From those various Forge and other companies that we have acquired and managing, there are so many assets that we are running. We would like to learn the lessons from this experience and reflect it in our future operations of those acquisitions that we made afterwards. The red one is related to governance, and we have two topics relating to that. One is that the AGP, Ajinomoto Group Policy, the code of conduct of the group officials and the employees. We have deliberated this at the board level two times, and this has been implemented from April 1st this year. AGP so far has not been revised after 2018, but after the environmental changes and the social requirements are now changing after this, so we have decided to upgrade the AGP as a result of that.
We have first revised the structure, so the governance is at the very top, which clarified our compliance-focused stance once again. Number nine, the politicians and the governments' transparent relationship is something we consider important. This is a new item that we have set forth this time around. The Group Policies at the board, we have defined this, so we have reflected that into this basic principles. Number three, the initiatives on health and nutrition, and also number four, contribution to global environment and sustainability, number 10, employees, human resources, and training, ensuring safety. Those are the things that we have decided to reinforce this time around. For the second topic related to governance is that the change of the Group Compliance Committee. The Business Conduct Committee evolved into Group Compliance Committee.
We have revised this, the former structure, and decided to establish this Group Compliance Committee. The new committee's mandate is to ensure global framework and establish the global framework, and formulate and promote strategy that is conducive to our company, oversee and promote the implementation of AGP, and operate the group hotline. Because we have a group hotline globally, so this committee is responsible for its operation and handle compliance issues if anything material happens. Those are roles and responsibilities of GCC. With this Group Compliance Committee, under this, we have also the regional compliance committee at the regional level. Japan is under the East Asia compliance committee. That is how it's structured. That's the 2025 Board of Directors deliberations highlights that I wanted to report to you. I just picked up those things that are worthy for you to note.
For 2026, right now, the board of directors effectiveness survey is currently ongoing. All the board members will recap the activities for 2025, and they are making proposal for improvement in 2026. The BOD's discussion is going to be held at the end of this month. As of today, I just wanted to share with you the aspirations for 2026. The BOD of the company, with respect to effectiveness, we have a definition. Effectiveness comprises of three points, i.e., the major direction will have to be presented by the board and support the risk-taking by the executive team and supervise the adequate operations of the company. Those are the three pillars of the effectiveness of the board.
When you look at the effectiveness survey of the board, supporting risk-taking and also the overseeing the execution of the business, all board members gave a high mark on that. As for the direction setting, the opinions were divided amongst the board members as to how we set the directions for the executive team. They are presenting the major direction. What does that mean, actually? That's what I thought. We have this guideline to set the major direction for the company, what the board should do and what should not do. I think the understanding may not be aligned amongst all members of the board. This is something that we would like to deliberate at the board level in a full-scale manner going forward. Also the balances of these three pillars, the opinions may not be aligned amongst the board members.
How to strike a balance, which to prioritize. Depending on that, the composition and also the matrix of the board member will change, and also the agenda setting may also change. The secretariat may have to be adjusted. We would like to therefore align the opinions amongst the board members as to these three points. Based on that, we would like to also work to further evolve the board of directors in 2026. That's all from myself. Thank you very much for your attention.
Next, we would like to briefly hear from each committee chair. First, Nakayama-san, Chair of Nomination Committee.
This is Nakayama speaking. Hello. At our Nomination Committee, the directors and executive officers, their selection and dismissing, as well as the objectivity is being obtained in order to sustainably enhance corporate value and also to enrich corporate governance. We believe that the selection of representative executives extremely important. With the cooperation from the previous President, Mr. Fujii, the baton was handed over to Mr. Nakamura based off the plan. Due to the cooperation from Mr. Nakamura, the new President, a new management plan, as well as a succession plan over the medium to long term, was being created. Enriching the plan is our current imminent challenge. Also for the 2030 roadmap, as well as the medium to long-term growth strategy.
Regarding the composition of the executive officers, we do believe it's an important challenge to continue to have discussions around this and to deepen our discussions around this.
Now I'd like to have Ms. Indo, the Chair of the Audit Committee.
