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—"The Sojitz Group creates value and prosperity by connecting the world with a spirit of integrity,” as well as Sojitz’s vision for 2030—becoming "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 purpose of clarifying authority and responsibilities and ensuring smooth and swift execution of business through the separation of management supervision and decision-making from operational execution.
The Board of Directors is the highest decision-making body for reviewing and resolving fundamental basic policies and the most important matters concerning the management of the Group. The Board of Directors also supervises operational execution through proposals of important matters and regular reports from the executive function.
The executive function comprises the Management Committee, chaired by the President, who is also the Chief Operating Officer. The Management Committee is responsible for the review and approval of important managerial and executive agendas from a Group-wide and medium- to long-term viewpoint. In addition, we have established the Finance & Investment Deliberation Council for the review and approval of important 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. All of these bodies report directly to the President.
The term of Directors (excluding Directors who are Audit and Supervisory Committee Members) and Executive Officers is set at one year in order to facilitate swift and appropriate responses to rapid changes in the operating environment to clarify responsibilities related to management.
Monitoring and supervisory functions for management
To enhance the Board of Directors’ oversight of business operations and to ensure the receipt of objective and diverse counsel, the majority of the Board of Directors is comprised of Independent Directors, and the Chair of the Board of Directors is an Independent Director.
Sojitz is a Company with Audit and Supervisory Committee. Under this system, Audit and Supervisory Committee Members, the individuals responsible for auditing the execution of duties of Directors, also serve as members of the Board of Directors. This will enable us to reflect audit results in discussions at the Board of Directors meetings, seeking to further strengthen the supervisory function of the Board of Directors.
Furthermore, the majority of the members of the Nomination Committee and the Remuneration Committee, which provide advisory services to the Board of Directors, are Independent Directors, and the Chairs of these committees are Independent Directors, ensuring the appropriateness and transparency of the appointment and remuneration of Directors.
Corporate Governance Framework (as of June 18, 2024)
Overview of Corporate Governance System (as of June 18, 2024)
Organization Structure | Company with Audit and Supervisory Committee |
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Number of Directors | 11 (6 of whom are Independent Directors) |
Chair of the Board of Directors | Tsuyoshi Kameoka (Independent Director) |
Number of Audit and Supervisory Committee Members | 4 (3 of whom are Independent Audit and Supervisory Committee Members) |
Presence of 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/27680/140120241031508483.pdf We implement all principles established in the Corporate Governance Code. |
Composition of the Board of Directors
Number of Meetings and Attendance Rate of the Board of Directors, Audit and Supervisory Board, and Other Bodies
For FY2023
Board of Directors | 16 meetings | 100% attendance rate of Directors 100% attendance rate of Audit and Supervisory Board Members |
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Nomination Committee | 9 meetings | 100% attendance rate of Nomination Committee Members |
Remuneration Committee | 9 meetings | 100% attendance rate of Remuneration Committee Members |
Audit and Supervisory Board(*2) | 19 meetings | 100% attendance rate of Audit and Supervisory Board Members |
- Attendance rate is measured as a percentage of the number of meetings held since the appointment of each member.
- We transitioned from a Company with Audit and Supervisory Board to a Company with Audit and Supervisory Committee in June 2024, and the results for FY2023 are shown here.
