Executive compensation and employee benefits—Japan—Q&A guide
Executive compensation and employee benefits—Japan—Q&A guide

The following Share Incentives practice note provides comprehensive and up to date legal information covering:

  • Executive compensation and employee benefits—Japan—Q&A guide
  • 1. Provide an overview of the primary sources of law, regulation and practice that govern or affect executive compensation arrangements or employee benefits.
  • 2. What are the primary government agencies or other entities responsible for enforcing these rules?
  • 3. Are any types of compensation or benefits generally subject to specific corporate governance requirements or approval by shareholders or government agencies? What is the general process for obtaining approval?
  • 4. Under what circumstances does the establishment or change of an executive compensation or benefit arrangement generally require consultation with a union, works council or similar body?
  • 5. Are any types of compensation or benefit arrangements prohibited either generally or with respect to senior management?
  • 6. What rules apply to compensation and benefits of non-executive directors?
  • 7. Must any aspects of an executive’s compensation be publicly disclosed or disclosed to the government? How?
  • 8. Are employment agreements required or prevalent? If so, what provisions are common? Are any terms prohibited or unenforceable?
  • 9. What are the prevalent types and structures of incentive compensation? Do they vary by level or type of organisation?
  • More...

Executive compensation and employee benefits—Japan—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to executive compensation and employee benefits in Japan published as part of the Lexology Getting the Deal Through series by Law Business Research (published: November 2020).

Authors: Nishimura & Asahi—Hiroko Shibata; Takato Masuda

1. Provide an overview of the primary sources of law, regulation and practice that govern or affect executive compensation arrangements or employee benefits.

Executive compensation is primarily regulated by the Companies Act. A listed company must disclose certain details of executive compensation in its annual securities report. The securities report must be prepared in accordance with the requirements of the Financial Instruments and Exchange Act (FIEA).

Employee benefits are primarily governed by the Labour Standards Act and Labour Contract Act. If employee benefits are set out in a collective labour agreement, the Labour Union Act also applies.

Individual executives and employees are taxed according to the Income Tax Act, and companies are subject to the Corporate Tax Act with respect to executive compensation arrangements and employee benefits.

2. What are the primary government agencies or other entities responsible for enforcing these rules?

The Financial Services Agency and the Tokyo Stock Exchange oversee disclosure regulations for executive compensation. The Labour Standards Supervision Office is the primary government agency tasked with the enforcement of employee benefits. Finally, the Internal Revenue Service is the primary enforcement agency dealing

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