This is Indo. I'm the Chair of the Audit Committee, and from the Audit Committee, I would like to share with you the topics for 2025, last fiscal year. Before that, the composition of the Audit Committee, we have five members. One is the full-time audit committee, the internal member, and four are outside directors. Nakayama-san here is also a member of the Audit Committee. This year, the Audit Committee, actually, there are several things that we can disclose and cannot disclose, but I would like to share with you two topics for the IR day today. One is that the Financial Services Agency's disclosure of the securities report, the best examples are published by the FSA, and that was announced on the 31st of March.
If you can go to the next page, and this is a press release. This is an excerpt from the press release of the homepage of FSA, and we were, together with Kagome, Nisshin OilliO, and Ajinomoto, and Quest. Together with these companies, we were selected as the status of audit section of the reports of the best practice companies of the information disclosure for 2025. What was evaluated highly, the theme of audit and the actual concrete actions, and also the dialogue with the accounting auditors and the discussion with the relevant departments. All these concrete actions that we have been taken were considered to be highly effective, and that's the reason why we were rewarded this award. This is the securities report, so sorry for this very detailed document.
If you can look at page 107 of the securities report, as we said last year, the audit report. Audit committee is based on the internal audit, but the audit committee is also engaged in audit activity. This is what we call the hybrid audit, and this hybrid audit was considered to be quite effective, and that was the reason why we were evaluated highly by the FSA. We have both offices and also subsidiaries and also domestic and overseas. 16 different sites were audited by the internal audit team and also by the audit committee. This is my second topic. This is the example of audit committee audit by this year. As I said, we are conducting hybrid audits, specifically internal audit team do the operational audit. Whether all the procedures are followed or whether there are some insufficiencies or deficiencies.
Those are things that are looked at by the internal audit team, and based on that information, the Audit Committee is responsible for management audit, including governance and also the actual management of these particular entities. When we go and do this audit, we try to have a conversation with the people on the field through interviews. We focus on that very much. Here, the target was Ajinomoto Taiwan, Inc, and Hatta-san, the member of the Audit Committee, visited this Ajinomoto Taiwan. As you can see from the photographs, she's seen many different places, and the interviewees, five people were selected, and she had an interview with these five people. If you look at the next slide, I visited this company, Ajinomoto Health & Nutrition North America, Inc.
I did this audit myself, and this is a company headquartered in Chicago, and they have three factories, and I visited all these sites and had a lot of interviews with many people. I was surprised myself that I had an interview with 27 people together and listened to their candid opinions. Through this psychological safety, I said that their psychological safety should be ensured and try to listen to the honest opinions of the people in the field so that we can understand the actual situation of the sites. That's all from myself. That's the report from the audit committee.
Next, Mr. Davis, Chair of the Compensation Committee. The executive compensation scheme is poised to be revised this year, and the thinking around it will be introduced.
I am Davis, Chair of the Compensation Committee. As the MC just said, at the Compensation Committee over the past one year for executive officers and executives, we have been reviewing the design of the compensation package. As required. Last year, we had actually been saying that we will spend the next year to do the review when we had this forum. I would like to talk about the results from the review today. Regarding the final decision, we are planning to do so mid-May. At this point in time, I will be talking about our basic thinking around it, what kind of challenges we have acknowledged, and what kind of considerations we have been doing.
It will be mainly process-focused. In our case, we don't want to do revisions just for the sake of revisions. As a starting point, we wanted to collect information in two parts, that is stated here. During fiscal 2024, at various investor relations opportunities from general investors and institutional investors, we have been asking about their requests with respect to officer compensation. We had been getting quite a lot of information through IR, so that was turned into a list. As a result of this review, there were a diverse range of requests and requirements, and when you sort it out, what they were saying were three things. First was that they wanted a compensation system that contributes to improving corporate value and a linkage with performance that is stronger. We had quite a lot of this kind of feedback.
In order for competent people to be in charge of execution, you need competent talent. Therefore, the compensation needs to be attractive levels. On top of that, we were acquiring other types of information, which is for the officers that receive compensation and their thoughts. I don't want to be misleading. It's not about how much they want that will motivate them. That's not the sort of questions we were asking them. It's more about the compensation scheme. How far do they understand the system we have? Is it an incentive that is in linkage with the jobs they do? It was more of a technical conversation. With approval of the committee, the secretary of the committee and myself, what we did was, for the executives that are serving as directors, we received one hour of their time in order to ask them questions.
