Corporate Governance

Latest Update : Jan.17, 2019

Directors

Directors

The Company makes rapid and highly strategic management judgments by eleven Directors. At the same time, the Company makes significant transfer of the authority for business execution from Directors to Executive Officers by introducing an Executive Officer execution from Directors to Executive Officers by introducing an Executive Officer System to facilitate a clear distinction between management and supervisory functions and business executing functions. The Company's basic policy calls for the appointment of Directors that have the necessary knowledge, experience, and international outlook, regardless of their nationality, ethnicity, or gender, with an emphasis on the diversity of the Board of Directors.

Moreover, aimed at obtaining advice on all aspects of our corporate management and strengthening the Board of Director's functions to supervise the organizations of execution, we include three Outside Directors out of the eleven Board members.

Furthermore, regarding the Audit & Supervisory Board Members, in order to strengthen and enhance its auditing functions, we have three Outside Audit & Supervisory Board Members (including one full-time Outside Audit & Supervisory Board Member) out of the four Audit & Supervisory Board members. In addition to holding the Audit & Supervisory Board and attending the Board of Directors' meetings and other important meetings, the Audit & Supervisory Board Members, in conjunction with the Independent Auditors, and the Internal Audit Office, audit domestic offices and our Group Companies, to audit the Directors' execution of duties.

Board of Directors (link to Company webpage)

Policy and Procedures for Appointment and Dismissal of Executive Management and Nomination of Director and Audit & Supervisory Board Member Candidates

When appointing Executive Management(indicating representative directors and executive directors; hereinafter the same shall apply)and nominating Internal Director candidates, the Board of Directors gives final approval after deliberations by the Senior Executive Officer Council based on the report given by the Nomination and Compensation Committee comprised of more than half independent Outside Directors (hereinafter, "Nomination and Compensation Committee") on whether the candidate is qualified for the position from the perspective of assigning the right person to the right position, considering accurate and swift decision making, appropriate risk management, supervision of business execution and capabilities for managing each function and each business division of the Company.

If the execution of duties of Executive Management significantly fails to meet the qualifications in the above appointment criteria, dismissal will be deliberated on by the Nomination and Compensation Committee and the Board of Directors will make a decision based on the report of these deliberations.

As for the nomination of Outside Director candidates, the Board of Directors gives final approval based on the report given by the Nomination and Compensation Committee on whether the candidate is qualified for the position, based on a holistic assessment of the candidate's advanced expertise in corporate governance, compliance, risk management, corporate management, etc., following the criteria for determining independence.

In addition, when nominating Audit & Supervisory Board Member candidates, the Board of Directors gives final approval after gaining consent of the Audit & Supervisory Board upon electing a candidate after having holistically conducted reviews with consideration placed on financial, accounting, and legal expertise, knowledge of the Company's business fields and know-how in risk management and corporate management.

Outside Directors and Outside Audit & Supervisory Board Members

Criteria for appointment and independence

We appoint Outside Director and Outside Audit & Supervisory Board Member who has no personal, capital or business relationship or any other interest with the company and who has sufficient independence and is unlikely to cause a conflict of interest with general shareholders in accordance with the requirements prescribed in the Companies Act and the independence standards set forth by the Tokyo Stock Exchange.

Outside Directors election reason and record of attendance (Year ended March 2017)

Fulfilling their roles and functions, We believe the Outside Directors will ensure the sound management of the Company, promote compliance, and strengthen management oversight functions.

Name Independent
director
Reason for appointment Status of attendance
Kohshi Murakami
appointed in June 2008
Mr. Murakami has a wealth of experience and keen insight as a former Presiding Justice of the Division of the Tokyo High Court and as an attorney-at-law. He selected to ensure the sound management of the Company and promote compliance. Board of Directors Meeting
100%
(13/13)
Atsuko Matsumura
appointed in June 2018
Ms. Matsumura has expertise in economics as a professor, Faculty of Economics, Tokyo International University (holding concurrent posts: part-time lecturer of Department of Social and Family Economy, Faculty of Human Sciences and Design, Japan Women's University and part-time lecturer of Department of Politics, Faculty of Law, Keio University) as well as broad knowledge and experience as an educator. We elects her as Outside Director so that her abundant knowledge and experience will be reflected in the management of the Company.
Takashi Matsuoka
appointed in June 2005
Mr. Matsuoka has been in charge of the Planning Division, etc. of KEIAISHA Co., Ltd. for many years, and he has broad insight and experience in business operation. He has properly performed the duties of an Outside Director of the Company by proactively participating in discussions at the Board of Directors meetings in this position since 2005.
The Company has conducted constant commercial transactions with KEIAISHA Co., Ltd. where Mr. Takashi Matsuoka serves as Director and Vice President Executive Officer, including purchase of machinery and equipment, components and grease and other materials from the said company. However, because the value of transactions with the said company is insignificant in terms of transaction size of the Company and there is no possibility that these transactions affect decision-making of the Company.
Board of Directors Meeting
100%
(13/13)
Link to Conversation between Two Outside Directors

Outside Audit & Supervisory Board Member election reason and record of attendance (Year ended March 2017)

We believe the Outside Audit & Supervisory Board Members, in fulfilling their roles and functions, will harness their legal, accounting, and tax accounting expertise, as well as vast professional knowledge of finance, accounting and legal to provide strict management oversight.

