Sojitz Corporation

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Governance

Corporate Governance

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 of creating value and prosperity by connecting the world with a spirit of integrity and on our vision for 2030 of becoming a general trading company that continues to create business and develop capable people.

In order to accomplish these objectives and based on our belief that the enhancement of our corporate governance is an important management task, 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 one year, in order to respond swiftly and appropriately to rapid changes in the business environment and clarify their responsibilities to management.

Management Monitoring 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 April 1, 2022)

コーポレート・ガバナンス体制図

Composition of Corporate Governance Bodies

Composition of Corporate Governance Bodies

Overview of Corporate Governance System (As of June 18, 2021)

Organization structure Company with Board of Company Auditors
Number of directors 8 (of whom 4 are outside directors)
Chairman of the Board of Directors Norio Otsuka (Outside Director)
Number of Audit & Supervisory Board members 5(of whom 3 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/27680/140120210618451740.pdfPDFpdf

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

Number of Meetings in the Fiscal Year Ended March 2021

Board of Directors 18 times 100% attendance rate of all directors
Nomination Committee 10 times 100% attendance rate of all committee members
Remuneration Committee 12 times 100% attendance rate of all committee members
Audit & Supervisory Board 19 times 100% attendance rate of all auditors

Attendance rate is measured as a percentage of the number of meetings held since the appointment of each member.

ご参照Election policy and composition of the Board of the Directors

ご参照Composition of the Audit & Supervisory Board

Briefings on Business Execution for Outside Directors

In order to elevate the effectiveness of the Board of Directors, Sojitz holds monthly briefings to share information between the president & CEO and the outside directors. In addition, Sojitz holds meetings exclusively for outside directors as well as briefings between the outside directors and the Audit & Supervisory Committee.

ご参照Analysis and Assessment of the Effectiveness of 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. They also provide opinions and advice on corporate governance.

Election Policy and Composition 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, and the Board of Directors shall consist of 4 internal directors with extensive business experience, and 4 outside directors who possess objective and professional perspectives and diverse knowledge, for a total of 8 directors (6 male and 2 female).

Name Position Board of Directors Meetings
(No. attended/No. held in FY ended March 31, 2021)
Masayoshi Fujimoto Representative Director, President & CEO 100%
(18 out of 18)
Seiichi Tanaka Representative Director, Executive Vice President & CFO 100%
(18 out of 18)
Ryutaro Hirai Representative Director, Executive Vice President 100%
(14 out of 14)
Masao Goto Director, Senior Managing Executive Officer 100%
(14 out of 14)
Norio Otsuka
  • Outside Director
  • Independent Officer
Chairman of the Board of Directors 100%
(18 out of 18)
Kayoko Naito
  • Outside Director
  • Independent Officer
Chair of the Remuneration Committee 100%
(18 out of 18)
Naoko Saiki
  • Outside Director
  • Independent Officer
Chair of the Nomination Committee 100%
(14 out of 14)
Ungyong Shu
  • Outside Director
  • Independent Officer

ご参照Skill Matrix

Procedure for Appointing Directors

In line with the policy above, 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 management among the Group, involving management philosophy, business plans and important personnel, organizational and system related matters based on the internal rules of the Board of Directors in addition to laws, regulations, and the Articles of Incorporation. It also reviews and resolves the important matters related 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 as well as 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 contents, scale, importance, and risks of each matter.

The company is making the following efforts to make the deliberations of the Board of Directors more active.

  • (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 are provided, and sufficient information is provided on agenda items;
  • (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; depending on the nature of the case, the company makes written resolutions and reports flexibly; and
  • (v)Materials that briefly summarize the main points are distributed in advance and sufficient deliberation time, including explanations in advance, is ensured.

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 internal and external directors with timely and appropriate information, reports, and communications.

Training

We take the following initiatives to enable directors and corporate auditors to appropriately fulfill their roles and responsibilities.

  • We provide newly appointed directors and corporate auditors with opportunities for lectures by attorneys on the legal obligations and responsibilities of directors and corporate auditors. We also have new officers undergo lectures on management methods and systems related to critical risk factors that impact the company’s activities, which are held by the departments in charge of internal controls and risk management.
  • In order for executive and outside directors and corporate auditors to deepen their understanding of our extensive business activities, each of the business division 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 corporate auditors 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.

Analysis and Assessment of the Effectiveness of the Board of Directors

The company conducts annual analyses and assessments of the effectiveness of the Board of Directors in order to improve its functionality.

The following table compiles the initiatives conducted in the year ended March 31, 2021, based on the assessment of the effectiveness of the Board of Directors undertaken in the year ended March 31, 2020, as well as the policies for initiatives to be implemented in the year ending March 31, 2022, based on the assessment from the year ended March 31, 2021.

取締役会の実効性評価

Advisory Bodies

Sojitz has established the following advisory bodies to the Board of Directors.

諮問機関

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 operations of business through means such as interviewing directors and reviewing important documents related to approval.

Composition of the Audit & Supervisory Board

The Audit & Supervisory Board is comprised of a total of five members (four men and one woman) as of June 18, 2021. Members include two in-house auditors and three objective outside auditors with specialist opinions and diverse knowledge.