If I may talk about the process. When I started to serve as the committee chair, when compensation was decided, what I would do was to notify that compensation. I would attach the internal rules together with the notification. The person who received that notification will have to interpret it themselves. In the following year, because people are busy, we decided to change the system. "This is your compensation." What we did was, the letter was created and personalized by the secretariat. The formula, the results, and then the internal rules were attached. In 2025, that was the first year we went to the new system, so we wanted to get feedback on how that system was received. The outcome was quite interesting. Well, I shouldn't say interesting because this is not academic, but it really helped us deepen our understanding.
Because they want to be more proactive, so they wanted their compensation scheme to encourage them to make medium, long-term management decisions in corporate transformation and the achievement of more ambitious goals. They wanted more alignment. This is pretty much obvious. Also, they wanted more clarity on the expectations on the employees, meaning they want to challenge themselves more, so they wanted a compensation package that matches up with that, and they wanted more relevance with the incentives. That was what we heard. Moving on to the next slide. Based off that, at the committee, what we did was we sorted out our basic policy based off the feedback from the capital market as well as the feedback from the executives. It was broken down into three parts. Compensation should lead to medium to long-term expansion of corporate value. That should be the premise.
The level of compensation should be competitive with market standards, and it should be explainable and decided in a transparent process. It needed to be accountable both internally and externally. The direction of the revisions are broken down into three parts, therefore. A compensation scheme that is in line with market levels, and design compensation to be more closely tied to shareholder value. The linkage with business performance is more clear, and the compensation was revised to raise the effectiveness of incentives for taking on challenges. Like I said at the beginning, a final decision had not been made yet, so I'm not able to go into detail.
If you refer to this slide, this is as far as I can talk about this, but the linkage between incentives for taking on challenges and shareholder value is we're striving to enhance that through STI and MTI, which is Short-Term Incentives and Medium-Term Stock-Based Incentives. Base salary is going to be in linkage with market. For STI, this is going to be about short-term performance. For MTI, this is going to be more future-oriented. For MTI, we are striving to increase the proportion of this, the weight of this. Among the MTI evaluation indicators, we have been changing the weight of the sub-items, such as increasing the weight of TSR. Going into detail. Up until now, out of the objectives, the compensation was decided based on the achievement rate. It was all or nothing. If you achieve, it was 100%.
If you don't achieve, it was 0%. It was quite extreme. Also for the curve, we wanted to ensure that people are able to get an upside to what they do. This will be a first. For the fourth point, we will start to grant shares to officers residing overseas, or actually, this is an idea we are currently deliberating. For today, I am unable to speak more than I have due to disclosure. By mid-May, what I've just talked about should be officially decided, and in the securities report, the details will be stated. I hope you can take a look, and if there is feedback from the capital market, we would be open to hear. We did the interviews with executive officers that are serving as directors.
Based off the new system, we will conduct hearing sessions again with the executives, as much as possible, we would like to take time with all of them so that we can receive feedback across the board. We want to incentivize people through the compensation scheme so that they will feel more ambitious to attempt to take on new challenges. We believe that compensation schemes will be increasingly effective when people feel that it's fair. We will be focusing on that even more.
Davis-san, thank you very much. From here, we would like to have a time for the conversation with the analysts and investors. If you have any comments or questions, please don't hesitate to share them with us. Those at the venue, please raise your hand. Those of you participating online, please press the Raise Hand button that's shown on the screen. Now we would like to start with the people at the venue. The person at the very front row, please let us know your affiliation, your name, if you don't mind.
I'm Saji from Mizuho Securities. I would like to ask this question. I just wanted to confirm what you are interested in about the stock market. Relatively speaking, overseas investors, who are one of your major investors, have sought a lot of concrete disclosure regarding your semiconductor materials. Board members at some companies out there have shared the board's view on those disclosures. Going forward, shareholder proposals or a cquisition proposals, especially in the semiconductor industry, is already taking place in Japan. These kind of proposals are likely to increase in the future.
Given that, as Ajinomoto's board, what is the major direction? Does this apply to the major direction? I'm not really sure about that, but the stock market is now going through a major change. Amid this environment, as the responsibility and the role of the board of directors, if there's any shareholder proposal at your AGM, I think you have to study that. Besides that, other than that, if there are new changes emerging, how are you going to interact with the stock market? I think because the things are changing right now. What is your current view as the board of directors as to how you interact with the shareholders?