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 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>
Global | We operate a diverse range of businesses on a global scale, and we believe it is important to have insight into international affairs, economics, and culture gained from our experience in managing businesses overseas. |
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Corporate management | We believe that it is important to have experience and insight in business management and corporate governance gained from management experience at domestic and overseas operating companies and overseas offices, as well as experience in business execution at the company’s headquarters. |
Legal / Risk management | We believe that it is important to have experience and insight to supervise whether appropriate contractual actions and risk management are taken while foreseeing significant risks associated with business execution. |
Business Investment / Mergers and acquisitions | We believe that it is important to have experience and insight to make decisions and supervise business investment and M&A management decisions, while overseeing management strategy, governance policies, and social and environmental impact. |
Finances and accounting | We believe that it is important to have professional experience and insight in the areas of finance, accounting, and taxation for the company to achieve sustainable growth, increase corporate value, and strengthen its financial base. |
Human Resources Strategy / Human Resources Management | We believe that it is important to have experience and insight in sustainable efforts to strengthen human capital and improve organizational culture for the company to achieve our vision of becoming “a general trading company that constantly cultivates new businesses and human capital.” |
Internal control | We believe that it is important to have professional experience and insight to monitor, confirm, and oversee business execution, and to supervise whether appropriate legal compliance, operations, and improvements are being made. |
Environment and social | We are striving to create two types of value– “value for Sojitz,” such as business expansion and sustainable growth, and “value for society,” such as regional economic development and environmental preservation. To achieve this, we believe that it is important to have insight into global environmental and social issues. |
Digital | We aim to utilize digital technology in all of our businesses under the motto “Digital in All.” We believe that it is important to have relevant technology-related insight in order to oversee proactive “offensive” DX, such as business model innovation and creation, and “defensive" DX, such as improving efficiency and enhancing security. |
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>
Management Strategies, Sustainability, and Governance (52%) | Transition to a Company with Audit and Supervisory Committee, Progress on Medium-term Management Plan 2023 and Formulation of Medium-term Management Plan 2026, Repurchase and cancellation of treasury stock, Sustainability Committee reports, Nomination and Remuneration Committees reports, Executive personnel and remuneration, Business execution reports, D&O insurance, Limited liability agreements with Independent Directors, Assessment of effectiveness of the Board of Directors, Cross-shareholdings, Shareholders’ equity costs, The Board of Directors’ annual plan, Matters related to the General Shareholders’ Meeting, Personnel policies, DX (Digital Transformation) strategy in Medium-term Management Plan 2026, Information and IT Systems Security Committee reports |
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Audit, Internal Control, Risk Management, Finance & Accounting, and Compliance (22%) | Matters related to the Audit and Supervisory Board, Internal audit reports, Internal Control Committee reports, Risk management operation policy, Matters related to financial closing, Matters related to budgets, Financial planning, financing and financial progress reports, Compliance Committee reports, Security Trade Control Committee reports, Reports on litigation and arbitration |
Investments & Loans (26%) | Food wholesale business in Vietnam, Automobile business in Panama, LNG business in Australia, etc. |
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.
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. |
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Members* | Independent Directors: 3 Executive Director: 1 |
Independent Directors: 3 Executive Director: 1 |
Naoko Saiki (Chair/Independent Director) Ungyong Shu (Independent Director) Tsuyoshi Kameoka (Independent Director) Kosuke Uemura (Representative Director and President) |
Ungyong Shu (Chair/ Independent Director) Naoko Saiki (Independent Director) Tsuyoshi Kameoka (Independent Director) Masayoshi Fujimoto (Representative Director and Chairman) |
* As of June 18, 2024
<Activities in FY2023)>
Members | Independent Directors: 5 Executive Director: 1 |
Independent Directors: 5 Executive Director: 1 |
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Number of committee members in attendance |
9 (100% attendance rate of committee members)* |
9 (attendance rate of committee members)* |
Main deliberations at each committee |
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*Attendance rate is measured as a percentage of the number of meetings held since the appointment of each member.
Audit and Supervisory Committee, Accounting Audits, and Internal Audits
Audit and Supervisory Committee
Sojitz transitioned to a Company with Audit and Supervisory Committee upon approval at the 21st Ordinary General Shareholders’ Meeting held on June 18, 2024. The Audit and Supervisory Committee audits the execution of duties of Directors from the perspective of legality and appropriateness to fulfill its supervisory and auditing functions over operations of business, by attending important meetings related to the execution of business, interviewing Executive Directors, reviewing documents related to important decisions, and using other methods.
Composition of the Audit and Supervisory Committee
The Audit and Supervisory Committee consists of 4 members (2 men and 2 women), including 1 full-time Inside Director and 3 Independent Directors. To ensure the effectiveness of audits by the Audit and Supervisory Committee, we appoint 1 Inside Director who is familiar with the Group’s business as a full-time Audit and Supervisory Committee Member and Chair of the Audit and Supervisory Committee.
Audit System (as of June 18, 2024)
*1 Senior Auditors
- Two Senior Auditors are assigned to ensure the effectiveness of audits by the Audit and Supervisory Committee.
