Corporate Governance

Basic Concept

In an effort to construct and continually strengthen our corporate governance system, the Sojitz Group is working to clarify managerial responsibility and accountability with respect to shareholders and other stakeholders, and establish a highly transparent management structure. This will raise earning capacity for the entire Group and maximize our corporate value.

Separation of management supervision and business execution

Sojitz employs an executive officer system, with the aim of, through the separation of managerial decision-making from business execution, clarifying authority and responsibilities, and ensuring a smooth and swift execution of business.

The Board of Directors is chaired by the Representative Director and Chairman and is the highest decision-making body, which reviews and approves fundamental policies and critical issues concerning the management of the Group. The Board of Directors also supervises business executions through proposals of important matters and regular reports from the executing body.

As for the executing body, we have established the Management Committee, chaired by the President, who is also the Chief Executive Officer. This 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 major investments and loans, 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 an executing body all directly reporting to the President.

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

Monitoring and supervisory functions for management

Sojitz appoints multiple Outside Directors with the aim of receiving appropriate advice and proposals on management of the Group from an outside, objective standpoint and to reinforcing monitoring functions for the Board of Directors. In addition, by having Outside Directors chairing the Nomination Committee and the Remuneration Committee, both advisory bodies to the Board of Directors, we ensure appropriateness and transparency with regard to the appointment of and remuneration for our Directors.

Sojitz is a company with Audit & Supervisory Board, and the Audit & Supervisory Board independently audits the operational execution of Directors, and oversees and audits the operations of the Group.

Governance Structure

Corporate Governance Report[PDF:348KB]

Structure

Organizational form

Sojitz is a company with Audit & Supervisory Borad.

Board of Directors

The Board of Directors comprises seven members (including two 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 four members (two of whom are outside directors) and is chaired by an outside director.

Audit & Supervisory Board

The Audit & Supervisory Board comprises five members (four 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

Internal audits are led by the Audit Dept. Based on auditing plans approved by the Board of Directors at the beginning of each term, the Audit Dept. conducts audits to assess priority matters, such as compliance, reliability of financial reporting, risk management, and investment/loan management, primarily focusing on the business departments, corporate departments, and the Group’s consolidated subsidiaries including major overseas affiliates. Additionally, the Audit Dept. monitors whether each department’s internal controls and governance systems are functioning effectively and suggests practical ways to amend operational issues.

On top of the auditing work conducted in their respective roles, the corporate auditors, accounting auditors, and internal auditors exchange information to mutually complement their separate functions and raise auditing effectiveness.

Business Execution Systems

Sojitz has the following executing bodies.

  • Management Committee
    The committee is comprised of Executive Directors and Executive Officers in charge of business divisions and heads of corporate departments, and discusses and resolves important issues pertaining to the management and execution of Sojitz.
  • Finance & Investment Deliberation Council
    The council is comprised of Executive Directors and Executive Officers in charge of business divisions and the heads of corporate departments, and discusses and resolves issues pertaining to important investment and loan opportunities.
  • Human Resource Deliberation Council
    The council is comprised of Executive Directors and Executive Officers in charge of business divisions and the heads of corporate departments, and discusses and resolves important issues pertaining to human resources.
  • Internal Committees
    Sojitz has established and manage the following internal committees that act as executing bodies under the direct supervision of the President to advance management initiatives to be handled across the organization in order to enhance corporate value. Each internal committee regularly issues reports on its activities to the Board of Directors and the Management Committee.
    • Internal Control Committee
      The Internal Control Committee monitors progress and operation status of establishing the internal control structure related to financial reporting based on internal control regulation specified by the Companies Act and Financial Instruments and Exchange Act, and formulates policies to maintain and improve our internal control structure.
    • Compliance Committee
      The Compliance Committee examines and formulates fundamental policies related to compliance of the Group, as well as discussing specific compliance measures.
    • CSR Committee
      The CSR Committee examines and formulates fundamental policies and measures related to promotion of CSR.

In addition, for handling subject matter in specific areas, we have established the Disclosure Subcommittee, Security Trade Control Subcommittee and Information Security Subcommittee as subsidiary bodies of the Internal Committees.

  • Executive Officers
    Sojitz has adopted an executive officer system to clarify authority and responsibility at the management level, as well as expedite decision-making and business execution.

Evaluation of the Effectiveness of Board of Directors

Each year, Sojitz analyzes and assesses the effectiveness of the Board of Directors as a whole in order to improve the functions of the Board of Directors.

<Analysis and Assessment Method>
A written self-assessment survey is conducted for all Directors, and the Board of Directors discusses effectiveness based on the aggregate results of the survey.

<Outline of Self-Assessment Survey Items>
Roles and responsibilities of Board of Directors, Composition of Board of Directors, Management of Board of Directors, Decision-making process of Board of Directors, Supervision by the Board of Directors, Training of Directors, Nomination Committee and Remuneration Committee, which are advisory bodies to the Board of Directors, Items concerning Outside Directors, and Decision-making function and supervisory function of Board of Directors, and Effectiveness of Board of Directors

<Outline of Assessment Results>
The following points were verified through the assessments.

  • The size and composition of the Board of Directors are appropriate, the separation of authority, roles and responsibilities between the Board of Directors and senior executives is clear, the Board of Directors is functioning properly and the Nomination Committee and Remuneration Committee are serving their respective purposes.
  • The balance between the decision-making and supervisory functions of the Board of Directors is suitable, discussion by the board is sufficient and its decision-making with respect to important management issues and supervision of business execution is effective.

