Bandai Namco Holdings is changing how it pays its executives, according to an announcement published on May 8. The revamped system will make executives’ salaries more dependent on how well they perform, i.e., how much they contribute to the company.
More specifically, fixed salary will make up only about 30% of executive pay, while the remaining 70% will be performance-based. Previously, this ratio was 40:60 (source: Bandai Namco Integrated Report for 2024). In addition, 50% of executive officers’ total earnings will be stock-based (as opposed to cash-based) with the goal of encouraging them to act in the interest of company shareholders. This percentage used to be 40%.
The fixed, base salary of Bandai’s executives will be capped at around $4.14 million per year in total, and a portion of it will go into a shareholding plan to purchase company stock. On the other hand, bonuses will depend on how well Bandai Namco meets targets related to profits, EPS (earnings per share), and sustainability. If performance goals aren’t met, executives may get no bonus at all. The total amount of bonus payments will be capped at either $4.14 million or 1.5% of net income attributable to shareholders for the year (whichever is lower).
Although Bandai Namco Holdings has seen record breaking profits in the past fiscal year, it aims to encourage long-term growth by making performance-based rewards more important for its executives. Interestingly, the group has been doing the opposite when it comes to regular employees – folding some of its bonuses into base salaries starting from 2022.