- Senior Auditors are persons who are familiar with the Group’s business and operations and have knowledge of finance and accounting, risk management, and other relevant areas. They complement and support the duties of the Audit and Supervisory Committee from the same perspective as Audit and Supervisory Committee Members.
- The Senior Auditor performs their duties under the direction of the Audit and Supervisory Committee.
- Senior Auditors’ personnel evaluations and transfers are subject to consultation with the Audit and Supervisory Committee to ensure the independence of audits.
*2 Establishment of a reporting line from the Internal Audit Department to the Audit and Supervisory Committee
- The Audit and Supervisory Committee receives regular reports on the audit status from the Internal Audit Department.
- The Audit and Supervisory Committee may ask the Internal Audit Department to make reports and conduct investigations and may give specific instructions to the Internal Audit Department, as necessary.
*3 Establishment of a reporting line from the Internal Control Committee to the Audit and Supervisory Committee
- The Internal Control Committee, which is an executing body under the management of the President, oversees the implementation and enforcement of the internal control system and conducts periodic monitoring. While cooperating with other committees, the Internal Control Committee identifies issues and considers countermeasures related to the internal systems and frameworks, points out these issues to the relevant departments, and makes improvements.
- The Audit and Supervisory Committee receives regular reports from the Internal Control Committee on the establishment and operation status of the internal control system in business execution.
In addition, the Audit and Supervisory Committee, the Internal Audit Department and the Accounting Auditor meet regularly to promote cooperation, share the status of their respective audits, and exchange opinions.
Accounting Audits
Independent auditing firm KPMG AZSA LLC performs accounting audits of Sojitz 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
Sojitz has established the Internal Audit Department as an organization independent of other business execution departments. The Internal Audit Department (comprising 35 people as of June 18, 2024) conducts internal audits covering the business divisions, corporate departments, and consolidated subsidiaries to verify that the various management activities and operational controls of the Sojitz Group are being properly executed in compliance with laws, regulations, and internal rules. Procedures for internal audits conducted by the Internal Audit Department are as follows:
- The Internal Audit Department develops an annual audit plan with an annual operating policy, priority items, and annual schedule, among other things, and conducts internal audits in accordance with this plan.
- 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 convenes an audit review meeting for the audited organization to present the audit results, exchange opinions on problem areas, and discuss improvement measures. Attendees include the president of the audited organization, COOs responsible for corporate departments, and full-time Audit and Supervisory Committee Members. After the audit review meeting, an internal audit report is prepared and submitted to the audit report meeting (comprising Representative Directors, full-time Audit and Supervisory Committee Members, and other persons deemed necessary by the President).
- To address the problems identified in the audits, the Internal Audit Department receives reports about improvements by the audited organizations for the three- and six-month periods after the audits and conducts a follow-up audit to check their progress.
- The General Manager of the Internal Audit Department reports the results of internal audits to the Management Committee, the Board of Directors, and the Audit and Supervisory Committee on a regular basis.
In addition, the following are initiatives taken by Sojitz to ensure the effectiveness of internal audits.
- The Internal Audit Department’s annual audit plan is determined through resolution by the Audit and Supervisory Committee.
- The Internal Audit Department reports the results of internal audits not only to the President, but also to the Board of Directors and the Audit and Supervisory Committee on a regular basis.
- The General Manager of the Internal Audit Department, full-time Audit and Supervisory Committee Members, and their assistants hold regular meetings to exchange opinions and share findings and challenges in their respective audit activities, among other issues, in a timely manner.
- The Internal Audit Department, Audit and Supervisory Committee, and the Accounting Auditor convene quarterly to share their respective audit results.
- 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, require consultation with the Audit and Supervisory Committee, ensuring the independence of the internal audits.
Business Executing Bodies
We have established the following executing bodies that directly report to the President, who is the Chief Operating Officer.
Management Committee
The Management Committee consists of Executive Directors, Chief Operation Officers (COOs) of the business divisions and corporate department supervisors. It reviews and approves management policies, management strategies and management administrative matters among the Group from Group-wide and medium-to-long-term viewpoints.
Finance & Investment Deliberation Council
The Finance & Investment Deliberation Council consists of Executive Directors and corporate department supervisors. It discusses and resolves important investment and loan proposals from a Group-wide viewpoint.
