Sojitz Corporation

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Corporate Governance

Basic Concept

We strive to improve our corporate value over the medium to long term based on the “Sojitz Group Statement” (“The Sojitz Group creates value and prosperity by connecting the world with a spirit of integrity”). In order to materialize this, based on our belief that the enhancement of our corporate governance is an important issue of management, we have built the following corporate governance structure in our effort to establish a highly sound, transparent and effective management structure, while also working toward the fulfillment of our management responsibilities and accountability to our shareholders and other stakeholders.

Management and Business Execution System

We employ an executive officer system for the purpose of, clarifying authority and responsibilities, and ensuring a smooth and swift execution of business through the separation of managerial decision-making from business execution.

The Board of Directors is the highest decision-making body reviewing and resolving fundamental policies and most important cases concerning the management of the Group. The Board of Directors also supervises business execution through proposals of important matters and regular reports from the executing body.

As the executing body, we have established the Management Committee, chaired by the President, who is also the Chief Executive Officer. The Committee is responsible for the review and approval of the Group’s important managerial and executive agendas, from the Group-wide and medium-to-long-term viewpoints. In addition, we have established the Finance & Investment Deliberation Council for the review and approval of investments and loans, the Human Resource Deliberation Council for the review and approval of major human resource matters, and internal committees to handle issues to be addressed from cross-organizational perspectives, as executing bodies all directly reporting to the President & CEO.

The term of Directors and Executive Officers is one year, in order to respond swiftly and appropriately to rapid changes in the business environment and clarify their responsibilities to management.

Monitoring and Supervisory Functions for Management

We appoint multiple Outside Directors for the purpose of receiving appropriate advice and proposals on management of the Group from an outside, objective standpoint and to reinforce the supervisory function of the Board of Directors. In addition, we ensure appropriateness and transparency with regard to the appointment of Directors and remuneration by having Outside Directors serve as the chair of the Nomination Committee and the Remuneration Committee, both advisory bodies to the Board of Directors.

We are a company with an Audit & Supervisory Board, that independently oversees and audits the operations of the Group.

 

Governance Structure

We now implement all principles established in the Corporate Governance Code announced in June 2021. All of the General Principles, Principles, and Supplementary Principles (83 in total), including items to be disclosed in line with all principles of the Corporate Governance Code, are listed at the end of the Corporate Governance Report as “Sojitz’s Approach to Corporate Governance Code Principles.”

Please refer below for more details.

Corporate Governance Report

 

Structure

Organizational form

Sojitz is a company with an Audit & Supervisory Board.

Board of Directors

The Board of Directors is comprised of eight members (including four outside directors). It discusses and resolves management policies and high-priority issues facing the Group, as the Company's foremost decision-making body.

Nomination Committee/Remuneration Committee

Sojitz has established the Nomination Committee and Remuneration Committee as consultative bodies to the Board of Directors, to ensure appropriate and transparent selection and compensation of directors.

Each committee comprises five members (four of whom are outside directors) and is chaired by an outside director.

Audit & Supervisory Board

The Audit & Supervisory Board is comprised of five members (three of whom are outside Audit & Supervisory Board Members). Independent from the Board of Directors, the Audit & Supervisory Board Members audit directors’ execution of duties.

Accounting Auditors

Sojitz has appointed the independent auditing firm KPMG AZSA LLC to conduct accounting audits based on Company Law, financial statement auditing based on the Financial Instruments and Exchange Act, quarterly reviews, and internal auditing.

Internal Audits

Based on an audit plan adopted by the Board of Directors and under the jurisdiction of the Internal Audit Committee(*), the Internal Audit Department conducts audits covering the business divisions, corporate departments and consolidated subsidiaries as below.
・During the audit, the Department investigates whether organizational governance, risk management and internal control are functioning appropriately and makes proposals for effective improvements to prevent loss and resolve issues.
・After the audit is completed, the Department submits an audit report to the Internal Audit Committee and the Audit & Supervisory Board Members after exchanging opinions at an audit review meeting for the audited organizations and the concerned parties (COOs of the divisions/departments with primary responsibility for the audited organizations, GMs in charge of each corporate department, and Audit & Supervisory Board Members). In addition, the Department holds an audit report meeting to provide an explanation to the Internal Audit Committee every month.
・To address the problems identified in the audits, the Internal Audit Department receives report about improvements by the audited organizations for the three- and six-month periods after the audits, and conducts a follow-up audit to check their progress.

