Cosmo Energy Holdings has adopted the governance structure of a company with an audit and supervisory committee, and it has established an Audit and Supervisory Committee and appointed an accounting auditor. In addition, to ensure a high degree of independence, objectivity, and transparency in the process of nominating and determining the remuneration of executives, the Company has voluntarily established a Nomination and Remuneration Committee chaired by an independent outside director, with independent outside directors forming a majority of its members.
Executive Remuneration Plan
The Company has adopted an executive remuneration plan designed to ensure that the executives of the Company and its core operating companies (Cosmo Oil Co., Ltd., Cosmo Oil Marketing Co., Ltd., and Cosmo Energy Exploration & Production Co., Ltd.; together with the Company, “the Group”) steadily carry out management plans and business strategies and commit to sustainable growth and to enhancing corporate value over the medium and long term, and to reflect recent thinking on corporate governance policy in Japan.
Remuneration for the Group’s executive officers engaged in business execution comprises three components: basic remuneration, paid as a fixed salary; annual incentive remuneration, linked to single-year business performance and individual performance; and medium- to long-term incentive remuneration, which varies according to the degree of achievement of performance targets over three business years. Remuneration levels are set to be competitive with those of major companies in Japan, and the greater management responsibility borne by higher-ranking executives is reflected in the remuneration mix for each position, with a higher proportion of incentive remuneration for higher-ranking positions.
The remuneration for independent outside directors, non-executive directors and directors who are members of the Audit and Supervisory Committee is limited to basic remuneration as a fixed salary, for reasons such as the fact that they do not perform business execution, or that they need to be able to properly fulfill their supervisory role.
Incentive Plans
Annual incentive remuneration
Annual incentive remuneration is determined based on consolidated net profit (excluding the impact of inventory valuation), initiatives to achieve ESG targets, and individual performance as approved by the Nomination and Remuneration Committee.
Consolidated net profit (excluding the impact of inventory valuation) is used as an indicator to maintain consistency with the shareholder return policy announced in the Seventh Consolidated Medium-Term Management Plan and to maintain continuity with the employee bonus system. In addition, to encourage directors and executive officers to address material issues with a sense of urgency and sincerity as they promote sustainable management, initiatives to achieve ESG targets have been reflected in remuneration since fiscal 2022.
Medium- to long-term incentive remuneration
Medium- to long-term incentive remuneration is provided in the form of a performance-linked share-based compensation plan that is non-monetary in nature. An incentive plan is established every year and evaluated over three consecutive business years in consideration of the execution of duties during the applicable business execution period. For each executive officer eligible under this plan, 50% of the basic points established for each position are allocated based on performance, and the remaining 50% are allocated based on other factors. The performance-linked coefficient is determined based on the growth rate of the Company’s total shareholder return (TSR) relative to TOPIX and on the consolidated net debt-to-equity ratio.
Stock ownership guidelines
To ensure that value is shared sustainably with all stakeholders, we have established stock ownership guidelines for the Group's executive officers, which took effect in fiscal 2023. Including potential stock holdings (the non-performance-linked portion of basic points granted through medium- to long-term incentive remuneration), the Group chairperson and the CEO will receive 1.5 times their annual basic remuneration within five years of assuming their respective positions. For other executive officers of the Group, the goal is a standard holding value equivalent to annual basic remuneration within five years of assuming their respective positions.
Remuneration of directors (Total remuneration for fiscal 2025)
| Category | Number of recipients (Persons) | Amount of remuneration (Millions of yen) | Basic remuneration (Millions of yen) | Performance- linked remuneration (Yearly incentive) (Millions of yen) | Non-monetary remuneration (Medium- to long-term incentives) (Millions of yen) |
|---|---|---|---|---|---|
directors (Excluding Members of the Supervisory Committee) | 8 | 612 | 256 | 230 | 125 |
(Of which outside directors) | (3) | (47) | (47) | (-) | (-) |
directors (Members of the Supervisory Committee) | 4 | 97 | 97 | - | - |
(Of which outside directors) | (3) | (59) | (59) | (-) | (-) |
Total | 12 | 710 | 354 | 230 | 125 |
| (Notes) 1. | Of the remuneration, etc. above, the amount of remuneration, etc., paid to directors (excluding those who are members of the Audit and Supervisory Committee) includes the amount of performance-linked remuneration (annual incentive) for each consolidated fiscal year and the amount of expenses recorded for non-monetary remuneration (medium- to long-term incentive) for which the applicable evaluation period includes that consolidated fiscal year. The amount of expenses recorded for the medium- to long-term incentive is calculated based on KPIs as of March 31, 2026. |
| 2. | The total amount of remuneration, etc. for directors does not include the salaries paid as the employee portion for the directors who also work as employees. |
| 3. | At the 9th Ordinary General Meeting of Shareholders held on June 20, 2024, it was resolved that the amount of monetary remuneration for directors (excluding those who are members of the Audit and Supervisory Committee) would be set at no more than 1,000 million yen per year (including no more than 200 million yen per year for outside directors), not including the salaries paid as the employee portion for the directors who also work as employees. With regard to the number of persons eligible at the conclusion of said General Meeting, the number of directors that received basic remuneration was eight persons (including three outside directors), and the number of directors that received yearly incentives was four persons (including zero outside directors). |
| 4. | At the 9th Ordinary General Meeting of Shareholders held on June 20, 2024, it was resolved that the amount of monetary remuneration for directors who are members of the Audit and Supervisory Committee would be set at no more than 200 million yen per year. At the conclusion of said General Meeting, the number of directors who are Members of the Supervisory Committee was four persons (including three outside directors). |
Fiscal 2025 Nomination and Remuneration Committee’s Activities
In fiscal 2025, the Nomination and Remuneration Committee met nine times and primarily discussed the following agenda items
| Meeting date | Matters deliberated/reviewed | Matters deliberated/reviewed |
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| May 13, 2025 |
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| June 16, 2025 |
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| June 26, 2025 |
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| July 22, 2025 |
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| September 25, 2025 |
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| November 11, 2025 |
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| January 20, 2026 |
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| February 26, 2026 |
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| March 24, 2026 |
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