Corporate Governance
- Policy and Basic Approach
- Systems
- Remuneration of Directors and Audit & Supervisory Board Members
- Holdings of Listed Shares
Policy and Basic Approach
Basic Policy on Corporate Governance
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,” as well as 2030 Vision of Sojitz—"a general trading company that constantly cultivates new businesses and human capital.” In order to materialize this vision, 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.
Systems
Corporate Governance System
Management and Operation Execution System
We employ an executive officer system for the purposes 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 bodies.
We have established the Management Committee, chaired by the president & CEO, as an executing body. 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 set at one year, in order to respond swiftly and appropriately to rapid changes in the business environment and to clarify their responsibilities as management.
Management Oversight and Supervisory Functions
Sojitz appoints multiple outside directors for the purpose of receiving appropriate advice and proposals on management from an outside, objective standpoint and to reinforce the supervisory function of the Board of Directors. In addition, Sojitz seeks to ensure appropriateness and transparency with regard to the nomination of directors and remuneration by having outside directors serve as the chairs of the Nomination Committee and the Remuneration Committee, both advisory bodies to the Board of Directors.
Sojitz is a company with an Audit & Supervisory Board described in the Companies Act of Japan, based on which it has established the Audit & Supervisory Board, which oversees and audits management from an independent perspective.
Corporate Governance Framework (As of June 20, 2023)
Composition of Corporate Governance Bodies
Overview of Corporate Governance System (As of June 20, 2023)
| Organization structure | Company with Board of Company Auditors |
|---|---|
| Number of directors | 9 (5 of whom are outside directors) |
| Chairman of the Board of Directors | Norio Otsuka (Outside Director) |
| Number of Audit & Supervisory Board members | 5 (3 of whom are outside Audit & Supervisory Board members) |
| Term of office of directors according to articles of incorporation | 1 year |
| Has executive officer system | Yes |
| Optional advisory committees to the Board of Directors | Nomination Committee and Remuneration Committee |
| Accounting Auditor | KPMG AZSA LLC |
| Corporate governance report | https://www2.jpx.co.jp/disc/27680/140120231221506690.pdfPDF |
Note: We implement all principles established in the Corporate Governance Code.
Number of Meetings and Attendance Rate of the Board of Directors, Audit & Supervisory Board, and Other Bodies
In the Fiscal Year Ended March 2022 (From April 2022 to end of March 2023)
| Board of Directors | 17 times | 100％ attendance rate of directors 100％ attendance rate of Audit & Supervisory Board members |
|---|---|---|
| Nomination Committee | 10 times | 100％ attendance rate of committee members |
| Remuneration Committee | 5 times | 100％ attendance rate of committee members |
| Audit & Supervisory Board | 19 times | 100％ attendance rate of Audit & Supervisory Board members |
Attendance rate is measured as a percentage of the number of meetings held since the appointment of each member.
ご参照Composition of the Board of Directors
ご参照Composition of the Audit & Supervisory Board
Briefings on Business Execution for Outside Directors
In order to improve the effectiveness of the Board of Directors, Sojitz holds monthly briefings to share information between the president & CEO and Outside Directors. In addition, Sojitz holds meetings between in-house directors and outside directors, meetings of outside directors, and meetings for exchanging opinions between outside directors and Audit & Supervisory Board members.
The Board of Directors
The Board of Directors
As the highest decision-making body, the Board of Directors reviews and resolves fundamental policies and the most important cases concerning the Group’s management, and also supervises business execution through proposals of important matters and regular reports from the executing bodies. The Outside Directors supervise the executive directors and overall system of business execution and provide opinions and advice on corporate governance.
Election Policy of the Board of the Directors
A general trading company deals in a wide and varied range of businesses. To ensure appropriate decision making and oversight of management, Sojitz considers diversity, including that of gender and international experience, when selecting directors, and has selected several individuals with a wealth of experience, exceptional insight, and sophisticated expertise from both within and outside Sojitz.