  • (*) The Internal Audit Committee was established as a subsidiary body of the Board of Directors, to strengthen supervision over business execution by the Board, and to separate internal audits from execution. This has created a more effective audit and supervisory structure combining audit functions performed by the Audit & Supervisory Board Members with those of the Accounting Auditor by having the Internal Audit Dept. perform internal auditing, as an organization well-versed in the Company’s internal processes.

Meetings of the Board of Directors, Audit & Supervisory Board, etc.

Meetings in the fiscal year ended March 31, 2021:

Board of Directors
18
Nomination Committee
10
Remuneration Committee
12
Audit & Supervisory Board
19

Business Executing Bodies

We have established the following executing bodies that directly report to the President, who is the Chief Executive Officer.

  • Management Committee
    The Committee is comprised of Executive Directors the heads of business divisions and corporate departments, etc. It reviews and approves management policies, management strategies and management administrative matters among the Group from Group-wide and medium-to-long-term viewpoints.
  • Finance & Investment Deliberation Council
    The Council is comprised of Executive Directors and the heads of corporate departments, etc. It discusses and resolves important investment and loan proposals from Group-wide viewpoints.
  • Human Resource Deliberation Council
    The Council is comprised of Executive Directors and the heads of corporate departments, etc., and discusses and resolves important issues pertaining to human resources from Group-wide viewpoints.
  • Internal Committees
    In order to enhance corporate value, we have established the following internal committees that act as executing bodies under the direct supervision of the President & CEO to advance management initiatives that need to be handled across the organization. Each internal committee regularly reports on its activities to the Board of Directors and the Management Committee.
    • Internal Control Committee
      The Internal Control Committee formulates policies to maintain and improve our Internal Controls based on the Companies Act and the Financial Instruments and Exchange Act, and monitors this Internal Controls and its enforcement among the Group.
    • Compliance Committee
      The Compliance Committee examines and formulates fundamental policies and measures to ensure compliance.
    • Sustainability Committee
      The Sustainability Committee examines and formulates fundamental policies and measures related to promotion of Sustainability.
    • Security Trade Control Committee
      The Security Trade Control Committee swiftly responds to changes in aspects of Security Trade Control that pertain to Sojitz Group, and establishes appropriate trade control systems.
    • DX Promotion Committee
      The DX Promotion Committee monitors the overall picture of DX promotion aimed at increasing corporate value, and shares the progress and status of efforts, and verifies their effects.
    • Quality Management Committee
      The Quality Control Committee will restructure a company-wide quality control system to develop business (B to C business) from a market-oriented perspective and to engage in the manufacturing industry.

In addition, we have established the Information Security Subcommittee, Disclosure Working Group, and Business Continuity Management Working Group as subsidiary bodies of the internal committees which will review the practices and initiatives for specific themes from a cross-organizational perspective. We will continue to make necessary reviews and upgrade our corporate structure to build a system that contributes to increasing our corporate value.

Analysis and Assessment of the Effectiveness of the Board of Directors

Each year, we analyze and assess the effectiveness of the Board of Directors as a whole in order to improve the functions of the Board of Directors. The results of the analysis and assessment for the fiscal year ended March 31, 2021, and the tasks ahead are as follows.

 




Analysis & Assessment Method
A written survey and an individual interview were conducted for all Directors and Audit & Supervisory Board Members. The results of this survey were then assessed by a third party (an outside consultant).
The analysis and assessment outcome was reported to the Board of Directors. The Board of Directors held a discussion on initiatives moving forward.



Survey Items
Roles and responsibilities of the Board of Directors, Composition of the Board of Directors, Management of the Board of Directors, Decision-making process of the Board of Directors, Supervision by the Board of Directors, Support system for the Board of Directors, Nomination Committee and Remuneration Committee, which are advisory bodies to the Board of Directors, Items concerning outside Directors, and Suggestions for improving effectiveness, etc.