Human Resource Deliberation Council
The Human Resource Deliberation Council consists of Executive Directors and corporate department supervisors. It discusses and resolves important issues pertaining to human resources from a Group-wide viewpoint.
Internal Committees
In order to enhance corporate value, we have established the following internal committees (as of June 18, 2024) that act as executing bodies under the direct supervision of the President to advance management initiatives that need to be handled across the organization.
Internal Control Committee
The Internal Control Committee formulates policies to maintain and improve our internal control system based on the Companies Act and the Financial Instruments and Exchange Act, in addition to monitoring this internal control system and its enforcement among 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.
Security Trade Control Committee
The Security Trade Control Committee expedites responses to changing security trade control issues associated with the 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 DX Promotion Committee monitors the overall picture of DX promotion aimed at improving corporate value, and shares the progress and status of efforts, and verifies their effects, with the goal of realizing increased corporate value through business transformation and enhanced competitiveness, while pursuing reforms in business models, human resources, and operational processes by utilizing digitalization.
Information and IT Systems Security Committee
The Information and IT Systems Security Committee promotes task setting, the formulation of action plans, and the implementation of countermeasures relating to the security of company-wide information assets and IT systems to improve corporate value, while grasping the focus and importance of risks that arise in business where digital data and IT are utilized in conjunction with the accelerated promotion of DX.
Furthermore, we have established the Business Continuity Management Working Group and the Disclosure Working Group, which discuss and review the practices and initiatives for specific themes from cross-organizational perspectives. 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
Composition of the Executive Remuneration System
The maximum amount of remuneration of Sojitz’s Directors and other matters were resolved at the Ordinary General Shareholders’ Meeting held on June 18, 2024 as described below.
Remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members)
As for remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members), the Executive Remuneration Policy, rank-based standard amounts for basic remuneration (fixed remuneration), and calculation methods of performance-linked remuneration (short-term) and performance-linked remuneration (medium- to long-term) (including the targets for each of the evaluation indicators) are decided based on resolutions made by the Board of Directors after deliberations at the Remuneration Committee. Based on these decisions, amounts of remuneration paid to Individual Directors are calculated and determined.
Executive Remuneration Policy
Based on the assumption of Sojitz’s transition from a Company with Audit and Supervisory Board to a Company with Audit and Supervisory Committee effective on June 18, 2024, the partial amendment of the Executive Remuneration Policy was approved, as a policy for determining the remuneration system and amounts for individual Directors (excluding Directors who are Audit and Supervisory Committee Members) and for Executive Officers. The policy was amended after obtaining reports from the Remuneration Committee.
The details of the amended Executive Remuneration Policy are as follows.
Basic view | Sojitz’s basic view on remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members; the same applies hereinafter) and Executive Officers (hereinafter collectively referred to as the “Officers”) is based on the following two considerations.
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Basic policies |
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Breakdown of remuneration | ◆Level of remuneration In line with the basic policies, Sojitz will provide an attractive level of remuneration commensurate with the job responsibilities of each of the Officers. The level of remuneration shall be determined in consideration of factors such as remuneration offered by other general trading companies, surveys conducted by third parties on executive remuneration at listed corporations in Japan, 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 a “pay for mission” approach, which takes into consideration factors such as the fulfillment of our corporate statement 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 [Officers (excluding Independent Directors)] The proportion of basic remuneration among total compensation will be lowered to between approximately 40% and 64%, based on job responsibilities, and the proportion of performance-linked remuneration will be raised.
[Independent Directors (excluding Directors who are Audit and Supervisory Committee Members)] Remuneration consists wholly of basic remuneration, while special allowance shall be paid separately to the Chairperson 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): After retirement* |
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Determination method of performance-linked remuneration |
Determined based on factors such as the degree of accomplishment of targets, progress made with the medium-term management plan and individual contribution to corporate performance. | ||||||
Forfeiture of remuneration (claw back clause, malus clause) |
If a resolution is passed by the Board of Directors for a post -closing correction of accounts due to serious accounting errors or fraud, or if wrongdoing by an Officer is confirmed by the Board of Directors, Sojitz may restrict the payment of performance-linked remuneration or request the refund of the remuneration the Officer has received. | ||||||
Governance over remuneration | The amount of remuneration for each of the Officers shall be determined by the Board of Directors, after deliberations at the Remuneration Committee chaired by an Independent Director, with the majority of committee members being Independent Directors. The amount of remuneration for Directors who are Audit and Supervisory Committee Members shall be determined through discussion among the Directors who are Audit and Supervisory Committee Members. |
- * 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. The beneficiary requirements shall be determined as necessary to achieve the purpose of the share remuneration system.