Sojitz’s Articles of Incorporation stipulate that the number of directors shall not exceed 10.
Composition of the Board of Directors
Sojitz’s Board of Directors consists of nine directors (seven men and two women). The Board includes four in-house directors who have abundant business experience at Sojitz and five outside directors who have objective specialist viewpoints and diverse knowledge. (As of June 20, 2023)
| Name | Position | Board of Directors Meetings (No. attended/No. held in FY ended March 31, 2023) |
|
|---|---|---|---|
| Masayoshi Fujimoto |  |
Representative Director, President & CEO | 100% （17 out of 17） |
| Ryutaro Hirai |  |
Representative Director, Executive Vice President | 100% （17 out of 17） |
| Yoshiaki Manabe |  |
Senior Managing Executive Officer | － |
| Masaaki Bito |  |
Director, Senior Managing Executive Officer | 100% （13 out of 13） |
Norio Otsuka
|
 |
Chairman of the Board of Directors | 100% （17 out of 17） |
Naoko Saiki
|
 |
Chair of the Nomination Committee | 100% （17 out of 17） |
Ungyong Shu
|
 |
Chair of the Remuneration Committee | 100% （17 out of 17） |
Haruko Kokue
|
 |
― | 100% （13 out of 13） |
Tsuyoshi Kameoka
|
 |
― | － |
Procedure for Appointing Directors
In line with the aforementioned policy, the Board of Directors deliberates each candidate’s performance and qualifications as a director based on the results of deliberations by the Nomination Committee—an advisory body to the Board of Directors—before passing a resolution and submitting it to the General Shareholders’ Meeting for approval.
Matters Deliberated by the Board of Directors
The Board of Directors reviews and resolves fundamental matters concerning the management of Sojitz Group including management policies, plans, and important personnel, systems, and organizational matters. These deliberations are conducted based on relevant laws and regulations, the Articles of Incorporation, and the internal rules of the Board of Directors. The Board of Directors also reviews and resolves important matters related to business execution, such as important investments and loans.
Regarding the execution of business other than these matters resolved by the Board of Directors, the president & CEO and the executing bodies reporting to the president & CEO (namely the Management Committee, the Finance & Investment Deliberation Council, and the Human Resource Deliberation Council) review and approve matters depending on the content, scale, importance, and risks in each case.
Sojitz implements the following measures to ensure dynamic, meaningful deliberation among the Board of Directors:
- (i)Materials for Board meetings are distributed sufficiently in advance of the meeting date.
- (ii)Opportunities are provided for prior explanation of agenda items. Materials other than those for the Board of Directors meeting are provided, and sufficient information regarding agenda items is distributed.
- (iii) In order to secure time for discussions on important matters, the annual schedule and agenda of the Board of Directors meetings is finalized at the beginning of the fiscal year.
- (iv)The number of agenda items and the frequency of meetings are set appropriately, and depending on the nature of the matter, the company handles written resolutions and reports on a case-by-case basis.
- (v)Materials that briefly summarize the main points are distributed in advance and sufficient time for deliberation is allocated, including time for explanations of materials prior to deliberation.
Administrative Support System
Establishment of a Dedicated Organization
We have established the Board Meeting Operation Office as an organization dedicated to assisting the directors. The full-time staff of the office provide directors with timely and appropriate information, reports, and communications.
Training
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 to participate in programs such as lectures on the medium-term management plan, internal control and risk management structure, IR and sustainability initiatives, and lectures by lawyers on legal duties and responsibilities of directors and Audit & Supervisory Board members. In order for Directors and Auditor and Supervisory Board members to deepen their understanding of our extensive business activities, each of the Chief Operation Officers (COOs) holds 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 and events held by external organizations.
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 its functions.
