We think of corporate governance as a mechanism that ensures sound, efficient management to provide stakeholders with sustainable, medium- to long-term profits. Based on this idea, we strive to ensure management decisions are made promptly, and work to clarify the management responsibility and responsibility for executing operations. At the same time, we take initiatives for strengthening the management’s monitoring function, compliance, risk management, and internal control system under our Board of Directors and Board of Corporate Auditors, whose members include highly independent outside officers.
Policy and Procedures in the Nomination of Officer Candidates
Nominations of director candidates and corporate auditor candidates are explained in advance to the independent outside directors. Then, after receiving appropriate advice from the independent outside directors and the contents of the Nomination and Remuneration Advisory Committee’s deliberation, the Board of Directors passes a resolution. The candidates are then proposed at the general meeting of shareholders. Nominations of corporate auditor candidates are approved by the Board of Corporate Auditors in advance.
|Directors||We operate business activities globally in diverse fields, including chemicals, performance materials, agricultural chemicals, and pharmaceuticals. In nominating candidates for our directors, we consider the balance between knowledge, experience, capabilities, and other elements of the overall board of directors and its diversity to ensure that our directors can make decisions regarding the business activities in diverse fields, including chemicals, performance materials, agricultural chemicals, and pharmaceuticals, and supervise the execution of operations in an appropriate and flexible manner. The candidates to be nominated shall also be physically and mentally healthy, have excellent personalities and aspirations, and have a high level of insight and ethics.
Human resources who have expertise, knowledge and other capacities in each business field such as corporate planning, personnel, finance & accounting, research and development, production technology, environment, safety & quality assurance and others.
Human resources who are capable of giving opinions proactively, raising questions and giving advice on growth strategies, the enhancement of governance and other issues from the viewpoints of various stakeholders and society.
|Corporate Auditors||Human resources with a wide range of experience and knowledge in specialized fields including finance, accounting, and legal affairs who are capable of giving opinions and advice to the management from a fair and neutral standpoint, in addition to auditing the execution of operations.|
Policy on Determination of Officers' Remuneration
The fundamental principle in officers’ remuneration is to maintain its system that is in line with management policy by ensuring that officers contribute to increasing operating performance on a continual basis over the mid- to long-term and toward increasing the overall value of the group, thereby meeting shareholder expectations. At the same time, the basic policy is to set remuneration at an appropriate level, taking into account such factors as the management environment, operating performance and consistency with the treatment of employees.
The remunerations of individual directors are determined at the board meeting after the deliberations of the Nomination and Remuneration Advisory Committee mostly consisting of independent outside directors as well within the total amount determined by resolution of the general shareholders’ meeting. The remunerations of individual corporate auditors are determined through discussions by corporate auditors.
Our Corporate Governance System
Execution and supervision of operations
By introducing a system with executive officers, we clarify the management’s function of prompt decision-making and supervision and the function of executing operations, thereby strengthening both. We also strive to improve management’s capabilities to develop and execute our management strategies. In addition, we have set a one-year term for each director and executive officer, thereby clarifying the management responsibility and the responsibility for executing operations.
Our board meets monthly in principle, to resolve important management matters. It also supervises the execution of operations by directors and executive officers. We ensure that important management matters are determined through careful deliberations at the board meetings or management meetings in our efforts to eliminate or reduce business risks. In addition, the details of decisions made at the management meetings and the results of business executions based on decisions made at the board meetings, etc. are reported to the Board of Directors to enhance the supervising function of the board meeting. We further strives to ensure and improve effectiveness in execution of roles and responsibilities of the Board of Directors by conducting the effectiveness evaluation on the overall Board of Directors every fiscal year.
Audit & Supervisory Board (Board of Corporate Auditors)
We have established the Board of Corporate Auditors. In accordance with auditing plans formulated by the Board of Corporate Auditors, corporate auditors audit the execution of directors’ operation by participating in the board meetings and other important meetings, and by regularly visiting each division / department of the Head Office and plant / laboratory to exchange opinions.
We have appointed the Yaesu Audit Company as our accounting auditor. They audit at the end of each fiscal year, and during the fiscal year when necessary.
We have the Internal Audit Department, which conducts fair and independent internal audits targeting the group companies. The department reports the internal audit results to the President & CEO and to the directors in charge, as well as to the Board of Directors. The department also shares information with the corporate auditors and coordinates with them, mainly through exchanges of opinion.
Support for outside directors and corporate auditors
The Corporate Planning Department supports outside directors by giving them prior explanations of the contents of the agenda and other matters to be discussed at the board meetings, and serves as a contact for inquiries. For outside corporate auditors, we have appointed audit assistants in response to requests from them. Audit assistants are employees who help outside corporate auditors fulfill their duties efficiently and smoothly. They serve as coordinators for holding internal audits, Board of Corporate Auditors’ meetings, and other meetings, help outside corporate auditors conduct audits, and collect and provide information to them.
