Compensation Committee
Overview
The Compensation Committee has the authority to set the policy for determining compensation for directors and executive officers and to set the specific compensation for each individual director and executive officer.
Activity Status
Main Activities and Deliberations During the Fiscal Year Ended March 2025
The Compensation Committee conducted activities including evaluating performance for performance-linked compensation (annual bonus) for the fiscal year ended March 2024 and determining the amount to be paid to each individual, deliberating on and determining the compensation system for directors and executive officers for the fiscal year ended March 2025, deliberating on compensation levels for directors and executive officers based on the results of a survey conducted by a third-party research organization.
The Compensation Committee comprehensively evaluated details of the compensation of individual directors and executive officers, including its consistency with the compensation policy based on the resolution of the Compensation Committee held on June 25, 2024. In examining the appropriateness of compensation levels, it used the results of an investigation conducted by a third-party compensation research organization to make its determination, and concluded that they were in line with the compensation policy.
Compensation for Directors and Executive Officers
ORIX Group’s business objective is to increase shareholder value over the medium- to long-term.
ORIX believes in the importance of each director and executive officer responsibly performing his or her duties and cooperating as members of a team to produce continued growth for the Group. The Compensation Committee believes that in order to accomplish such business objectives, directors and executive officers should place emphasis not only on performance during the current fiscal year, but also on medium- to long-term results. Accordingly, under the basic policy that compensation should provide effective incentives, ORIX takes such factors into account when making decisions regarding the compensation system and compensation levels for directors and executive officers.
Taking this basic policy into consideration, we have established separate policies for the compensation of directors and executive officers in accordance with their respective roles based on a decision of the Compensation Committee held on June 25, 2025.
Compensation Policy for Directors
- The compensation policy for directors who are not also executive officers aims for compensation composed in a way that is effective in maintaining the supervisory and oversight functions of executive officers’ performance in business operations, which is the main duty of directors. Specifically, ORIX’s compensation structure for directors consists of fixed compensation and share-based compensation (*1). In addition, the Company strives to maintain a competitive level of compensation with director compensation according to the role fulfilled and receives third-party research reports on director compensation for this purpose.
- Fixed compensation is in principle the same amount for all directors with certain amounts added for directors serving as members or chairpersons of committees.
- For share-based compensation reflecting medium- to long-term performance, directors are granted a fixed number of points on an annual basis for their period of service, and they are paid in ORIX shares corresponding to the number of points they have accumulated at the time of retirement.
Compensation Policy for Executive Officers
- The compensation policy for executive officers, including those who are also directors, aims for a level of compensation that is effective in maintaining business operation functions, while also incorporating a component that is linked to current period business performance. Specifically, ORIX’s compensation structure for executive officers consists of fixed compensation, performance-linked compensation, and share-based compensation (*2). Our basic policy is to maintain a composition ratio of 1:1:1.
- In addition, the Company strives to maintain a competitive level of compensation with executive officer compensation according to the role fulfilled and receives third-party research reports on executive officer compensation for this purpose.
- Fixed compensation is determined according to each position’s role based on a standardized amount for each position.
- Performance-linked compensation (annual bonuses) for the fiscal year ended March 2024 is based on the level of achievement of the consolidated net income annual growth target as a company-wide performance indicator. 50% of the position-based standard amount is adjusted based on this company-wide indicator within a range of 0% to 200%. The remaining 50% is adjusted using the level of achievement of the division’s target for which the relevant executive officer was responsible as a division performance indicator (*3) within a range of 0% to 300%. In the case of representative executive officers, the level of achievement of the company-wide performance indicator is used as the sole performance indicator to adjust the standard amount within a range of 0% to 200%. These performance indicators are selected taking into consideration the company’s medium-term management targets. In addition to the above, annual bonuses for Executive Officers at the Managing Executive Officer level and above will be increased or decreased by an amount ranging from 0% to 30% of the base amount for each position based on progress toward the ESG-related key goals. If progress towards ESG-related key goals is proceeding as planned, the annual bonus will not be adjusted.
- For share-based compensation, which reflects medium- to long-term performance, executive officers are granted a fixed number of points based on their positions and are paid in ORIX shares corresponding to the number of points accumulated at the time of retirement.
- Share-based compensation is a program under which annual points (a fixed number of points) are allocated to directors and executive officers while in office and ORIX shares are granted via a trust based on the cumulative number of points at the time of retirement. Points granted are determined based on guidelines established by the Compensation Committee. The Compensation Committee has not established a period during which shares delivered under this program must be held. If a determination is made that a director or executive officer engaged in substantially inappropriate conduct that causes harm to the Company while in office, the Compensation Committee may set restrictions on the payment of share-based compensation.
- The compensation of executive officers who are assigned to an overseas subsidiary or who have a high level of specialization is determined through individual deliberations taking into consideration the local compensation system and compensation levels as well as specialization and other factors.
- For performance-linked compensation (annual bonuses) based on the degree of achievement of targets regarding the performance of the divisions for which individual executive officers are responsible, achievement is determined comprehensively with a focus on the annual growth rate in the performance of the relevant division for the current fiscal term but also by incorporating qualitative determinations such as difficulty of targets, details of performance, strategic arrangements for the future, and ESG-related initiatives.