The analysis and assessment method, FY2021 results, and upcoming objectives are as follows.
| Assessment Method |
|
|---|---|
| Survey |
|
| Outline of Effective Assessment Results | The Board of Directors discussed the results of the survey and individual interviews and confirmed that the effectiveness of the Company’s Board of Directors has been ensured. The main matters that were assessed are as follows: (Medium-term Management Plan) The quarterly performance progress reports and reports from the COOs on progress and issues, both quantitative and qualitative, are good initiatives, and in particular, the reports from the COOs were assessed as easier to understand than in FY2021.（Management） The annual schedule and agenda setting were assessed as adequate, and the materials were evaluated as easier to read with improved contents compared to FY2021.（Dialogue with Shareholders, Human Resources, and Sustainability） IR activities, including those for individual shareholders, were highly appreciated by shareholders, and reports on human resources and sustainability were appropriately and regularly made, all of which received generally high assessments. |
The assessment performed for initiatives in FY2022, and our policy on major tasks we will perform in FY2023 based on these results are as follows:
Advisory Bodies on the Board of Directors
Sojitz has established the following advisory bodies to the Board of Directors (as of June 20, 2023).
| Nomination Committee | Remuneration Committee | |
|---|---|---|
| Roles | Discusses and proposes the standards and methods for selecting director and executive officer candidates and considers candidate proposals. | Discusses and proposes remuneration levels for directors and executive officers and various systems related to evaluation and remuneration. |
| Members | Five outside directors and one in-house director | Five outside directors and one in-house director |
| Naoko Saiki (Chairperson/Outside Director) Norio Otsuka (Outside Director) Ungyong Shu (Outside Director) Haruko Kokue (Outside Director) Tsuyoshi Kameoka (Outside Director) Masayoshi Fujimoto (Representative Director, President & CEO) |
Ungyong Shu (Chairperson/Outside Director) Norio Otsuka (Outside Director) Naoko Saiki (Outside Director) Haruko Kokue (Outside Director) Tsuyoshi Kameoka (Outside Director) Masayoshi Fujimoto (Representative Director, President & CEO) |
|
| Number of meetings (in the Fiscal Year Ended March 2023) |
10 times | 5 times |
The Audit & Supervisory Board and Audits
The Audit & Supervisory Board
Audit & Supervisory Board members are independent from the Board of Directors and audit the directors’ execution of their duties based on laws and regulations, the Articles of Incorporation, internal rules, and the Corporate Audit Standards established by the Audit & Supervisory Board. Audit & Supervisory Board members attend major meetings related to the execution of business in addition to the meetings of the Board of Directors. Audit & Supervisory Board members also monitor and audit business operations through means such as interviewing directors and reviewing important documents related to approval.
Composition of the Audit & Supervisory Board
The Audit & Supervisory Board consists of five members (three men and two women), including two full-time Audit & Supervisory Board members with abundant practical and management experience within Sojitz and its invested companies, and three Outside Audit & Supervisory Board members with objective perspectives and diverse expertise based on specialist knowledge. Three of these directors have substantial knowledge of finance and accounting (as of June 20, 2023).
| Name | Board of Directors Meetings (No. attended/No. held in FY ended March 31, 2023) |
Audit & Supervisory Board Meetings (No. attended/No. held in FY ended March 31, 2023) |
|
|---|---|---|---|
| Masaaki Kushibiki (full-time) |
 |
100% (17 out of 17) |
100% (19 out of 19) |
| Takehiro Honda (full-time) |
 |
100% (17 out of 17) |
100% (19 out of 19) |
Michiko Nagasawa
|
 |
100% (17 out of 17) |
100% (19 out of 19) |
Kazuhiro Yamamoto
|
 |
100% (17 out of 17) |
100% (19 out of 19) |
Junko Kamei
|
 |
100% (13 out of 13) |
100% (14 out of 14) |
Support Structure
We have established the Audit & Supervisory Board Members Office as an organization dedicated to assisting Audit & Supervisory Board members, and its full-time staff provides Audit & Supervisory Board members with timely and appropriate information, reporting, and communications.