Outline of Assessment Results
The aggregated survey results showed that the overall average score exceeded the standard, and the third-party assessment was favorable as detailed below. It is therefore confirmed that the Board of Directors is function appropriately and effectively as described below.



Excerpts from Third-Party Assessment Observations
The Board of Directors has maintained a high standard of effectiveness from the previous to the current fiscal year, which can be attributed to appropriate management by the Chairman of the Board of Directors (a role that was assumed by an Outside Director in the fiscal year ended March 31, 2021), adequate opportunities for presenting information to the Board of Directors, and enhanced board diversity through the appointment of an additional Outside Director.

The success of initiatives to encourage active debate regarding medium- to long-term management planning can be seen through assessment comments noting the substantial discussion of management strategies at offsite meetings and ample opportunities for outside Directors to receive briefings prior to board meetings. However, there were also comments stating that the Company should enhance practices for analyzing the progress of plans and strategies for success.

Following the additional appointment of one Outside Director, the Board of Directors consists of seven members, with four In-house Directors and three Outside Directors. The greater representation of Outside Directors has led to enhanced diversity. Comments also stated that the Board of Directors should continue to debate skills required in order to further enhance diversity and ensure growth over the medium- to long-term.

As the Nomination Committee and the RemunerationCommittee strengthen their activities, it is important to continue to ensure transparency in these committees.



Tasks ahead to further increase the effectiveness of the Board
Strengthen monitoring for the achievement of Medium-term Management Plan 2023 through reports on the status of initiatives to achieve non-financial targets in the Plan and on issues and strategies in place for achieving success of qualitative plans (progress of major businesses and projects, etc.)

Finalize the annual schedule and agenda of the Board of Directors meetings at the beginning of the fiscal year to secure time for discussions on important matters. Improve the quality of deliberations by organizing and clarifying the points of focus in deliberations.

Further stimulate discussions by continuing to share information between the President & CEO and Outside Directors, holding Outside Directors meetings and meetings to exchange opinions between Outside Directors and Audit & Supervisory Committee, conducting visits to business locations by Outside Directors, and holding off-site meetings between In-house Directors and Outside Directors.

Deepen understanding within the Board of Directors by further improving reports by advisory committees to the Board of Directors on their status of activities, issues and responses, etc. The Nomination Committee will review the terms of office and systematic rotation of Outside Officers with consideration for the balance of skills, careers, and expertise required on the Board, the content of which will subsequently be discussed by the Board of Directors.

Training Policy for Directors and Audit & Supervisory Board Members

We take the following initiatives to enable Directors and Audit & Supervisory Board Members to appropriately fulfill their roles and responsibilities.

  • We provide newly appointed Directors and Audit & Supervisory Board Members with opportunities for lectures by lawyers on legal obligations and responsibilities of Directors and Audit & Supervisory Board Members, as well as programs targeting company management, such as third-party consulting sessions. We also have new officers undergo lectures on management methods and systems related to critical risk factors which impact our company’s activities, held by the departments in charge of internal controls and risk management.
  • In order for internal and Outside Directors and Audit & Supervisory Board Members to deepen their understanding of our extensive business activities, Chief Operation Officers (COO) of each business division hold business and initiative briefing sessions, and in order for them to deepen their understanding of the latest macroeconomic conditions, our research institute holds monthly briefing sessions. In addition, we provide other necessary information on an ongoing basis.
  • We offer Directors and Audit & Supervisory Board Members opportunities to attend seminars, etc. held by external organizations such as the Japan Association of Corporate Directors and the Japan Audit & Supervisory Board Members Association.

Outline of the remuneration system for company officers

●Executive Remuneration Policy
Sojitz’s basic policy on remuneration for Directors is to create a system that is closely linked to Sojitz’s business performance which will ensure transparency and objectivity with the aim of encouraging contributions to improv Sojitz’s performance and corporate value over the medium- to long term. In accordance with Sojitz’s basic policy on remuneration, the Executive Remuneration Policy (company policy for determining details of remuneration, etc. for individual Directors) was introduced for resolution at the Board of Directors meeting held in April 2021 in order to make a policy for the remuneration of Directors and Executive Officers that is consistent with Sojitz’s corporate statement, value creation model, vision for 2030, and Medium-term Management Plan 2023 which launched in April 2021.