Conceptual Diagram of Compensation System for Executive Officers
| Compensation Type | Payment Criteria | |
|---|---|---|
| Fixed Compensation | Determined according to role based on a fixed amount for each position | |
| Performance-linked compensation (Annual bonus) | Representative Executive Officer | Executive Officers |
| Company-wide performance indicator (100% of the position-based standard amount) Level of achievement of the consolidated net income growth target (Adjustment: 0% to 200%) |
Company-wide performance indicator (50% of the position-based standard amount) Level of achievement of the consolidated net income growth target (Adjustment: 0% to 200%) |
|
| Division performance indicator (50% of the position-based standard amount) Level of achievement of the target of the division for which the relevant executive officer was responsible (Adjustment: 0% to 300%) |
||
| ESG progress (100% of the position-based standard amount) Progress on ESG-related key goals (Adjustment: Increase or decrease within the range of -30% to 30%) |
ESG progress: only applies to managing executive officers and above (100% of the position-based standard amount) Progress on ESG-related key goals (Adjustment: Increase or decrease within the range of -30% to 30%) |
|
| Share-based compensation |
For medium- to long-term compensation, directors and executive officers are granted a fixed amount of points based on their position, and paid in ORIX shares corresponding to the amount of points they have accumulated at the time of retirement. | |
Method for Calculating Performance-linked Compensation (Annual Bonus)
Representative Executive Officer
- The only performance indicators for the representative executive officer are Company-wide performance indicators, which reflect the degree of achievement of the annual growth rate target for consolidated net income against a standardized base amount for each position.
Executive Officers
- Company-wide Performance Indicator: To support the achievement of mid-term management targets, the Compensation Committee sets milestones for annual growth rate related to consolidated net income. The level of achievement of this milestone for the fiscal year ended March 2025 was 90%.
- Division Performance Indicator: Division performance targets are based on Company-wide performance targets. The level of achievement of division performance targets among the 27 executive officers responsible for the fiscal year ended March 2025 (comprehensive evaluation including qualitative aspects) ranged from 0% to 200%, with a median of 100%.
Level of Achievement of Target
| FY2023.3 | FY2024.3 | FY2025.3 | |
|---|---|---|---|
| Company-wide performance indicator | 87% | 105% | 90% |
| Division performance indicator | 0% to 150% (Median: 100%) |
0% to 150% (Median: 100%) |
0% to 200% (Median: 100%) |
Reflecting ESG Initiatives in Annual Bonuses
To encourage directors, executive officers, and Group executives to take the initiative in addressing ORIX Group’s ESG issues, the status of ESG initiatives is reflected in their compensation.
- From the fiscal year ended March 2022, “Status of ESG Initiatives” has been added as a qualitative evaluation item in the division performance indicator for annual bonuses for executive officers.
- From the fiscal year ended March 2024, progress on ORIX Group’s ESG-related key goals has been added as a quantitative evaluation item for executive officers at managing executive officer level and above.
Compensation Clawback Policy
ORIX has established a Compensation Clawback Policy pursuant to applicable NYSE listing standards. This Policy provides for the clawback of performance-linked compensation (annual bonus) received in excess of executive officers’ original salaries based on erroneous financial statements in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements.
Compensation of Directors, Executive Officers and Group Executives (FY2025.3)
| Category | Fixed Compensation | Performance-linked Compensation | Share-based Compensation | Total Amount Paid (Millions of yen) |
|||
|---|---|---|---|---|---|---|---|
| Number of Recipients | Amount Paid (Millions of yen) | Number of Recipients | Amount Paid (Millions of yen) | Number of Recipients | Amount Paid (Millions of yen) | ||
| Directors (Outside Directors) |
6 (6) |
110 (110) |
- | - | 6 (6) |
26 (26) |
137 (137) |
| Executive Officers | 27 | 676 | 27 | 653 | 27 | 935 | 2,265 |
| Total | 33 | 787 | 27 | 653 | 33 | 962 | 2,403 |
- Number of recipients and amounts paid include four executive officers who retired during the fiscal year ended March 2025. As of March 31, 2025, ORIX had 11 directors (6 outside directors) and 23 executive officers (including directors serving concurrently as executive officers).
- At ORIX, no directors serving concurrently as executive officers received compensation as directors. Total compensation for the six people serving concurrently as directors and executive officers is shown in the Executive Officers line.
- The amount of share-based compensation paid is calculated by multiplying the number of points confirmed to be provided as the portion for the fiscal year ended March 2025 by the stock market price paid by the trust when ORIX’s shares were acquired (¥2,248.39 per share).
Therefore, the total amount of share component of compensation actually paid in the fiscal year ended March 2025 is not presented. The total amount of share component of compensation actually paid in the fiscal year ended March 2025 was ¥408 million for one executive officer who retired during the fiscal year ended March 2025. - ORIX did not provide stock options in the form of stock acquisition rights in the fiscal year ended March 2025.
- Figures shown are rounded down by truncating figures of less than ¥1 million.
ORIX Shares Held (As of the Date of Submission of the Securities Report for the FY Ended March 2025)
| Name | Currently Held Common Shares | Latent Common Shares* | |
|---|---|---|---|
| Internal Directors | Makoto Inoue | 105,000 | 840,948 |
| Hidetake Takahashi | 7,100 | 109,583 | |
| Satoru Matsuzaki | 10,428 | 205,170 | |
| Stan Koyanagi | 5,000 | 0 | |
| Yasuaki Mikami | 3,026 | 140,388 | |
| Outside Directors | Hiroshi Watanabe | 0 | 9,000 |
| Aiko Sekine | 0 | 9,000 | |
| Chikatomo Hodo | 0 | 7,500 | |
| Noriyuki Yanagawa | 0 | 6,000 | |
| Mami Yunoki | 0 | 0 | |
| Miwa Seki | 0 | 0 |
- Latent common shares are shares that are scheduled to be delivered equivalent to the cumulative points granted by the share component of compensation system.
For details on the number of ORIX shares held by executive officers and compensation for directors and executive officers, please refer to the following.
Form 20-F filed with the U.S. Securities and Exchange Commission