Audit Structure
Audit & Supervisory Board members, the accounting auditor, and the Internal Audit Department work to boost the effectiveness of their respective audits by exchanging information to ensure their efforts are complementary and efficient.
Audits by Audit & Supervisory Board Members
Pursuant to the Corporate Audit Standards established by the Audit & Supervisory Board, Audit & Supervisory Board members attend important meetings, such as those of the Board of Directors, the Management Committee, and the Finance & Investment Deliberation Council. In addition, based on audit plans and task assignments, Audit & Supervisory Board members oversee and audit management by performing audits using means such as interviewing directors and other members of senior management regarding operational execution, reviewing important documents relevant to major business decisions, and requesting business reports from consolidated subsidiaries.
Audit & Supervisory Board members receive explanations about audit plans and regular audit reports from the accounting auditor, which they use to conduct effective audits and to monitor the independence of the accounting auditor. They also receive audit plans and reports on the status of audits from the Internal Audit Department and submit opinion statements on audit results. Sojitz has thus established a system for ascertaining the status of audits in a timely and appropriate fashion, based on cooperation with the accounting auditor and the Internal Audit Department.
Sojitz encourages full-time Audit & Supervisory Board members to use their unique position as full-time members in order to facilitate audit operations, actively collect and analyze information at the company, and share information and communicate with other board members. In this way, Sojitz aims to enable Audit & Supervisory Board members to form neutral and objective opinions.
Accounting Audits
Sojitz has appointed the independent auditing firm KPMG AZSA LLC to conduct accounting audits in accordance with the Companies Act as well as to perform audits of financial statements, quarterly reviews, and internal control audits in accordance with the Financial Instruments and Exchange Act.
Internal Audits
Based on an audit plan adopted by the Board of Directors and under the supervision of the Internal Audit Committee* established as a subordinate body of the Board of Directors, the Internal Audit Department conducts audits based on an audit plan approved by the Board of Directors covering business divisions, corporate departments, and consolidated subsidiaries.
- ・During the audit, the Internal Audit Department investigates whether organizational governance, risk management, and internal controls are functioning appropriately, and makes proposals for effective improvements to prevent loss and resolve issues.
- ・After the audit is completed, the Internal Audit Department holds an audit review meeting to exchange opinions with the audited organization and other relevant parties (COO of the supervising department, COO of corporate departments, Audit & Supervisory Board members, etc.). The Internal Audit Department then submits an audit report to the Internal Audit Committee and the 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 reports on improvements made by the audited organizations for the three- and six-month periods after the audits and conducts a follow-up audit to check their progress.
- (*)In order to strengthen oversight of business execution, Sojitz established the Internal Audit Committee as a subsidiary body of the Board of Directors as a way to separate internal audits from business execution. The Internal Audit Department, which is well versed in the company’s internal processes, conducts internal audits in accordance with the aforementioned structure, which when combined with audit functions performed by the Audit & Supervisory Board members and those of the accounting auditor, makes for a highly effective auditing system.
- In addition, the following are initiatives taken by Sojitz to ensure the effectiveness of internal audits.
- ・The Internal Audit Department reports audit policies directly not only to the President and Representative Director, but also to the Board of Directors and the Audit & Supervisory Board.
- ・The Internal Audit Department reports audit results directly not only to the President and Representative Director, but also to the Board of Directors and the Audit & Supervisory Board once a quarter in principle.
- ・Deliberations and assessments of the Internal Audit Department's organizational performance, as well as individual evaluations of the General Manager of the Internal Audit Department, are conducted by the Internal Audit Committee, ensuring the independence of the Internal Audit Department.
- Sojitz and its consolidated subsidiaries have introduced a Self-Assessment System to help identify frontline operation problems at each organization in the early stages, improve operational efficiency, prevent losses, and raise awareness of risk management.
Outside Directors and Audit & Supervisory Board Members
Policies on Appointment and Standards for Independence of Outside Directors and Outside Audit & Supervisory Board Members
Sojitz places importance on the independence of outside directors and outside Audit & Supervisory Board members. Sojitz has formulated its own Independence Standards for Outside Directors and Outside Audit & Supervisory Board members.