I will try to summarize the question. The stock market is now going through major changes on many different fronts. I think the shareholders are making concrete proposals to the company in some cases. In light of that, vis-à-vis those changes or vis-à-vis those actions, what is the view of the board of directors? I think that was the gist of the question.
Thank you very much for your questions and comment. We have always been mindful that the role of the board of directors. What is the role of the board of directors? I think that is to be conducive to the constant increase of the enterprise value and what kind of judgments is needed for that. The voices from the market is very useful and important in that regard.
Whatever the investor is or no matter who the shareholder is, the opinions given to us on many different fronts, we would like to take reference of that and leverage that to increase the corporate value of the company. Even in today's presentation, Davis-san talked about the revision of the compensation scheme, and the shareholders' and investors' perspective was reviewed. That was shared in his presentation. That is the basic attitude that we adhere to. Given the new trends in the market, we would like to faithfully and openly respond to those changes.
Thank you. Specifically, and as of the end of March, the semiconductor material price hike, if that was done, the enterprise value will increase. I think that concrete proposal came in both in Japanese and English.
I think for those kind of proposals or for those kind of disclosures, how does the Board of Directors receive that, and what kind of discussion takes place when those proposals come in?
I think it was in late March, the IR office received that letter, and at the Board level, we have received the information from the IR office. We reviewed that document, and as you mentioned, those things related to the business conduct account for the bulk of that proposal. Our decision was that, how the Executive Team interpret that and what is the response? We have given the direction for the Executive Team to first look at that. At the current moment, we have not conducted any discussions at the Board level yet.
We are receiving reports from the executive team, and according to that, the IR team is currently playing the central role and interacting with the shareholder through opinion exchanges and try to understand precisely what this proposal is. Based on that, we would like to decide on our responses. If need be, the board of directors would like to hold discussions based on that.
The next person. The person in the second row, please.
I am Miyazaki from Goldman Sachs. I have a follow-up question about what just has been discussed regarding the frozen foods business. From the shareholder and the proposals, I think that will first be brought to the executive officer side. For the frozen foods business, I think there has been some feedback about its profitability before. When you look back at the past one year, I think there was some talk about discussions for structural reform. Six months ago, there was strategies with regards to pricing, and I think that is being implemented right now. Even recently, there was news about recalls. I think that was a fact. At the board, how do you review these things?
Are these things that are taken up after the fiscal year ends in March, or do you do regular reviews about these specific businesses and developments throughout the year? That was something that was being proposed by the shareholder in question.
Thank you for the question. That was about the frozen foods business, several challenges associated with it, and various things are happening on the executive side. There was the recall in North America as well. In light of that.
Not just applying to frozen foods, but for the entire portfolio, I think, what is the Board doing with respect to grasping the facts and responding or considering them?
Thank you very much for your feedback as well as your question. At the Board, from shareholders and investors, we constantly believe that the feedback is extremely important. Analyst reports are shared with us accordingly, and several times a year, we hear about the summary of what kind of feedback was given to investor relations and SR activities as well. For the frozen foods business, too, we are aware that there are many investors that feel the business has challenges. For daily developments, at the beginning of the Board every month, because we have the regular Board meeting once a month.
At the beginning of the board, there is a reflection of the past month of what kind of developments happened in the business and how it was responded to by the executive side. That is the way we receive the updates on the recall as well. When it comes to what are people going to do with the frozen foods business or what are they doing, it's more about what the executive side of the business is doing, looking at the results that are being generated, and hearing that domestically, the business is doing better. That's the extent of the information we are able to grasp. Like I mentioned at the beginning, for the seven important management items that I talked about in the beginning, all of the main businesses are associated to these seven.
Therefore, we do intend on overseeing the businesses in that regard on a daily basis, and if necessary, we may have discussions around it as independent themes. Currently, since last fiscal year, for the frozen foods business, because there are initiatives in place to improve the business, we would like to continue to watch the developments.
Please.