<Basic view>
Sojitz’s basic view on remuneration for Directors and Executive Officers (the “Officers”) consists of the following two dimensions.

・It shall be a system that serves as an incentive to powerfully drive sustainable growth and increase its corporate value over the medium-to-long term, with a view to creating and providing the two types of value upheld by Sojitz, namely value for Sojitz and value for society.

・It shall be a system that solidly promotes the vision of “a general trading company that constantly fosters new businesses and human resources” to be materialized in 2030.

<Basic policy>
・A system linked not only to short-term performance, but to performance as well as growth in corporate value over the medium-to-long term.
・A system linked to the new value Sojitz creates and provides in the digital society and in its pursuit of ESG management.
・A system linked to shareholder value of Sojitz.
・A system that provide a sufficient level of remuneration to secure and retain globally competitive personnel.
・A system in which remuneration is determined through a process with high degree of transparency and objectivity.

<Breakdown of remuneration>
・Level of remuneration
In line with the basic policy, the level of remuneration shall stay attractive commensurate with job responsibilities of each of the Officers. The level of remuneration shall be determined in consideration of factors such as other general trading companies, surveys on executive remuneration at listed corporations both in Japan and abroad that are conducted by third parties, along with the level of employee salary. The level of Sojitz’s executive remuneration shall be subject to review as appropriate depending on the changes in external business environment.

・Structure of remuneration
Sojitz’s remuneration consists primarily of basic remuneration and performance-linked remuneration. Medium-to-long term performance-linked remuneration applies a “pay for mission” approach, which takes into consideration factors such as the fulfillment of corporate philosophy and the creation and provision of the two types of value.
-Basic remuneration (fixed remuneration):Monetary remuneration determined by the individual’s rank, commensurate with job responsibilities
-Performance-linked remuneration (short-term)Monetary remuneration linked to corporate performance in a single year as well as the progress made with the Medium-Term Management Plan
-Performance-linked remuneration (medium-to-long term):Share remuneration linked to the achievement of the Medium-Term Management Plan and the increase in corporate value (in terms of ESG and share price)

・Remuneration mix
【Executive Officers (including those concurrently serving as Directors)】
The proportion of basic remuneration shall be lowered from the current level of 77% uniformly applied to all, to the range between 54% and 66% depending on individual job responsibilities, while the proportion of performance-linked remuneration shall be increased.
Basic remuneration 54%~66%
Performance-linked remuneration (short-term) 21~26%
Performance-linked remuneration (medium-to-long term) 13%~20%

【Outside Directors】
Remuneration consists wholly of basic remuneration, while special allowance shall be paid separately to the Chairman of the Board of Directors, and the chairs of the Nomination Committee and the Remuneration Committee.

・Timing of the payment of remuneration
-Basic remuneration:Paid monthly
-Performance-linked remuneration (short-term):Paid once a year at a certain time
-Performance-linked remuneration (medium-to-long term):Shares will be delivered after the retirement

<Determination method of performance-linked remuneration>
Determined based on factors such as the level of achievement of targets, progress made with the Medium-Term Management Plan and individual contribution to corporate performance.

<Forfeiture of remuneration (claw back clause, malus clause)>
If a resolution is passed by the Board of Directors for a post-closing correction of accounts due to serious accounting errors or fraud, or if a wrongdoing by a Director or an Executive Officer is confirmed by the Board of Directors, Sojitz may restrict the payment of performance-linked remuneration or request the refund of the remuneration they have received.

<Governance over remuneration>
Amount of remuneration of each of the Officers shall be determined by the Board of Directors, after deliberations at the Remuneration Committee chaired by an Outside Director, with the majority of committee members being Outside Directors.

●FY2021 Remuneration System for Directors
In accordance with the Executive Remuneration Policy, an outline of the remuneration system for Directors in FY2021 is as follows.

・Types of Remuneration
Remuneration for Directors (excluding Outside Directors) consists of basic remuneration (fixed remuneration), performance-linked remuneration (short-term), and performance-linked remuneration (medium- to long-term). Remuneration for Outside Directors consists solely of basic remuneration (fixed remuneration). However, in the event that an Outside Director assumes the position of Chairman of the Board of Directors, Chair of the Nomination Committee, or Chair of the Remuneration Committee, they will be paid a predetermined special allowance every month in addition to their basic remuneration (fixed remuneration).