Composition of Remuneration
With the aim of further enhancing the link between remuneration and business performance and creating a remuneration system that includes a system of evaluation criteria that more fully reflects the efforts and progress made toward improving corporate value in the medium- to long-term, Sojitz has decided to lower the proportion of basic remuneration among total compensation for Directors (excluding Independent Directors and Directors who are Audit and Supervisory Committee Members) and Executive Officers to between approximately 40% and 64%, based on their job responsibilities, and raise the proportion of performance-linked remuneration from the year ending March 31, 2025.
In order to ensure that the executive remuneration system is closely linked to Sojitz’s corporate performance and is highly transparent and objective, the target of each indicator was determined by resolution of the Board of Directors after deliberations at the Remuneration Committee, reflecting the targets set out in Medium-term Management Plan 2026.
(excluding Independent Directors and Directors who are Audit and Supervisory Committee Members)>
(Notes)
- Refers to profit for the year attributable to owners of the company.
- If actual results for each criterion fall below 40% of the targets, no remuneration shall be paid for such criterion.
- Evaluation shall be made based on a relative comparison between total shareholder return (TSR) of Sojitz and dividend-included TOPIX.
- Level of achievement of the ESG targets is evaluated by the Remuneration Committee.
Remuneration System of Directors and Method of Calculation for Remuneration in the Year Ending March 31, 2025
For more information on the remuneration of Directors and the Method of calculation for performance-linked remuneration (short-term / medium- to long-term) in the year ending March 31, 2025 utilized in accordance with the Executive Remuneration Policy, please refer to here.
Remuneration System of Directors who are Audit and Supervisory Committee Members
Performance-linked remuneration is not paid to Audit and Supervisory Committee Members out of consideration for their role in auditing Directors’ execution of their duties. As a result, Audit and Supervisory Committee Members only receive basic remuneration (monetary). The amount of such remuneration is determined through discussion among the Directors who are Audit and Supervisory Committee Members.
Remuneration of Directors and Audit and Supervisory Board Members for the Year Ending March 31, 2024
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)
Number of persons to be paid | Basic remuneration | Performance-linked remuneration | Total | ||
---|---|---|---|---|---|
Monetary (*1, 2) |
Monetary (short-term) (*1) |
Share (medium-to long-term)
(*1, 3, 4) |
|||
Directors (Total) | 10 | 317 | 127 | 275 | 720 |
Executive Directors | 5 | 254 | 127 | 275 | 657 |
Independent Directors | 5 | 63 | - | - | 63 |
Audit and Supervisory Board Members (Total) | 5 | 106 | - | - | 106 |
Audit and Supervisory Board Members (full-time) | 2 | 73 | - | - | 73 |
Independent Audit and Supervisory Board Members | 3 | 32 | - | - | 32 |
- 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.
Holdings of Listed Shares
Policies for Reducing Cross-Shareholdings of 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. In accordance with our policy to halve the ¥89.6 billion in listed shares held on a consolidated basis as of the end of December 2020 by the end of March 2024, we have sold a cumulative total of ¥76.6 billion and reduced shares as initially planned.
The ratio of Sojitz’s holdings on a non-consolidated basis to total equity on a consolidated basis (plan and results) is indicated below:
<Holding status of listed shares and unlisted shares on a non-consolidated basis>
* The figures for listed shares reflect share prices at each point in time.
Policies for Shareholdings under Medium-term Management Plan 2026
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.
Exercise of Voting Rights
Based on the significance of holding shares of listed companies, we exercise our voting rights based on whether or not they contribute to sustainable growth and improved corporate value over the medium- to long-term for both Sojitz and the investee. We also have a system of monitoring the status of exercise of voting rights.