The company evaluates outside director and outside Audit & Supervisory Board member candidates based on these standards and on the provisions of the Companies Act and standards for independence of officers set by financial instruments exchanges. Sojitz has confirmed that all outside directors and outside Audit & Supervisory Board members meet these standards.
Standards Concerning the Appointment of Outside Directors and Outside Audit & Supervisory Board Members
The Company appoints outside directors 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 on world affairs, social and economic trends, and corporate management. In appointing Outside Audit & Supervisory Board members, in addition to the aforementioned criteria, 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
In addition to the independence standards prescribed by financial instruments exchanges, Sojitz evaluates the independence of outside directors and outside Audit & Supervisory Board members by confirming that they do not meet any of the following criteria.
- 1.A major shareholder of Sojitz (a shareholder holding 10% or more of Sojitz’s total voting rights) or a member of business personnel thereof
- 2. A major creditor to Sojitz (a creditor from whom Sojitz owed an amount exceeding 2% of consolidated total assets in the most recent fiscal year) or a member of business personnel thereof
- 3.A major business partner of Sojitz (a business partner whose transaction amount with Sojitz exceeded 2% of Sojitz’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 Sojitz (an entity whose transaction amount with Sojitz exceeded 2% of its annual consolidated revenue, etc. 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 Sojitz 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 Sojitz 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 revenue, etc. of the organization, whichever the greater)
- 6.A person who receives donations or grants from Sojitz 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 serves as Sojitz’s accounting auditor or a person who is engaged in auditing Sojitz’s activities as an employee of the accounting auditor
- 8.A person who has fallen under any of the aforementioned items 1. to 7. in the past three fiscal 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 Sojitz’s business personnel (limited to the person holding the position of officer or other important positions) or any of its consolidated subsidiaries
- 11.A person whose term of office as outside director or outside Audit & Supervisory Board member of Sojitz exceeds eight years
- 12.A person with concerns about his/her independence, such as having constant and substantial conflicts of interest with general shareholders as a whole in performing the duties of outside director or outside Audit & Supervisory Board member
Notice Regarding Independent Officers (Japanese)
Outside Directors and Outside Audit & Supervisory Board Members / Reasons for Appointment
＜Outside Directors＞
| Name | Reasons of Appointment | |
|---|---|---|
| Norio Otsuka | ||
| Mr. Otsuka served as Director, President and Chief Executive Officer, and Chairperson of NSK Ltd., and has abundant experience and deep insight regarding management developed through promoting worldwide growth strategies and strengthening corporate governance. Since 2018, Mr. Otsuka has played an appropriate role as Outside Director of Sojitz by supervising business execution as well as providing sound advice from a practical perspective, incorporating business management know-how from other industries. He has been exercising his leadership as the Chairman of the Board of Directors since 2020, and Sojitz has chosen him as Outside Director candidate with the expectation that he will further strengthen the supervisory function of the Board of Directors. | ||
| Naoko Saiki | ||
| Ms. Saiki has had a career at the Ministry of Foreign Affairs in positions such as Director General of the Economic Affairs Bureau and Director General of the International Legal Affairs Bureau. In addition to her skills in economic negotiations, she has a high level of insight into international affairs, international law, economics, and culture. Based on her experience and insight from working at the forefront of diplomacy, she has provided pertinent advice to the Board of Directors of Sojitz from a wide range of perspectives, including international affairs, the environment and society, and human resource development. In addition, as Chairperson of the Nomination Committee, she has contributed to the creation of a system that contributes to the development and strengthening of management personnel. Sojitz has chosen her as Outside Director candidate with the expectation that she will continue to exercise an appropriate supervisory function in relation to management from an independent and objective standpoint, by leveraging her extensive experience and will contribute to Sojitz’s sustainable growth and enhancement of corporate value. | ||
