Corporate Governance

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 body. The Independent Directors supervise the Executive Directors and overall system of business execution. They also provide opinions and advice on corporate governance.

Election Policy of the Board of Directors and Procedure for Appointing Directors

In appointing candidates for Directors, we prioritize diversity and take into consideration gender, age, international experience, and other characteristics, and appoint multiple candidates who possess abundant experience, specialized knowledge, and advanced expertise from both inside and outside Sojitz, to ensure decision-making and management supervision appropriate to a general trading company involved in a wide range of businesses.

In line with the aforementioned policy, the Board of Directors deliberates on the experience and quality as an officer with respect to each Director candidate based on the results of discussion at the Nomination Committee, which provides advisory services to the Board of Directors, and resolves the candidate proposal for submission to the General Shareholders’ Meeting for approval.

Composition of the Board of Directors

The Board of Directors consists of 11 members (4 women and 7 men). The Board includes 4 Directors who are Audit and Supervisory Committee Members.

• The skills, careers, and expertise required for the Board of Directors will be reviewed in response to changes in the business environment and management policies.
• Areas of particular attention should be paid to by each officer in supervising management are marked with (●).
• For more information on each Director’s career, please click here.

＜Purpose of selection of each skill＞

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 & COO and the executing bodies reporting to the President & COO (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:

• Materials for Board meetings are distributed sufficiently in advance of the meeting date.
• 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.
• 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.
• 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.
• 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.

＜Main deliberations at the Board of Directors meetings held during FY2023＞

Systems for Supporting and Sharing Information with Independent Directors

To support Independent Directors, the company arranges briefings on its medium-term management plan, internal control and risk management systems, and investor relations and sustainability initiatives as well as lectures by lawyers when a new Independent Director assumes their position. In addition, information on the latest macroeconomic trends is provided by the Group’s think-tank subsidiary when appropriate.

To ensure greater effectiveness in the monitoring function of the Board of Directors, venues outside of standard Board of Directors meetings are used as opportunities for Independent Directors to obtain and share the information necessary for fulfilling this function. Specific examples of these opportunities include information sharing sessions between the President and Independent Directors, off-site meetings between Executive Directors and Independent Directors, and meetings between Independent Directors.

Furthermore, various events are arranged on a year-round basis to help Independent Directors gain a better understanding of Sojitz Group’s wide-ranging business activities. These events include tours of domestic and overseas business sites and opportunities to speak directly with employees.

Analysis / Assessment of 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 method of analysis and the results of the FY2023 assessment, as well as the action plan for FY2024 based on these results, are as follows.

Assessment method

• At the December 2023 Board of Directors meeting, the Board discussed whether to use an external organization or conduct a self-assessment internally, with the aim of ensuring the effectiveness of the evaluation process.
• After careful consideration, it was determined that this year’s evaluation would also be conducted as a self-assessment. This decision was based on the fact that the self-assessment conducted in FY2022 elicited frank and honest opinions from Directors and Audit and Supervisory Board Members, and that the process was found to foster beneficial exchange of opinions among the Board members.
• Conversely, there were opinions that an evaluation by an external organization should be conducted once every few years. The Board of Directors therefore decided to separately discuss the evaluation method for the next fiscal year and thereafter.

Method of implementation:
The Board Meeting Operation Office collects anonymous questionnaires and conducts individual interviews with Directors and Audit and Supervisory Board Members. Based on the results of these interviews, the Board of Directors deliberates on issues identified and determines measures and policies for agenda setting and various measures in the next fiscal year. Questionnaire items are reviewed as necessary. The evaluation is on a 4-point scale, with a free-response column for all questions.

Questionnaire items and interview items:
The questionnaire items and interview items cover a range of topics, including: the roles and responsibilities of the Board of Directors (including business portfolio management), composition of the Board of Directors, the management of the Board of Directors, the decision-making process of the Board of Directors, the supervision by the Board of Directors, the support system for the Board of Directors, advisory committees, items concerning Independent Directors, dialogue with shareholders, human resource strategies, sustainability, DX, management issues to be discussed, the transition to a Company with Audit and Supervisory Committee, the evaluation of the Board Meeting Operation Office, and other relevant topics.

Outline of FY2023 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.

Policy for Initiatives in FY2024
　

Independent Directors

Policies on Appointment and Standards for Independence of Independent Directors

Sojitz places importance on the independence of Independent Directors. Sojitz has formulated its own Independence Standards for Independent Directors, in addition to the provisions of the Companies Act and standards for independence of officers set by financial instruments exchanges. Sojitz confirms that all our Independent Directors meet these standards.

＜Standards Concerning the Appointment of Candidates for Independent Director＞
Sojitz appoints Independent Directors from those with a wide range of knowledge, deep insight, excellent character, mental and physical health conditions, and abundant experience in industries and administrative fields, such as those who have management experience in business corporations and government agencies, and who have objective and specialist viewpoints toward world affairs, social and economic trends, and corporate management. Sojitz also ensures the diversity of the candidates’ gender, age, and internationality from the perspective of reflecting the viewpoints of a variety of stakeholders in the supervision of business activities.

＜Independence Standards for Independent Directors＞
Sojitz judges Independent Directors to be independent by confirming that they do not fall under any of the following conditions, in addition to the independence standards prescribed by financial instruments exchanges.

• A major shareholder of Sojitz (a shareholder holding 10% or more of Sojitz’s total voting rights) or a member of business personnel thereof
• 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
• 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
• 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
• 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 Director or Audit and Supervisory Board Member (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 gross income or annual consolidated revenue, etc. of the organization, whichever the greater)
• 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)
• 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
• A person who has fallen under any of the above items 1. to 7. in the past three years
• 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)
• A spouse or relative within the second degree of kinship of a member of business personnel of Sojitz or any of its consolidated subsidiaries (limited to the person holding the position of officer or other important positions)
• A person with concerns about his/her independence, such as having constant and substantial conflict of interest with general shareholders as a whole in performing the duties of Independent Director

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Advisory Bodies to the Board of Directors (Nomination Committee, Remuneration Committee)

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

＜Activities in FY2023）＞

Total amount of remuneration by officer classification, total amount of remuneration by type of remuneration and number of company officers subject to payment

(Millions of Yen)

• Figures are rounded down to the nearest million yen.
• As of the end of FY2023, there were 9 Directors and 5 Audit and Supervisory Board Members. The total amount of remuneration of Directors and Audit and Supervisory Board Members includes that for 1 Director who retired due to expiration of his term of office at the conclusion of the Ordinary General Shareholders’ Meeting held on June 20, 2023, and for 1 Director who retired due to resignation on March 31, 2024.
• As the Board of Directors confirmed that the amounts of remuneration for individual Directors for FY2023, including the target of each evaluation indicator, based on the Executive Remuneration Policy, basic remuneration (fixed remuneration) by rank, the calculation method for performance-linked remuneration (short-term), and the calculation method for performance-linked remuneration (medium- to long-term) were consistent with the determination policy described in below (Executive Remuneration Policy for FY2023), the details of such remuneration were judged to be in line with the policy.
• 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 FY2023 associated with the share delivery points regarding the BIP Trust, including the persons who are scheduled to retire in FY2023.

Each year, we conduct a quantitative assessment of each lot of listed shares that we continue to hold as cross-shareholdings to ensure that dividends or related profit earned from those shares exceed the shares’ equity cost (weighted average cost of capital). 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 impact and benefit 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 such assessments for each lot of shares held as cross-shareholdings.

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