1.Basic Views on Corporate Governance
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.
2.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. The Company 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 the Company’s corporate organizations and internal control, etc.
3.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.|
4.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.
5．Analysis and Evaluation of the Effectiveness of the Overall Board of Directors (Effectiveness Evaluation of Boards)
We consider the primary roles and responsibilities of the Company’s Board of Directors as follows and annually analyze and evaluate whether the roles and responsibilities are fulfilled. In order to ensure the neutrality and objectivity of the executioner of the effectiveness evaluation, evaluation is conducted every few years by third-party that is not related to the Company and interests.
Effectiveness evaluation in FY2017 was conducted with the cooperation of external organization.
The Company prepared a questionnaire for directors and corporate auditors and analyzed the results of their responses, and conducted individual interviews with all directors and corporate auditors. Based on the results of these responses and interviews, all independent directors (two outside directors and one outside corporate auditor), the President, the Vice President, the Director and Head of the Corporate Planning Department, and external organizations analyzed and evaluated at the meeting of exchange of ideas. The results of the meeting were discussed and summarized at the board meeting.
As a result of deliberations by the board meeting, it is concluded that the Board of Directors assured the effectiveness considering its structure, operation and appropriate content to discuss. Implemented countermeasures against the results of effectiveness evaluation implemented in FY2016 were also taken into account. However, it is necessary to assess following items as future initiatives at the boards’ effectiveness evaluation later than 2018 and improve subsequently and take remedial action as necessary.
- (1)Enhancing the involvement of outside directors in discussions for developing management plans
- (2)Having outside directors and auditors participate in discussions on the progress of management strategies and plans
- (3)Further improving information materials used in the board meetings
- (4)Sharing discussions at management meetings with outside directors and auditors
- (5)Composition of the Board of Directors that considers balance and diversity
- (6)Setting up a voluntary committee that explains and discusses successor plans including executive managers