Well, thank you very much. My name is Hirohashi from Sumitomo Life. I have two questions to you, if you don't mind. As it was explained earlier, regarding the seven important managed matters of the BOD, one is the portfolio of your business. I have a question relating to that. In the first question, you talked about this shareholder proposal from a particular shareholder. This relates to that. The electronic materials and other high growth areas, compared with other competitors overseas, how do you evaluate the competitiveness or competitive advantage of your company? I'm not really sure there's entry barrier, but do you really have a competitiveness that is worth of a massive investment? That's my first point. Second point is about the current share price multiples. Do you think that reflects your growth potential properly? How's your self-assessment of that?
If there's any gap, what kind of information is not really getting across to the shareholders, and what is the discussions taking place at the board level? Because this relates to the enterprise value. Can you share these two points? That would be appreciated.
Those were two questions. The first question was about the electronic materials business in terms of portfolio. How do you position this in your business portfolio? The second question was about the enterprise value, the share price value. If there's any gap between the market perception and the actual value, what are the issues that you have to address? Mami Indo, can you answer the question?
I would like to answer that question. Thank you. Thank you very much for the question in the first place. The electronic material strength. What is the strength of this business, actually? In a nutshell, I would say amino science is the strength. What I would like to say is that right now, ABF is a major pillar of our business, and this production method is based on amino acid, amino science, MSG. In the process of making MSG, this is a new process that was discovered, and using this process, we are able to deliver products that offers high performance.
The biggest highlight is that electronic materials business, not only that business unit, is now going to expand the business significantly, meaning that the Bio-Fine Innovation Center, we have this innovation center under the headquarters, and they are responsible for a lot of innovations, and they are developing many new materials. Through the collaboration with the different departments and the units, new products are being created. This cycle, the existence of this cycle itself, is a major competitive advantage of our company, I would say. If we make a mistake, and what will happen to that cycle is something that we have to give thoughts to. As for the market value, to what extent is this reflected in the market value? It's very difficult to quantify.
It's very difficult to address that question. Also, actually, even if big products come out in the market, eventually, the time of disclosure, when are we going to make that announcement, is also affecting the share price. The executive team will make an announcement and communicate to the market at the appropriate timing. That's what I think. Also, when it comes to semiconductors, semiconductor is a very volatile market, and also it's not only the business itself, but also depending on the situation in the market, the volatility changes, and I think you are very aware of that given the recent situation. However, at Ajinomoto, even though we think that we made a proper announcement and communication, if the market is not sufficiently digesting that, people like Kaji-s an and other members of the IR team will tenaciously provide explanation to the market.
That is the position of the company. If there's anything unclear to you, please don't hesitate to contact Kaji-s an.
Yes. Thank you. I have high expectations for you. Thank you.
Please go ahead.
Thank you for your time today. I'm Manabu Sumoge from BofA Securities. I'm going back to the portfolio discussion. Kimie Iwata, you talked about the sales process of Althea a little bit earlier. I would like you to walk us through a little bit more specifically. For the board and the management, you said the ball went back and forth, but what did you do actually, identifying the challenges, how are you going to ensure its survival maybe? You decided to sell, so I just was curious to ask about what kind of discussions took place between the board and management.
With regards to the disposal of Althea, starting off with that example, when you have discussions with respect to the portfolio, what kind of interaction takes place between the board and the executive side? I think that was the point of your question.
Thank you very much for your question. Well, I think I did go into detail quite a lot earlier already, so I'm not sure if I could go deeper than that. Regarding the discussions that took place, what's most important is when we have discussions around the portfolio, what we always ask is it in sync with the roadmap? Is it consistent with the roadmap? We always ask that question. Because the acquisition of Forge took place then after this time around, we were able to confirm that it is consistent with the roadmap with respect to its disposal. It had been quite a lot of years since its acquisition, so why aren't we able to do it organically? Were some questions asked? Why can't you manufacture it on your own?
There were some decisions, so there was some cost comparisons, and also the justification of the price was also discussed over multiple times and for risk. Of course, the executive side oversees risks as well, but it's more business oriented, and I think the scope of the risks are narrower. For example, regarding the regional community and what kind of impact that may cause on our reputation, those kind of broader views from various stakeholders need to be addressed as well. We try to ask those types of questions as well. For the business review, like I mentioned earlier, for this item, what was the most difficult was the overseas business. We needed to have good talent that is able to oversee the business.