| Ungyong Shu | ||
| Mr. Shu has held important positions at J.P. Morgan Securities and Merrill Lynch Japan Securities Limited, and has extensive knowledge of M&A strategies and financial and capital policies, as well as extensive experience as a corporate manager at financial institutions and personal connections. As Sojitz implements strategic business investments for sustainable growth, he has provided accurate recommendations to the Board of Directors and contributed to active discussions, taking advantage of his experience and expertise. As the Chairperson of the Remuneration Committee, he is leading discussions to formulate an executive remuneration system that will encourage the realization of Sojitz’s vision. Sojitz has chosen him as Outside Director candidate in the expectation that he will be able to exercise appropriate supervision over management from an independent and objective standpoint, and contribute to the further development and enhancement of the corporate value of the Company. | ||
| Haruko Kokue | ||
| Ms. Kokue has extensive experience in supply chain management, public relations, investor relations, and international business management in Mitsui Chemicals Inc. Sojitz has chosen her as an Outside Director for Sojitz’s Board of Directors with the expectation that she will appropriately supervise management amidst diversifying risk and provide appropriate advice from an independent standpoint and objective perspective taking advantage of her dialogue with various stakeholders and high level of insight into supply chains, and contribute to raising Sojitz's corporate governance and corporate value. | ||
| Tsuyoshi Kameoka | ||
| Mr. Kameoka has served as President & Representative Director, Group CEO of Showa Shell Sekiyu K.K. and brings a wealth of experience and deep insight regarding management from his involvement in overseeing the business integration of Idemitsu Kosan, Co., Ltd. and other events. Sojitz has chosen him as an Outside Director candidate with the expectation that he will be able to exercise appropriate supervision over management from an independent and objective standpoint, taking advantage of his experience and expertise, and will contribute to strengthening Sojitz’s corporate governance and raising its corporate value. | ||
Note: Please refer to the "Composition of the Board of Directors" section for details on the attendance of the members of the Board of Directors.
＜Outside Audit & Supervisory Board Members＞
| Name | Reasons of Appointment | |
|---|---|---|
| Michiko Nagasawa | ||
| As an attorney, Ms. Nagasawa has a wealth of advanced and specialized knowledge in the field of corporate law. In addition to holding key positions in the legal field, she also has experience serving as an outside director for other firms. Based on her supervisory capabilities and high level of insight on management matters, Sojitz has concluded that she remains qualified to supervise Company management from an independent and objective viewpoint and give appropriate advice within and outside the Board of Directors as an Outside Audit & Supervisory Board member. Ms. Nagasawa will therefore continue her appointment as an Outside Audit & Supervisory Board member. | ||
| Kazuhiro Yamamoto | ||
| After joining Teijin Limited, Mr. 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. Through these experiences, he gained a knowledge of finance and accounting as well as a high level of insight in fields including management, information and telecommunications, and home healthcare. Sojitz therefore believes that he is capable of supervising Company management from a neutral and objective perspective. Furthermore, Sojitz has concluded that he is qualified for his position due to his ability to fulfill monitoring and supervising functions over Sojitz businesses in the healthcare and digital transformation fields, areas in which Sojitz is now focusing its efforts. Mr. Yamamoto will therefore continue his appointment as an Outside Audit and Supervisory Board member. | ||
| Junko Kamei | ||
| As a certified accountant, Ms. Kamei brings years of audit experience and expertise from her time at what is now Ernst & Young ShinNihon LLC. Additionally, she has worked for a securities company and possesses financial and accounting knowledge from this background. Sojitz has concluded that she will appropriately fulfill her duties as an Audit & Supervisory Board member and supervise management, incorporating an external perspective. Ms. Kamei will therefore continue her appointment as an Outside Audit & Supervisory Board member. | ||
Note: Please refer to the “Composition of the Audit & Supervisory Board” section for details on the attendance of the members of the Board of Directors and Audit & Supervisory Board.
Business Executing Bodies
We have established the following executing bodies that directly report to the president & CEO.
