred compensation is delivered in mid/long-term incentive plans, such as equity linked awards with appropriate vesting periods.
- Guarantees of bonus/compensation should be allowed only in limited circumstances such as new hiring or strategic business needs, and multi-year guarantees should not be used as a matter of course.
- There should be no special or expensive retirement/severance guarantees for senior executives.
- Nomura will respect all areas in which it operates and will seek to ensure pay structures reflect the needs of the organization as well as regulatory and government bodies.
6) Ensure Robust Governance and Control Processes
- This Policy and any change hereof must be approved by Nomura Holdings' Compensation Committee, a majority of which consists of non-executive outside directors.
- The Compensation Committee of Nomura Holdings decides individual amounts as well as compensation policy for Directors and Executive Officers of Nomura Holdings, in line with this Policy.
- Globally, we institute a review and authorization policy for senior or high-level contracts ensuring consistency with this Policy. This is administered by Human Resources, involves Finance, Risk Management and Regional Compensation Committees and is reviewed by the Executive Managing Board.
- Compensation for employees of risk management and compliance functions is determined independently of other business divisions.
- The Compensation Committee uses market and specialist advisory groups to advice on appropriate compensation structures and levels as necessary.
- Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc.
"Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc." is as follows.
Compensation of Directors and Executive Officers is composed of base salary, cash bonus and long-term incentive plans.
1) Base Salary
- Base salary is determined based on factors such as professional background, career history, responsibilities and compensation standards of related business fields.
- A portion of base salary may be paid in equity linked awards with appropriate vesting periods to ensure that medium to long-term interests of Directors and Executive Officers are closely aligned with those of shareholders.
2) Cash Bonus
- Cash bonuses of Directors and Executive Officers are determined by taking into account both quantitative and qualitative factors. Quantitative factors include performance of the Group and the division. Qualitative factors include achievement of individual goals and subjective assessment of individual contribution.
- Depending on the level of bonus payment, a portion of payment in cash may be deferred. In addition, a portion of deferred bonus may be paid in equity linked awards with appropriate vesting periods in lieu of cash to ensure that medium to long-term interests of Directors and Executive Officers are closely aligned with those of shareholders. Such deferred bonus may be unpaid or forfeited under specific circumstances.
3) Long-term Incentive Plan
- Long-term incentive plans may be awarded to Directors and Executive Officers, depending on their individual responsibilities and performance.
- Payments under long-term incentive plans are made when a certain degree of achievements are accomplished. Payments are made in equity linked awards with appropriate vesting periods to ensure that medium to long-term interests of Directors and Executive Officers are closely aligned with those of shareholders.