However, the question around whether we had certain people internally at HQ at Ajinomoto, of course, we do have talent that are developing as we speak. We didn't have the talent available back then. Physically, because the operations are taking place at a far place, it was hard for management to take care of the business on a hands-on basis. Obviously, we were facing COVID-19, so it was hard to go back and forth at one time. That was also an obstacle. From the acquisition until the disposal, it was quite a long time, several years. We tried to be extremely careful at addressing the reasons why we need to sell the business. The executive side sorted those things out first, and then we looked at those items at the board.
The intent of my question was that when it comes to the detail of the business, the executive side knows more, probably. Yes. For independent directors or outside directors, you apply a bird's eye view and refer it to the roadmap to see whether it's justified or not, I guess. Is that the way you were doing the interaction?
Yes. What I just talked about regarding doing the acquisitions or doing the disposals, I always look at those four points that I already explained. The consistency with the medium to long-term strategy, as well as out of all of the options, why is this option the best?
Thirdly, t he acquisition or the disposal process and the price justification, as well as are the risks being addressed. Those are the four points I look at when we are discussing various acquisitions or disposal opportunities.
Thank you. I think everybody else is the same. Thank you.
The next question. Go ahead, please.
JP Morgan Asset Management. My name is Sada. Thank you very much for this opportunity. I have a question regarding your major theme. I have two questions. First is that within the food sector, Ajinomoto has a long story, and that is reflected properly in your share price. You are one of such companies. But the bridge between long-term and short-term, in terms of communication, in terms of remuneration, it still has some challenges. This is the question therefore.
In terms of communication, in the CDMO business, there's a long story for the long term, and also you have your technical advantage over the long term, and also your customer relations also are long term. Given the non-disclosure requirements, it's not really easy for you to disclose them. The long-term story will have to be viewed from a short term. That's a big discrepancy.
Nakayama-san, because you have an experience in the pharmaceutical business, so I want to hear from you. With respect to this pharma business, this long-term story, how do you communicate this to the analyst community who are mainly looking at the food business? What kind of information should be disclosed so that they can have a better understanding and bridge the short term versus the long term? As an outside director's perspective, what's your view on that?
That's my first question. My second question is about for CDMO in the medical and others. Besides that, the new businesses, the short-term results is not going to have a significant impact on your long-term story as of yet. So, those directors in charge of those new businesses, how do you set the remuneration structure for the long term versus short term and make a bridge between them?
Well, thank you very much for the question. It was a very extensive question. The first one is a question addressed to you, Nakayama-san. The second question was the short term versus the long-term businesses, the different time horizon business, and how the remuneration is set for those different businesses. That will be answered by Davis-san. Please begin with Nakayama-san.
Well, thank you very much. The long term versus short term issue, especially with the pharma business, this is a very vivid topic. Actually, I've been realizing this after coming to Ajinomoto more strongly than before. As an outside director, what I'm thinking in my mind is that because we have this food business, and of course, we have to communicate the short-term trends. From the shareholders' perspective, the compilation of the short-term results will lead to the long-term business. I think that is the scenario that they are contemplating. That alone will not withstand the major changes over the long term. As an outside director, we have to always attach weight to whether that is aligned to the long-term trend. When it comes to the Ajinomoto pharmaceuticals business, the high risk of the pharmaceuticals manufacturers, the CDMO supporting that, whether we are achieving a well-balanced structure.
As a CDMO technology prowess is the major challenge that we have to address going forward. Depending on the combination with many different companies, how do we utilize this is something that we have to verify going forward. We cannot take all the full risk, every risk, but what is good about us is that when it comes to gene therapy, at the clinical trial, even if the product is used, we can generate revenues from that, which is a very big difference between the pharmaceutical companies. The advanced medical, focusing on that, realizing these differences, and not taking the maximum risk is what we are doing. That strategy is not bad in itself. However, we have to be careful that when it comes to the real market, after the approval is given, whether we can capture that market.
That's one thing that we have to be very careful. Whether that market itself will grow, we have to monitor that very carefully. The gene therapy market is not sizable yet, and the hurdle is going to be very large. We have to be aware of that. Being aware of that, we will have to do a CDMO and secure a good position for many different pharmaceutical types. Even if it's a CDMO, the competition is different. Ajinomoto obviously is know-how and technology oriented. That is our position. How we can create a know-how for production is a very important capability as CDMO. I am always asking that question to the executive team. Did I answer your question?