On the other hand, it was pointed out that there is room for improvement in providing more training opportunities for each director, and also in providing opportunities for communication between outside directors and executives other than at meetings of the Board of Directors. It was confirmed that improvements will be made going forward.

Training policy for Directors and Audit & Supervisory Board Members

Sojitz shall take the following initiatives in order for Directors and Audit & Supervisory Board Members to appropriately fulfill their roles and responsibilities.

  • Sojitz provides newly appointed Directors and Executive Officers with opportunities for lectures by lawyers on legal obligations and responsibilities of Directors and Executive Officers.
  • In order for inside and Outside Directors and Audit & Supervisory Board Members to deepen their understanding of the Company’s extensive business activities, general managers of each business division holds business briefing sessions, and in order for them to deepen their understanding of the latest macroeconomic conditions, the Company’s research institute holds monthly briefing sessions. In addition, Sojitz continues providing other necessary information.
  • In order to ensure sufficient deliberations by the Board of Directors as well as enable the Board of Directors to appropriately demonstrate supervisory functions, the Board of Directors secretariat and Audit & Supervisory Board Members Office provide materials in advance and give prior explanation about proposals for resolutions to inside and Outside Directors and Audit & Supervisory Board Members prior to holding of each meeting of the Board of Directors.
  • In addition, Sojitz offers Directors and Audit & Supervisory Board Members opportunities to attend seminars held by external organizations such as the Japan Association of Corporate Directors and Japan Audit & Supervisory Board Members Association with Sojitz bearing such costs.

Remuneration of Directors and Audit & Supervisory Board Members

Classification
Directors
Audit & Supervisory Board Members
Total
Number of persons to be paid
Amount
(Millions of yen)
Number of persons to be paid
Amount
(Millions of yen)
Number of persons to be paid
Amount
(Millions of yen)
Remuneration pursuant to resolution of General Shareholders' Meeting
7 368 5 103 12 471
Internal
5 344 1 37 6 381
Outside
2 24 4 65 6 89
Notes: 1.   Directors’ maximum remuneration resolved at the Ordinary General Shareholders’ Meeting held on June 27, 2007
  Internal Directors: ¥550 million per year (excluding salary as employee)
  Outside Directors: ¥50 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

Policies on Appointment and Standards for Independence of Outside Officers

Sojitz places importance on the independence of its 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 Company Act, 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 Officers

<Standards Concerning the Appointment of Candidates for Outside Officers>
Sojitz appoints outside directors with a wide range of knowledge and deep insight and abundant experience in industries and administrative fields, such as those who have management experience in business corporations and government agencies and others who have objective and specialist viewpoints regarding 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’ backgrounds 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>
Sojitz 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

 
<Outside Directors>
Name
Board of Directors (No. attended/No. held)
Audit & Supervisory Board (No. attended/No. held)
Yoko
Ishikura
18/18
Appointed because she provides appropriate and meaningful advice and recommendations regarding the Company' s business from an independent standpoint as Outside Director of the Company, based on her substantial academic knowledge of international competitiveness and international corporate strategy, and her experience as an outside director at a number of other companies.
Yukio
Kitazume
18/18
Appointed because he provides appropriate and meaningful advice and recommendations regarding the Company' s business from an independent standpoint as Outside Director of the Company, based on his many years of experience in important positions in public administration and his wealth of insight acquired in his service as a diplomat.
<Outside Audit & Supervisory Board Members>
Name
Board of Directors (No. attended/No. held)
Audit & Supervisory Board (No. attended/No. held)
Takayuki
Ishige
Appointed because he is expected to supervise the Company' s management and give appropriate advice within and outside the Board of Directors from an independent and objective standpoint as Outside Audit & Supervisory Board Member of the Company, based on his many years at Kao Corporation, where he was responsible for duties including finance, accounting and management audits and served as a full-time Audit & Supervisory Board member.
Miki
Seko
18/18
19/19
Appointed because she supervises the Company' s management and gives appropriate advice within and outside the Board of Directors from an independent and objective viewpoint as Outside Audit & Supervisory Board Member of the Company, based on her many years of experience and wealth of knowledge as a university professor of economics.
Tadao
Tsuya
18/18
19/19
Appointed because he supervises the Company' s management and gives appropriate advice within and outside the Board of Directors from an independent and objective viewpoint as Outside Audit & Supervisory Board Member of the Company, based on his deep insight as a certified public accountant and his valuable knowledge and experience cultivated in important positions at various companies.
Mikinao
Kitada
Appointed because he is expected to supervise the Company' s management and give appropriate advice within and outside the Board of Directors from an independent and objective standpoint as Outside Audit & Supervisory Board Member of the Company, based on his abundant experience in the judicial field by holding important posts as a public prosecutor and as an attorney, and as an outside director and outside Audit & Supervisory Board member at various companies.

Holding of Listed Shares

<Policy for shareholdings>
Sojitz holds shares of other listed companies for reasons other than portfolio investment based on comprehensive consideration of whether earnings can be expected through enhanced business strategic relationship and whether a medium-to-long term earning opportunity becomes available through such shareholding.
We review significance of shareholdings by quantitatively examining returns such as earnings and dividends received for each investment on an annual basis, in addition to the above qualitative perspectives.

<Exercising of voting rights>
Based on the significance of holding shares of listed companies, Sojitz exercises its voting rights based on whether or not they contribute to sustainable growth and improved corporate value over the medium-to-long term for both Sojitz and the investment target and has a system of monitoring the status of exercise of voting rights.

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