・Basic Remuneration
Basic remuneration (fixed remuneration) is monetary remuneration of an amount determined by the individual’s rank, commensurate with job responsibilities. As an annual wage plan, basic remuneration is paid out annually with one-twelfth of the total amount paid monthly.

・Short-Term Performance-Linked Remuneration
Short-term performance-linked remuneration is monetary remuneration linked to corporate performance in a single year as well as the progress made with the Medium-term Management Plan. It is paid to Directors in certain predetermined positions and payment is based on:
(1)the standard amount of remuneration according to job rank (remuneration amount if 100% of all evaluation criteria is achieved), (2)consolidated net profit and progress of consolidated net profit in the period (degree of progress for consolidated net profit during Medium-term Management Plan in FY2021–2023), ROE, core operating cash flow, and progress of core operating cash flow (degree of progress for core operating cash flow during Medium-term Management Plan in FY2021–2023), and(3)an amount determined based on achievement of each evaluation criteria. The degree of achievement of targets for each evaluation criteria shall be calculated by comparing the target amounts for each evaluation criteria with the actual results. The target for each evaluation criteria shall be determined by resolution of the Board of Directors after deliberation by the Remuneration Committee in April or May of each year, which is the beginning of the fiscal year. The specific calculation method for performance-linked remuneration (short-term) shall be as described below and shall be paid in July following the end of the fiscal year.

The targets to be used in the calculation of performance-linked compensation (short-term) for FY2021 are as follows

Evaluation criteria
Target
Evaluation weighting
 Consolidated net profit for the year (* Note)
¥53.0 billion
35%
 Consolidated net profit
 (progress made toward Medium-term Management Plan target)
¥53.0 billion
35%
 ROE
8.4%
20%
 Core operating cash flow for the year
¥71.0 billion
5%
 Core operating cash flow
 (progress made toward Medium-term Management Plan target
  (¥240.0 billion))
¥71.0 billion
5%

Note:Targets for FY2022 and FY2023 will be determined by a resolution of the Board of Directors after deliberation by the Remuneration Committee in April or May each year.

・Medium- to Long-Term Performance-Linked Remuneration
Performance-linked remuneration (medium- to long-term) is share-based remuneration linked to the achievement of targets under Medium-term Management Plan and improvement in corporate value (ESG evaluation and share price). It is paid to Directors in certain predetermined positions and is based on:
(1Basic points which are granted each year and which are calculated based on the basic remuneration amount and basic share value for each position,(2“Share Delivery Points” calculated by multiplying the number of basic points accumulated after the three-year period by the performance-linked factor based on the achievement level of the evaluation criteria, and(3company shares and cash calculated based on the accumulated “Share Delivery Points” at the time of retirement of eligible Directors, when all preconditions are satisfied.

In the calculation of Share Delivery Points, the evaluation criteria during Medium-term Management Plan in FY2021–2023 are consolidated net profit, Sojitz share growth rate (based on the ratio of Sojitz’s Total Shareholders Return (TSR) to the TOPIX growth rate (including dividends)), and separately established ESG targets. Targets for each evaluation criteria shall be determined by resolution of the Board of Directors after deliberation by the Remuneration Committee.

The specific calculation method for performance-linked remuneration (medium- to long-term) is as described below.


Evaluation criteria
Targets
Evaluation weighting factor
 Medium-term Management Plan
  (three-year period) accumulated consolidated net profit
  (*1)
195.0 billion
60%
 Growth rate of the Company’s stock
  (relative comparison between the Company’s
  Total Shareholders Return (TSR) to TOPIX
  (including dividends)) (*2)
110%
30%
 ESG (Environmental, Social, Governance)-related criteria
 (*3)
Evaluation of each ESG criteria by the Remuneration Committee
10%

(*1) Profit for the year attributable to owners of the Company.
(*2) Evaluated based on the relative comparison between Total Shareholders Return (TSR) of Sojitz and TOPIX (including dividends).
(*3) Level of achievement for ESG targets (including decarbonization, initiatives for addressing social problems, empowering women in the workplace, encouraging employees to take childcare leave, improvement in the results (main items) of the employee awareness survey, and strengthening of governance) upheld in the Medium-term Management Plan shall be evaluated by the Remuneration Committee.