Well, thank you very much for summarizing the key points.
I would like to hear your updates on those key points like on an annual basis, once a year, so that we can understand what is your basic strength and whether the underlying market is growing and what position has Ajinomoto secured so that we can update the information every time. If you do that, I think the value will continue to reflect your actual strength.
Davis-san, if you can answer the second question.
Well, yes. How should I put this? To be very straightforward with you, we have discussed this quite extensively at the compensation committee. The short-term compensation versus the long-term compensation. How do we link and bridge between the two? We have conducted a lot of discussion on this matter.
To give you something awkward first, the strategic compensation is something that we would like to achieve, but what is good about that and what is bad about that will be decided by the strategy. Even if when the strategy is not right, even if we decide the incentive for that, the result is not going to be meaningful. But fortunately, we have devised a structure and the strategy very well after a meticulous discussion. We have set a very attractive KPI. How to incentivize that is the key point here. This time around, on the third slide, I have just given a little description of that. The STI was lowered a little bit, then MTI increased a little bit. I have repeated this message internally, and everybody is tired of that.
We have to look at the big picture and decide on the details after the big picture, and that's the reason why we have decided to raise the MTI portion a little bit and the relative TSR. The relation with the relative TSR, and then naturally the big picture will become the centerpiece if we do this appropriately. Also, some of the compensation is going to be paid in stocks. Even if it's an option, they are the shareholder of the company. The executive team is also a shareholder company. That has to be realized. They will be able to have a mindset and change the mindset that what they're doing today is going to be reflected in the share price of tomorrow. I think this is a very effective design.
After listening to what I just said, I don't want you to misunderstand, so I would like to clarify one thing here, that everybody is quite aware of the big picture, long-term vision, and looking at the short-term things. They're not focused on the short-term things only because it's very important. Even if you try to find a person who is only short-term focused, we can't find such people because everybody starts with the long-term picture when I have an interview with them. I realized this through the interviews. I'm not really sure if I can disclose this information, but within the committee, I had this conversation within the committee based on our internal rules and decide on the compensation, objectivity, transparency, and accountability. We are aware of that. Then decided on the documents, and then shared that document on the securities report.
In many cases, the formula is decided, and if the performance is decided, then the compensation is automatically decided. Is that really adequate? The compensation committee comprises only of the internal members, so maybe there could be some differences. Even if the short-term result is this, because they went after the long-term goals, that could be incentivized a little bit, maybe. Just as an example, if there is a business overseen by this particular director, if the performance was short of the target, even if the progress is not as planned, but this business is already starting to make a contribution to revenue. Of course, the profit not really, but the revenue contribution is already there. If that is the case, that could be evaluated.
This person is looking at the long-term outcome of the company, and if this director, if he tried to find the best owner for this business, and tried to carve out that business, you cannot do that if you're just too short-term focused, because even if the performance is bad, they try to keep the company inside the company. That kind of bad motivation will kick in. Even if the short-term performance is sacrificed, those low performing performances are streamlined, and we can also compensate for the short term. We have to make sure the short-term things will not be a drag on the long-term performance. Because the compensation committee is only comprises of outside directors, there are many things that we can do. The balance between short term versus long term is a very important matter. We are aware of that.
If there is any input from you, we would love to listen to your opinions. Thank you.
Thank you for your question. I think we're having a heated conversation, but unfortunately, the hour is approaching. If there is a pressing question from anyone else, we can take the last question. Does anyone have a question? Are we set? Okay, then. I'd like to thank you for your time once again for gathering today. Finally, Ms. Iwata would like to extend a closing remark.
Well, thank you everyone for coming today. Despite your busy schedules, thank you for coming to this venue. There are many people that have joined online as well. That's what we've heard. Thank you very much for joining as well. I hope today's forum was good for you, and if there's an opportunity to get your feedback, we would appreciate it. Like I've reiterated today, the feedback from shareholders and investors are very important to us. If there is another opportunity in the future to directly meet with you, we would be happy to accommodate. Thank you very much.
That concludes today's IR day. Thank you everyone for joining.