Management Committee
The Management Committee is comprised of executive directors, the heads of business divisions, and corporate departments, among others. It reviews and approves management policies, management strategies, and administrative matters on management throughout Sojitz Group from a medium- to long-term perspective.
Finance & Investment Deliberation Council
The Finance & Investment Deliberation Council is comprised of executive directors and the heads of corporate departments, among others. It discusses and resolves important investment and loan proposals from a Group-wide perspective.
Human Resource Deliberation Council
The Human Resource Deliberation Council is comprised of executive directors and the heads of corporate departments, among others, and discusses and resolves important issues pertaining to human resources from a Group-wide perspective.
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 (as of June 20, 2023). 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 internal controls and their enforcement throughout the Group.
Compliance Committee
The Compliance Committee examines and formulates fundamental policies and measures to ensure compliance.
Sustainability Committee
Based on the Sustainability Challenge, the Sustainability Committee examines and formulates various policies and measures, focusing on the realization of a decarbonized society and respect for human rights in the supply chain.
Please see below for more details.
https://www.sojitz.com/en/csr/group/management/
Security Trade Control Committee
The Security Trade Control Committee swiftly responds to changes in security trade controls that pertain to Sojitz Group and establishes appropriate trade control systems.
Quality Management Committee
The Quality Management Committee builds and maintains a company-wide quality control system and studies and formulates measures to develop business (B to C business) from a market-oriented perspective and to increase corporate value.
DX Promotion Committee
The objective of the DX Committee is to reform business models, human resources, and work processes to incorporate digital technologies in order to pursue competitiveness while raising the company’s corporate value. The committee assesses and shares information on the overall progress of all company-wide DX initiatives and verifies the effectiveness of DX measures.
Information and IT System Security Committee
The Information and IT Security Committee identifies key challenges, establishes policies, and promotes the implementation of countermeasures relating to information assets and IT system security in order to improve the company’s corporate value. As Sojitz accelerates its promotion of DX, the committee pinpoints the potential risks associated with businesses that utilize digital data and IT tools. The committee assesses the severity of risks and deliberates on countermeasures.
In addition, we have established the Disclosure Working Group and Business Continuity Management Working Group 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.
Remuneration of Directors and Audit & Supervisory Board Members
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 improve 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 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 Approach
Sojitz’s basic view on remuneration for directors and executive officers is based on the following two principles.
- ・The remuneration system shall be a system that serves as an incentive to powerfully drive sustainable growth and increase Sojitz’s 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.
- ・The remuneration system shall promote our vision for 2030 of becoming a general trading company that constantly cultivates new businesses and human capital.
Basic policy for the remuneration system
- ・A system linked not only to short-term performance, but to 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 for Sojitz
- ・A system that provides a sufficient level of remuneration to secure and retain globally competitive personnel
- ・A system in which remuneration is determined through a process with a high degree of transparency and objectivity
Breakdown of remuneration
Level of remuneration
In line with the basic policy, the level of remuneration shall stay at a level that all officers consider to be favorable and commensurate with their job responsibilities. The level of remuneration shall be determined in consideration of factors such as other general trading companies, third-party surveys on executive remuneration at listed corporations both in Japan and abroad, 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 the 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 an approach that rewards officers based on achievement of goals and 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
Directors and Executive Officers (excluding Outside Directors)
| Basic remuneration | Performance-linked remuneration (short-term) |
Performance-linked remuneration (medium-to-long term) |
|---|---|---|
| 54-66％ | 21-26％ | 13-20％ |
Outside Directors
Basic remuneration makes up 100% of remuneration for outside directors. Special allowances 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*
*Note: For share remuneration, after retirement of Directors, based on the confirmation that they meet the beneficiary requirements, they shall receive delivery of the number of Sojitz shares equivalent to the accumulated share delivery points calculated at the rate of one Sojitz share per share delivery point (0.2 Sojitz share per share delivery point after the share consolidation on October 1, 2021). The beneficiary requirements shall be determined as necessary to achieve the purpose of the share remuneration.