・Composition of Remuneration
In order to further enhance the connection between remuneration and business performance, as well as to create a system of evaluation criteria that more fully reflects the efforts and progress made toward improving corporate value in the medium-to-long term, the Company has revised its overall remuneration system for FY2021. The proportion of basic remuneration shall be lowered from the current level of 77% uniformly applied to all, to the range between 54% and 66% depending on individual job responsibilities, while the proportion of performance-linked remuneration has been increased.

・Reduction, Non-Payment, and Request for Return of Remuneration In the following cases, the Company may reduce or withhold payment of the unpaid portion of basic remuneration (fixed remuneration), performance-linked remuneration (short-term), and performance-linked remuneration (medium- to long-term) for Directors, and may demand the return of all or part of the portion that has been paid.
ーIn the event of a resolution of the Board of Directors to make adjustments to financial statements due to serious accounting errors or fraud
ーIn the event that the Company suffers major damages due to intentional or accidental gross negligence of professional duties (including but not limited to violations of laws, regulations, Articles of Incorporation, or internal rules, or violations of the Directors’ Duty of Care and Duty of Loyalty in the execution of duties)
ーIf the Director resigns from office for personal reasons against the Company’s wishes (excluding cases of resignation for unavoidable reasons such as injury or illness)
ーWhen a Director is dismissed from the Board of Directors for justifiable reasons
ーIn case of employment at another company in the same industry without the Company’s permission

Remuneration of Directors and Audit & Supervisory Board Members for the Fiscal Year Ended March 31, 2021)

(Millions of yen)

Classification
Number of persons to be paid
Basic remuneration
Performance-linked remuneration
Total
Monetary
(※1、2)
Share
(※3)
Monetary
(※1)
Share
(※3)
Directors (Total)
9 328 26 20 10 385
Directors(Internal)
6 290 26 20 10 347
Outside Directors
3 37 - - - 37
Audit & Supervisory Board Members (Total)
7 106 - - - 106
Audit & Supervisory Board Members(Internal)
2 64 - - - 64
Outside Audit & Supervisory Board Members
5 41 - - - 41
(Note)Figures are rounded down to the nearest million yen.
 
Notes:
1.
Directors’ maximum remuneration:  
Internal Directors: Resolved at the Ordinary General Shareholders ‘Meeting held on June 27, 2007
¥550 million per year (excluding salary as employee)
Outside Directors: Resolved at the Ordinary General Shareholders ‘Meeting held on June 18, 2021
¥100 million per year
     
2. Audit & Supervisory Board members’ maximum remuneration: Resolved at the Ordinary General Shareholders’ Meeting held on June 27, 2007
¥150 million per year
     
3. Performance-linked Remuneration for Directors: Resolved at the Ordinary General Shareholders’ Meeting on June 19, 2018
  Persons eligible for Delivery of Sojitz shares: ・Directors (excluding Outside Directors and non-residents in Japan)
・Executive Officers (excluding non-residents in Japan)
  Upper limit of cash contributed by Sojitz: JPY 700 million in total for three fiscal years
  Upper limit of the number of Sojitz shares subject to Delivery to Directors: 3 million points (equivalent to 3 millions shares) for three fiscal years
 
The total amount of the aforementioned share remuneration represents the amount reported as expenses for fiscal year ended March 31, 2020 associated with the share delivery points regarding the System (Board Incentive Plan (BIP) Trust). Basic remuneration (share) refers to the “fixed portion” with no link to business performance within the remuneration to be paid under the System.

Policies on Appointment and Standards for Independence of Outside Officers

We place importance on the independence of outside officers. We have formulated our own Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members in addition to the provisions of the Companies Act, and standards for independence of officers set by financial instruments exchange, and confirm that all our outside officers meet these standards.

