Governance System

Corporate Governance Support System

Our support system of corporate governance is on top of various organizations stipulated under Companies Act (General Shareholders’ Meeting, Representative Director, Board of Directors, Board of Auditors, and Accounting Auditors). We have also deployed a Corporate Officer System in order to ensure prompt management decision making and execution of work operations by making clear the supervision of our management and execution of work operations.
Also, in order to fortify strategizing functions in our top management, we conduct deliberation to understand the current status of various business schemes and business strategies by holding Management Meeting among our Directors as core members. The Chair of the Board Meeting is our Chairman and President, who cannot serve as a Corporate Officer at the same time. Furthermore, at the 143rd Ordinary General Shareholders’ Meeting held on March 29, 2019, the appointment of four External Directors was approved, and the number of Directors was reduced from 10 to 9.
The attendance rate of Internal Officers at meetings of the Board of Directors in 2018 was 100%, and the attendance rate of External Officers was as follows.

FY2018 attendance status

  Board of Directors
  Number of times attended Attendance rate
Director Naozumi Furukawa 14/14 100.0%
Director Hideichi Okada 13/14 92.9%
Director Nobuo Takenaka 13/14 92.9%
Director Hirokazu Kono 10/10 100.0%
Audit & Supervisory Board Member Yoshiki Sato 12/14 85.7%
Audit & Supervisory Board Member Atsushi Kamei 13/14 92.9%
Audit & Supervisory Board Member Megumi Shimizu 10/10 100.0%

Reasons for the selection of Outside Directors and Outside Audit & Supervisory Board Members

  • Naozumi Furukawa
    Naozumi Furukawa will have served as the Company’s Outside Director for a period of five years as of the conclusion of the 143rd Ordinary General Shareholders’ Meeting, and during this period he has expressed his opinion and provided advice based on an extensive knowledge of corporate management, accounting, and finance. He has been selected as a candidate for Director so that we can continue to incorporate his abundant experience and insight as an officer of Zeon Corporation in corporate management. Note that he served as the Company’s Outside Audit & Supervisory Board Member for a period of seven years and nine months starting from June 2006.
  • Hideichi Okada
    Hideichi Okada will have served as the Company’s Outside Director for a period of six years as of the conclusion of the 143rd Ordinary General Shareholders’ Meeting, and during this period he has expressed his opinion and provided advice from an international perspective based on his wealth of experience working at government agencies and his corporate management experience at a leading Japanese company in the petroleum exploration business; he has fulfilled the role expected of him as an Outside Director (by monitoring the company’s operations from a neutral stance independent of the company’s management team, helping to ensure that the Company’s business decisions are not unduly affected by internal biases).
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Nobuo Takenaka
    Nobuo Takenaka will have served as the Company’s Outside Director for a period of three years as of the conclusion of the 143rd Ordinary General Shareholders’ Meeting, and during this period he has expressed his opinion and provided advice based on his abundant experience and insight as an officer of a leading homebuilder company and its group companies in corporate management for many years; and he has fulfilled the role expected of him as an Outside Director (by monitoring the company’s operations from a neutral stance independent of the company’s management team, helping to ensure that the Company’s business decisions are not unduly affected by internal biases).
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Hirokazu Kono
    Hirokazu Kono will have served as the Company’s Outside Director for a period of one year as of the conclusion of the 143rd Ordinary General Shareholders’ Meeting, and during this period he has expressed his opinion and provided advice taking advantage of deep insight based on abundant experiences as a university professor dedicated to research on management engineering and corporate administration at universities in Japan and the US for many years and as an outside director of other companies; and he has fulfilled the role expected of him as an Outside Director (by monitoring the company’s operations from a neutral stance independent of the company’s management team, helping to ensure that the Company’s business decisions are not unduly affected by internal biases).
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Yoshiki Sato
    Yoshiki Sato has utilized his extensive experience and deep insights acquired as a manager at a financial institution and as an outside director of other companies to participate actively in board meetings etc. by addressing frank questions and expressing his opinions; he has fulfilled the role expected of him as an Outside Director (by monitoring the company’s operations from an external perspective, thereby helping to ensure the soundness of the Company’s management and enhance the transparency of its operations).
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Atsushi Kamei
    Atsushi Kamei has effectively utilized his experience and management perspective gained as an executive and CEO of Ito-Yokado Co., Ltd., which has been a leading company in the distribution sector in Japan for many years, to further strengthen our Company’s audit system.
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Megumi Shimizu
    Megumi Shimizu has effectively utilized her abundant experience and knowledge as a legal expert active as an attorney for many years from a legal point of view and objective perspective to further strengthen our Company’s audit system.
    She has maintained her independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
The Board of Directors’ Meeting was held 14 times in fiscal 2018, and 62 proposals were deliberated.
In addition, we seek and incorporate the opinions of institutional investors in matters including proposals at the General Shareholders’ Meeting for Outside Officers, proposals on dividends and the Corporate Governance Code, and proposals regarding the Stewardship Code response policy.
Under our systems, Audit & Supervisory Board Members can get know the status of our business operations by attending various important meetings or committees such as the Management Meeting, and the Internal Audit Office that serves as an independent organization conducts internal audits of each business to check that operations are being conducted properly.
We have three pillars in our auditing system: the audits done by our Audit & Supervisory Board Members who supervise work execution by our Directors, accounting audits done by our independent accounting auditors as external audits, and finally, the audits done by our Internal Audit Department for work operation by our each corporate division and group companies, plus accounting audits. They function by maintaining each other’s independency; by establishing the three pillars of the audit system, our Audit & Supervisory Board Members can fortify the function of Audit & Supervisory Board Members by obtaining information from our Accounting Auditors and Internal Audit Department in a timely manner.
Also, in order to secure transparency and fairness in relation to the appointment and various benefits of our Directors, we determine them at the Board of Directors’ Meeting by establishing a voluntary Personnel/Remuneration Committee for Corporate Officers and Directors followed by our review.
The Personnel/Remuneration Committee for Corporate Officers had four Members (of which two were Outside Members) during the fiscal year from April 2018 to March 2019, and three Members (of which two were Outside Members) during the fiscal year from April 2019 to March 2020. As required by law, all transactions by directors that could be deemed to have conflict of interest implications and all transactions involving competitor firms were subject to approval by the Board of Directors, with the results being reported at Board Meetings.