Determination method of performance-linked remuneration
Performance-linked remuneration is 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 (Clawback/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 a refund of the remuneration received by the director or executive officer.
Governance over Remuneration
The amount of remuneration for each of the officers shall be determined by the Board of Directors after deliberations by the Remuneration Committee, which is chaired by an outside director and consists of a majority of outside directors.
Remuneration system for Audit & Supervisory Board Members
Regarding remuneration for Audit & Supervisory Board Members, performance -linked remuneration is not introduced for Audit & Supervisory Board Members in view of their role in auditing Directors’ execution of their duties. Audit & Supervisory Board Members are, therefore, subject only to basic remuneration (monetary).
Please refer to Sojitz Corporation’s Annual Financial Report (P110 and after) (Japanese)for an overview of the FY2023 Board of Director remuneration system established based on our Executive Remuneration Policy.
Please refer to Sojitz Corporation’s Annual Financial Report (P112 and after) (Japanese) for 1) calculation methods for short-term performance-linked remuneration and 2) an overview of the long-term performance-linked remuneration system and its calculation methods.
Remuneration of Directors and Audit & Supervisory Board Members for the Fiscal Year Ended March 31, 2023
Remuneration of Directors and Audit & Supervisory Board Members for the Fiscal Year Ended March 31, 2022
The total amount of remuneration by officer category and a breakdown of totals by remuneration type, as well as the number of officers receiving remuneration are as follows.
The following are the three Directors to receive a total of 100 million or more in remuneration and other financial benefits for the year ended March 31, 2023.
(Totals in millions JPY.)
| Name | Rank | Company | Basic Remuneration | Performance-linked Remuneration | Total | |
|---|---|---|---|---|---|---|
| Monetary | Monetary (Short-term) |
Shares （medium-to-long term） |
||||
| Masayoshi Fujimoto | Director | Sojitz Corporation | 86 | 51 | 30 | 168 |
| Seiichi Tanaka | Director | Sojitz Corporation | 66 | 26 | 11 | 104 |
| Ryutaro Hirai | Director | Sojitz Corporation | 66 | 35 | 17 | 118 |
- （Notes） *1:Figures are rounded down to the nearest million yen.
- *2:The performance-linked remuneration (medium- to long-term) is a share remuneration system based on the Board Incentive Plan (BIP) Trust. The total amount of the aforementioned share remuneration represents the amount reported as expenses for FY2021 associated with the share delivery points regarding the BIP.
Holdings of Listed Shares
Policies for reducing cross-shareholdings (listed shares) under Medium-term Management Plan 2023
Under Medium-term Management Plan 2023, Sojitz decided to proceed further with reducing listed shares held as part of our shareholding policy. We intend to achieve a 50% reduction (reduction of ￥45.0 billion) by the end of March 2024 based on the value of listed shares held on a consolidated basis as of December 31,2020(￥89.6.billion). We formulated a specific divestiture plan including timing and sold ￥61.4 billion worth of shares by March 31, 2023.
The ratio of Sojitz’s holdings on a non-consolidated basis to total equity on consolidated basis (plan and results) is indicated below, showing steady progress in reducing cross-shareholdings.
Policies for Shareholdings
Each year, we conduct a quantitative assessment of each lot of listed shares held as cross-shareholdings to ensure that dividends or related profits earned from those shares exceed the shares’ equity cost (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 holdings. We retain those holdings that are deemed to be worthwhile, seeking ways to achieve greater benefits and profits from those shares. Meanwhile, for those shares which are deemed to 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 conduct this assessment for each lot of shares held as cross-shareholdings.
Exercise of Voting Rights
With consideration for the merits of holdings of listed shares, we exercise voting rights based on whether or not each proposal will contribute to ongoing growth and improved corporate value over the medium- to long-term for both Sojitz and the investee. We also have a system of monitoring the status of exercise voting rights.