(Reference) Standards Concerning the Appointment and Independence of Candidates for Outside Directors and Outside Audit & Supervisory Board Members

<Standards Concerning the Appointment of Candidates for Outside Directors and Outside Audit & Supervisory Board Members>
The Company appoints Outside Directors from those with a wide range of knowledge and deep insight and abundant experience in industries and administrative fields, targeting those who have management experience in business corporations and government agencies and others who have objective and specialist viewpoints toward world affairs, social and economic trends and corporate management. In appointing Outside Audit & Supervisory Board Members, in addition to the above, we also ensure the diversity of the candidates’ background from the perspective of reflecting the viewpoints of a variety of stakeholders in the audit of business activities.

<Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members>
The Company judges Outside Directors and Outside Audit & Supervisory Board Members to be independent by confirming that they do not fall under any of the following standards, in addition to the independence standards prescribed by financial instruments exchanges.

  • 1.  A major shareholder of the Company (a shareholder holding 10% or more of the total voting rights of the Company) or a member of business personnel thereof
  • 2.  A major creditor to the Company (a creditor from whom the Company owed an amount exceeding 2% of the consolidated total assets of the Company in the most recent fiscal year) or a member of business personnel thereof
  • 3.  A major business partner of the Company (a business partner whose transaction amount with the Company exceeded 2% of the Company’s annual consolidated revenue in the most recent fiscal year) or a member of business personnel thereof
  • 4.  A party whose major business partner is the Company (an entity whose transaction amount with the Company exceeded 2% of its annual consolidated net sales in the most recent fiscal year) or a member of business personnel thereof
  • 5.  An attorney, certified public accountant, certified tax accountant, consultant or other professional who received money or other property from the Company for his/her services as an individual in an amount exceeding ¥10 million annually on average over the past three fiscal years, other than remuneration of Directors or Audit & Supervisory Board Members (if such money or property was received by an organization, such as a corporation or partnership, this item refers to a person who belongs to the organization that received money or other property from the Company in an amount exceeding ¥10 million annually on average over the past three fiscal years or in an amount of 2% of the annual total revenue or consolidated net sales of the organization, whichever the greater.)
  • 6.  A person who receives donations or grants from the Company in an amount exceeding ¥10 million annually (if such donations or grants are received by an organization, such as a corporation or partnership, this item refers to a member of business personnel of the organization.)
  • 7.  A person who is the Accounting Auditor of the Company or a person who is engaged in audit activities of the Company as an employee of the Accounting Auditor
  • 8.  A person who has fallen under any of the above items 1. to 7. in the past three years
  • 9.  A spouse or relative within the second degree of kinship of a person falling under any of the above items 1. to 8. (limited to the person holding the position of officer or other important positions)
  • 10. A spouse or relative within the second degree of kinship of a member of business personnel (limited to the person holding the position of officer or other important positions) of the Company or any of its consolidated subsidiaries
  • 11. A person whose term of office as Outside Director or Outside Audit & Supervisory Board Member of the Company exceeds eight years
  • 12. A person with concerns on his/her independence such as having constant and substantial conflict of interest with general shareholders as a whole in performing the duties of Outside Director or Outside Audit & Supervisory Board Member or for other reasons

Outside Directors and Outside Audit & Supervisory Board Members / Reasons for Appointment

<Outside Directors>

NameBoard of Directors Meetings
(No. attended/No. held in FY ended March 31, 2021)
Audit & Supervisory Board Meetings
(No. attended/No. held in FY ended March 31, 2021)
Kayoko Naito100%(18 out of 18)
As a lawyer, Ms. Kayoko Naito has advanced and specialized knowledge in the fields of international law and corporate law, as well as in soft low, which is a global norm.
She was judged to be a good fit for the position as she provides accurate and meaningful advice from an independent and global perspective regarding the Company’s business—particularly with regards to legal matters and corporate governance.
Norio Otsuka100%(18 out of 18)
Mr. Norio Otsuka has a wealth of experience in top management from his time acting as Director, President and Chief Executive Officer/Chairperson of the Board of Directors at NSK, where he advanced the company’s global growth strategy and strengthened corporate governance. He was judged to be a good fit for the position, as he provides accurate and meaningful advice from an practical perspective regarding the Company’s long-term strategy and ways to further strengthen corporate governance.
Naoko Saiki100%(14 out of 14)
Ms. Naoko Saiki has held several important positions in the Ministry of Foreign Affairs of Japan, and possesses a wealth of knowledge pertaining to international affairs, international law, economy, and culture cultivated through diplomatic service. She was judged to be a good fit for the position as she provides accurate and meaningful advice from an independent and objective perspective regarding the Company’s business.
Ungyong Shu
Mr. Ungyong Shu has held important positions at J.P. Morgan Securities Japan Co., Ltd. and Merrill Lynch Japan Securities Limited. He is highly knowledgeable in the areas of M&A strategy and financial and capital policy. He also has a wide business network and extensive experience as a corporate manager at financial institutions.
He was judged to be a good fit for the position given his ability to provide sound advice from a financial perspective and utilize his experience and expertise to supervise the execution of business operations. Sojitz is striving to implement strategic business investments that will ensure sustainable growth, and we expect that these skills will enable him to contribute to the Company’s efforts to grow and increase our corporate value.