Corporate Governance Support System

The structure notified is as of March 29, 2019.

Improvement of our
Corporate Governance System

We have made resolutions under the “Basic Guidelines for Corporate Governance in Accordance with the Companies Act” during our Board of Directors’ Meeting in May 2006. Not only do we follow up with their activity status every year, we also keep making further enhancements such as our review by aiming for clearer description of the “Guidelines of the Elimination of Anti-Social Behavior” in April 2009 and re-establishment of the Basic Guidelines following the revision of the Companies Act in June 2015. Also, to comply with the J-SOX Law effective from the fiscal year of 2008 (evaluation of support system for financial account in accordance with Financial Instruments and Exchange Act), it has been confirmed that our corporate governance system is effective both in internal and external evaluation in the fiscal year of 2017. We will continue to make improvements on this aspect as well in order to maintain sustainable and effective functionality.

Remuneration for
Corporate Officers and Directors

Candidates for Directors and Audit & Supervisory Board Members are selected by the Personnel/Remuneration Committee for Corporate Officers and Directors that incorporated Outside Officers as members as of 2016, submitted to a resolution by the Board of Directors, and then submitted to approval by the General Shareholders’ Meeting. With regard to remuneration, transparency and fairness are secured by the Personnel/Remuneration Committee for Corporate Officers and Directors, and remuneration is decided on by the Board of Directors. Regarding the remuneration of Audit & Supervisory Board Members, the Board of Directors has established a policy of “determining remuneration by Audit & Supervisory Board Members after deliberation by the Board of Directors in order to ensure the transparency, fairness, and independence of audits.” It was 639 million yen for fiscal 2018. We seek the opinions of stakeholders through means such as a shareholder questionnaire and the “Contact Us” page of our official website.

Details of executive remuneration

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  Total remuneration
(Million yen)
Total by type of remuneration
(Million yen)
Number of
applicable executives
(persons)
Executive category Basic remuneration Restricted stock compensation Bonus
Directors
(excluding Outside Directors)
531 271 160 100 10
Audit & Supervisory Board Members
(excluding Outside Audit & Supervisory Board Members)
57 45 - 12 2
Outside Officers 51 51 - - 8