Nomination and Remuneration Advisory Committee
We have established under the Board of Directors a Nomination and Remuneration Advisory Committee mostly consisting of independent outside directors for the purpose of strengthening the Board of Directors’ independence, objectivity and accountability in relation to matters such as the nomination and remuneration of Directors and further strengthening corporate governance. In response to the Board of Directors’ request for consultation, the Committee shall deliberate the matters such as the nominations of director candidates and corporate auditor candidates, the appointment of senior management, the plans for successors of senior management, and the remuneration of directors, and report the contents of their deliberations to the Board of Directors.
Relationships between our corporate organizations and internal control, etc.
|Male||People||2 (2)||2 (2)||2 (2)||2 (2)|
|Total||People||2 (2)||2 (2)||2 (2)||2 (2)|
|Ratio of independent outside directors (Actual)||%||25||22||22||25|
|Ratio of independent outside directors (Target)||%||-||-||-||33|
|Ratio of female directors||%||0||0||0||0|
|Corporate auditors||Inside corporate auditors||Male||People||1||1||1||1|
|Outside corporate auditors
|Male||People||3 (1)||3 (2)||3 (1)||3 (1)|
|Total||People||3 (1)||3 (2)||3 (1)||3 (1)|
|Altogether||People||4 (1)||4 (2)||4 (1)||4 (1)|
|Ratio of independent outside corporate auditors||%||25||50||25||25|
|Ratio of female corporate auditors||%||0||0||0||0|
- Data is as of after the general meeting of shareholders held in June of each year.
Number of Major Meetings and Attendances※
|Attendance of directors at board meetings||%||98.0||100||99.1||100|
|Attendance of corporate auditors at board meetings||%||96.2||100||100||97.9|
|Board of Corporate Auditors’ Meeting||Times||12||12||12||12|
|Attendance of outside corporate auditors at board of corporate auditors’ meetings||%||97.9||100||100||97.9|
- Data from April to March of each fiscal year
(excluding outside directors)
|Number of officers※||People||6||8||9||8|
(excluding outside corporate auditors)
|Number of officers※||People||2||1||1||1|
|Outside officers||Remuneration||Million yen||76||79||80||80|
|Number of officers※||People||5||6||6||5|
- Above number of Directors and Auditors, remuneration , etc. include remunerations for officers who resigned at the close of general meeting of shareholders. There are no officer’s remuneration, etc. received by outside officers from our subsidiaries.
Analysis and Evaluation of the Effectiveness of the Overall Board of Directors (Effectiveness Evaluation of Boards)
We perform analysis and evaluation (the “Effectiveness Evaluation”) every year to see if the Board of Directors has fulfilled its roles and responsibilities and carry out a third-party evaluation every several years using an external organization that holds no relationships of interest with us in order to ensure neutrality and objectivity. The third-party evaluation was carried out recently in fiscal year 2017.
The evaluation method for fiscal year 2018 is in the form of a questionnaire answered by all Directors and Corporate Auditors. An external organization is contracted to collect the responses and collate the data in order to ensure anonymity, which enhances the self-evaluation. Based on the results of the questionnaire responses, an opinion-exchange meeting was held in March 2019 (with all Independent Officers (2 Outside Directors and 1 Outside Corporate Auditor), the President & CEO, the Senior Executive Vice Presidents, the Director and Head of Corporate Planning Department, and the full-time Corporate Auditor) to discuss issues and responses and conduct analysis and evaluation. The results of the analysis and the evaluation were discussed and confirmed at the Board of Directors meeting held in May 2019.
As a result of the Effectiveness Evaluation for fiscal year 2018, it was concluded that our Board of Directors was generally operating appropriately overall from the perspective of carrying out its principle roles and responsibilities, and that the effectiveness of the Board of Directors was ensured as improvement measures were taken with regard to issues identified in the Effectiveness Evaluation for fiscal year 2017.
Through the discussion that was conducted this time, the following issues were identified from a perspective of further enhancing the effectiveness of the Board of Directors, and we confirmed that measures are to be taken to improve them.
- (1)Examining the following while making use of the Nomination and Remuneration Advisory Committee (established on April 1, 2019):
- 1)Creating systems to appropriately reflect our business performance in the nomination and remuneration of Directors.
- 2)Taking a leading role in formulating and implementing succession plans for senior management and appropriately supervising the development of successor candidates, along with providing opportunities for explaining and discussing successor development plans, including for other Directors and Executive Officers.
- (2)Examining the creation of a system that allows each Director and Corporate Auditor sufficient time for discussion by further innovating methods for prior provision and sharing of information to Directors and Corporate Auditors in order to deepen their deliberation on matters for resolution within a limited time.
- (3)Examining the creation of a system for regularly verifying the investment impact of investment projects approved by the Board of Directors and reporting the verification result to the Board of Directors.