Name Board 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)
Masaaki Kushibiki
(full-time)
100%
(18 out of 18)
100%
(18 out of 18)
Takehiro Honda
(full-time)
Kazunori Yagi
  • Outside Director
  • Independent Officer
100%
(18 out of 18)
100%
(19 out of 19)
Michiko Nagasawa
  • Outside Director
  • Independent Officer
100%
(18 out of 18)
100%
(19 out of 19)
Kazuhiro Yamamoto
  • Outside Director
  • Independent Officer

ご参照Skill Matrix

Support Structure

We have established the Audit & Supervisory Board Members Office as an organization dedicated to assisting corporate auditors, and its full-time staff provides internal and outside auditors 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.

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 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 approved by the Board of Directors and under the supervision of the Internal Audit Committee, the Internal Audit Department* conducts audits mainly covering business divisions, corporate departments, and consolidated subsidiaries.

  • During the audit, the 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 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, Audit & Supervisory Board Members, etc.). 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.
  • (*) 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, 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 on risk management.

Outside Directors

Policies on Appointment and Standards for Independence of Outside Officers

Sojitz places importance on the independence of outside officers. Sojitz has formulated its own Independence Standards for Outside Officers, based on which it evaluates outside candidate officers in addition to the provisions of the Companies Act and standards for independence of officers set by financial instruments exchanges. Sojitz has confirmed that all outside officers meet these standards.

Standards Concerning the Appointment of Outside Officers

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

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 while also adhering to the independence standards prescribed by financial instruments exchanges.

  • 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 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 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 net sales 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 above 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 (in Japanese)

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

<Outside Directors>

Name Board 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 Naito 100%(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 Otsuka 100%(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 Saiki 100%(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>

Name Board 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 Yagi 100%(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 Nagasawa 100%(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)

Business Executing Bodies

We have established the following executing bodies that directly report to the president & CEO.

Management Committee

This 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

This council is comprised of executive directors and the heads of corporate departments, etc. It discusses and resolves important investment and loan proposals from a Group-wide perspective.

Human Resource Deliberation Council

This council is comprised of executive directors and the heads of corporate departments, etc., 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. 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

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 controls that pertain to Sojitz Group and establishes appropriate trade control systems.

DX Promotion Committee

The objective of the DX Promotion Committee is to promote business transformation and reform Sojitz’s business models, human resources, and work processes by incorporating digital technologies to pursue competitiveness and growth potential while aiming to raise the company’s corporate value. The DX Promotion Committee shares overall progress and the status of all company-wide DX initiatives and verifies the effectiveness of DX measures.

Quality Management Committee

The Quality Control Committee establishes and implements a company-wide quality control system and deliberates and formulates quality control policies in order to increase Sojitz’s corporate value and develop business (B to C business) from a market-oriented perspective.

Information and IT 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. 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 Business Continuity Management Working Group and Disclosure Working Group These organizations review the practices and initiatives for specific themes from a cross-organizational perspective. We will continue to review and upgrade our corporate structure as necessary to build systems that contribute to increasing our corporate value.

Remuneration of Directors and Audit & Supervisory Board Members

Executive Remuneration Policy

Basic Approach

Sojitz’s basic view on remuneration for directors and executive officers consists of the following two dimensions.

  • 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 continues to create business and develop capable people.

Basic policy for the remuneration system

  • 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 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

Details of Officer Remuneration

An extensive revision was implemented to the company’s remuneration systems for directors, excluding outside directors, and for executive officers based on discussions centered around the Remuneration Committee for the purpose of promoting medium- to long-term improvements in corporate value. Remuneration primarily consists of basic remuneration and performance-linked remuneration. Medium- to long-term performance-linked remuneration is based on a “pay for mission” approach that accounts for factors such as contributions to the implementation of the Sojitz Group Statement and to the creation and provision of two types of value—value for Sojitz and value for society. Moreover, the revision entailed lowering the ratio of total remuneration accounted for by basic remuneration, which had previously been set uniformly at 77%, to between 54% and 66% based on the duties of the respective officers to make for a higher ratio of performance-linked remuneration. Remuneration of outside directors wholly comprises basic remuneration, and additional payments are made to compensate outside directors with extra duties, namely the chairman of the Board of Directors and the chairpersons of the Nomination Committee and the Remuneration Committee.

報酬の構成

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.

Remuneration of Audit & Supervisory Board Members

Performance-linked remuneration is not paid to Audit & Supervisory Board members out of consideration for their role in auditing directors’ execution of their duties. As a result, Audit & Supervisory Board members only receive basic remuneration (monetary), and individual remuneration is therefore determined through deliberation by the Audit & Supervisory Board.

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.

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

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 (in millions of yen).

2021年3月期の役員報酬

Holdings of Listed Shares

Medium-term Management Plan 2023 Policy for Reducing Shareholdings

In Medium-term Management Plan 2023, we have decided to further reduce our cross-shareholdings, and based on the amount of listed shares held on a consolidated basis as of December 31st, 2020, we intend to halve this amount by the end of March 2024.

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 paid to the meaningfulness 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 of voting rights.

Exercise of Voting Rights

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