Name Independent
director
Reason for appointment Status of attendance
Kazuyoshi Tokimaru
appointed in June 2015
Mr. Tokimaru brings years of banking, finance, compliance and internal audit experience he gained at the Sumitomo Mitsui Trust Bank, Limited, which is one of our major banks. We believe he uses the expertise and insight he developed over the course of his career to fulfill his role as an auditor independent from management, he is appointed as outside auditor.
Since he has retired from the bank in June 2015, he is not in a position to receive the influence of the bank.
In addition to the bank, the Company has transactions with multiple financial institutions, so there is no danger that the bank will have an impact on our decision-making.

Board of Directors Meeting
100%
(13/13)

Audit & Supervisory Board
100%
(15/15)

Hisayoshi Rikuna
appointed in June 2011
As a licensed accountant, Outside Audit & Supervisory Board Member, Mr. Rikuna, is well versed in accounting and tax matters. He serves in a supervisory role independent from management using the expertise and professional knowledge he has gained over the course of his career.

Board of Directors Meeting
100%
(13/13)

Audit & Supervisory Board
100%
(15/15)

Shinichiro Shibasaki
appointed in June 2014
Mr. Shibasaki is well-versed in corporate legal affairs as an attorney-at-law. We elect him as Outside Audit & Supervisory Board Member so that his professional knowledge will be reflected in the Company's audit.

Board of Directors Meeting
100%
(13/13)

Audit & Supervisory Board
100%
(15/15)

Compensation for Directors and Audit & Supervisory Board Members

Regarding compensation for directors and audit & supervisory board members, limits for directors and audit & supervisory board members as a group have been set by the resolution of the general shareholders meeting.

Policy and procedure for reward decision of a director and an auditor

Executive Management and Directors' compensation

The compensation for Executive Management consists of a performance-linked incentives compensation which was introduced in 2017, as well as stock options in addition to the basic compensation which is paid on a monthly basis, and performance-linked bonuses which are determined according to the performance of each business year.

Basic compensation is determined by a resolution passed by the Board of Directors according to his functions, performance, the performance of the Company, and other factors.

Performance-linked bonuses are structured to reflect the Company's performance, job responsibilities, and performance. Payment standards are determined based on the bonus calculation table, which is based on the consolidated result and stock price levels for each fiscal year. The amount of performance-linked incentive compensation is determined based on the degree of achievement of the Medium-term Business Plan aimed at "one trillion yen in net sales and 100 billion yen in operating income".

The compensation for Outside Directors is determined according to their professional backgrounds and other factors. The performance-linked incentives compensation system and stock option are not offered to Outside Directors.

Based on the above policy, the compensation for Executive Management and Directors is approved by resolution of the Board of Directors based on deliberations held by the Nomination and Compensation Committee, within the scope of 1,500 million yen, as authorized by the General Meeting of Shareholders.

Audit & Supervisory Board Members' compensation

Compensation packages consist solely of the basic compensation, which is paid in a fixed amount on a monthly basis. Each Audit & Supervisory Board Member's compensation package is determined by the Audit & Supervisory Board Members.

Based on the above policy, the compensation of Audit & Supervisory Board Members is determined by discussions of the Audit & Supervisory Board within the scope of 100 million yen, as authorized by the General Meeting of Shareholders.

Total compensations for directors, audit & supervisory board members, Outside Directors and Outside Audit & Supervisory Board Members combined for March 31, 2018

Categories Number of payees Amount of remuneration, etc. (thousand yen)
Total Basic remuneration Bonuses Stock options
Directors Directors other than the following 12 959,771 292,920 666,851
Outside directors 2 17,026 17,026
Total 14 976,797 309,946 666,851
             
Audit & supervisory board members Audit & supervisory board members other than the following 1 16,456 16,456
Outside audit & supervisory board members 3 35,340 35,340
Total 4 51,796 51,796
             
Total 18 1,028,593 361,742 666,851

Notes:

  1. The above table includes amounts paid to two directors, who retired from the position as Director at the conclusion of the 71st Ordinary General Meeting of Shareholders held on June 29, 2017.
  2. The remuneration for Directors excludes the salary to be paid for service as officer or employee for Directors who concurrently hold a post of officer or employee of the Company.
  3. The Company resolved that the maximum annual remuneration for Directors shall be not more than 1.5 billion yen (this amount includes maximum annual remuneration of 50 million yen for Outside Directors) at the 71st Ordinary General Meeting of Shareholders held on June 29, 2017. Furthermore, the Company resolved at the 66th Ordinary General Meeting of Shareholders held on June 28, 2012 that the Company may grant stock-based compensation stock options of up to 30 million yen per annum, within the limits of the above remuneration amount, to Directors of the Company (excluding Outside Directors).
  4. During the fiscal year under review, 648 million yen in accrued bonuses for directors was posted, including anticipated payments under the performance-linked incentives remuneration system introduced in 2017.
  5. The Company resolved that the maximum annual remuneration for Audit & Supervisory Board Members shall be not more than 100 million yen at the 61st Ordinary General Meeting of Shareholders held on June 28, 2017.
  6. The amount of remuneration, etc. is shown with fractions of 1 thousand yen rounded off.

An individual whose total compensation exceeds 100 million yen (for the fiscal year ended March 31, 2018)

Name Position Company Total for each class of remuneration
(thousand yen)
Total remuneration
(thousand yen)
Basic
remuneration
Bonuses Stock
options
Yoshihisa Kainuma Director MinebeaMitsumi 101,503 133,000 234,503

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