<Outside Audit & Supervisory Board Members>

NameBoard of Directors Meetings
(No. attended/No. held in FY ended March 31, 2021)
Audit & Supervisory Board Meetings
(No. attended/No. held in FY ended March 31, 2021)
Kazunori Yagi100%(18 out of 18)100%(19 out of 19)
Mr. Kazunori Yagi supervises the Company’s management and gives appropriate advice within and outside the Board of Directors, from an independent standpoint and objective viewpoint as an Outside Audit & Supervisory Board Member, based on his experience holding important positions at Yokogawa Electric Corporation, including roles in accounting and business planning, and as a Director. He has also served as an outside director at several other companies and has abundant experience in corporate management, as well as expertise knowledge in auditing as a member of the Certified Public Accountants and Auditing Oversight Board, and thus has been appointed.
Michiko Nagasawa100%(14 out of 14) 100%(14 out of 14)
Ms. Nagasawa has a wealth of advanced and specialized knowledge in the field of corporate law. She provides appropriate advice within and outside the Board of Directors, from an independent standpoint and objective viewpoint as Outside Audit & Supervisory Board Member based on her previous experience holding important legal positions and her experience serving as an outside director for other firms, and thus has been appointed.
Kazuhiro Yamamoto
After joining Teijin Limited, Mr. Kazuhiro Yamamoto held a number of important positions, including General Manager of the Pharmaceutical and Medical Care Business Management Department, as well as President & Representative Director, CEO and CFO of Infocom Corporation, a listed subsidiary of Teijin Limited. Sojitz believes that he can supervise its management from a neutral and objective perspective based on his high level of insight in fields including management, information and telecommunications, home healthcare, and his knowledge of finance and accounting., which he has cultivated through his experience. In addition, Sojitz expects him to supervise its business, which is focusing on the healthcare and digital transformation fields, and thus has been appointed.

* Ungyong Shu and Kazuhiro Yamamoto were appointed at the 18th Ordinary General Shareholder's Meeting (June 18, 2021)

Holdings of Listed Shares

<Medium-term Management Plan 2023 Policy for Reducing Shareholdings>
We will proceed with further reduction of cross-shareholdings as part of our policy (announced March 2021) to achieve a 50% reduction by the end of March 2024. We will continue to implement this policy under Medium-term Management Plan 2023. In recent years, cross-shareholdings have been drawing greater attention from the market, and we have decided to further divest from cross-shareholdings as part of our efforts to raise capital efficiency.

<Policies for Shareholdings>
Each year, we conduct a quantitative assessment of listed shares held in each company as part of our shareholding policy to ensure that dividends or related profit earned from those shares exceeds the weighted average cost of capital (WACC). We also conduct a qualitative assessment, looking at whether the shares help improve our corporate value. Based on these assessments, we examine the value of retaining these shares. We retain those that are deemed to be worthwhile, seeking ways to achieve greater impact and benefit from those shares. Meanwhile, for those shares which are deemed to now lack significant value, we set a deadline to improve their value; or if there is no indication these shares will improve, we examine the possibility of divestiture. The Board of Directors and the Management Committee conducts this assessment for each lot of shares held in each company.

<Exercising of Voting Rights>
Based on the significance of holding shares of listed companies, we exercise our voting rights based on whether or not they contribute to sustainable growth and improved corporate value over the medium-to-long term for both the Company and the investment target. We also have a system of monitoring the status of exercise of voting rights.

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