Showa Denko continuously promotes corporate governance to ensure the soundness, effectiveness, and transparency of management, and to contribute enhancing its corporate value, thereby contributing to the sound growth of society and earning its full trust and confidence. To that end, it is essential for the Company to strengthen relations with its stakeholders, including shareholders, customers, suppliers, community residents, and employees. Based on the above, the Company has clarified its mission in the form of Our Vision and Showa Denko is working hard to realize this Vision.
Implementation status of corporate governance measures
Policies and procedures of the Board of Directors in the selection of senior management personnel and the nomination of candidates for Directors and Auditor & Superisory Board Members
Candidates for Directors must possess sufficient knowledge, experience and capabilities to fulfill their obligations as Directors. Senior management personnel are selected by additionally taking into account, among others, their corporate and individual performance. Candidates for the Audit & Supervisory Board Members must possess, in addition to an appropriate level of expertise in the areas of finance and accounting, sufficient knowledge, experience and capabilities to fulfill their obligations as Audit & Supervisory Board Members.
The Nomination Advisory Committee deliberates the nomination of candidates for the aforementioned positions and submits recommendations to the Board of Directors. The Committee is an advisory body to the Board of Directors and more than half of its members are independent outside directors.
Explanation regarding the selection of senior management personnel and the nomination of candidates for Directors and Audit & Supervisory Board Members
Reasons why each candidate has been nominated are stated in the Reference Materials for the General Meeting of Shareholders.
Criteria on the independence of outside directors
The Board of Directors has established independence standards for Outside Directors based on independence criteria stipulated by law and the Tokyo Stock Exchange and selects candidates who meet the standards. See the Attachment of Corporate Governance Basic Policies for the independence standards.
Policies and procedures for determining the remuneration of directors, Audit & Supervisory Board members, and corporate officers
The remuneration of directors (excluding outside directors) and corporate officers shall be composed of base remuneration, short-term performance-linked remuneration, and mid- to long-term performance-linked remuneration. The base remuneration shall be decided according to the job title and others, while the short-term performance-linked remuneration shall be determined in consideration of corporate and individual performance and others under the performance evaluation system. The mid- to long-term performance-linked remuneration shall be paid in line with the stock ownership rules set for directors. Only the base remuneration shall be paid to outside directors and Audit & Supervisory Board members.
The upper limit of the total amount of remuneration to be paid to directors and Audit & Supervisory Board members shall be resolved at the general meeting of shareholders. In line with the policies described above, the Remuneration Advisory Committee, with a majority of members being independent outside directors and outside Audit & Supervisory Board members, shall conduct deliberations about the remuneration of directors and corporate officers, and the Board of Directors shall make the final decision. The amount of remuneration to be paid to Audit & Supervisory Board members shall be determined through discussions at the meetings of the Audit & Supervisory Board.
3.Remuneration of directors (excluding outside directors) and corporate officers
|Base remuneration||Fixed remuneration decided according to job title and others|
|Short-term performance-linked remuneration||Performance indicators: Sales, ordinary income and ROA|
|Mid- to long-term performance-linked remuneration||Stock-based rewards based on the trust system
Total points given before resignation are multiplied by the adjustment index for changes in stock prices to calculate the amount of reward
The amount of remuneration paid to Directors and Audit & Supervisory Board Members in 2017 is as given below.
|Paid amount||Number of applicable persons|
|Directors(excluding outside Directors)||¥305 million||6|
|Auditors(excluding outside Auditors)||¥56 million||3|
|Outside Directors and Auditors||¥68 million||8|
Overview of Governing Bodies/Committees/Councils
|Governing Body||Members||Meeting frequency|
|Board of Directors||
||Once or twice a month|
||Once a week in principle|
|Audit & Supervisory Board||5 Auditors (Three of them are outside Auditors. (One is female.))||Once or twice a month|
|Nomination Advisory Committee||2 inside directors and 3 outside directors||3 or 4 times a year|
|Remuneration Advisory Committee||2 inside directors, 2 outside directors and 1 outside Auditor||3 or 4 times a year|
Attendance at Meetings of the Board of Directors and Auditit & Supervisory Board（2018）
|Bord of Directors|
|Representative Director, Chairman of the Board||Hideo Ichikawa||14／14（100％）|
|Representative Director, President||Kohei Morikawa||14／14（100％）|
|Outside Director||Tomofumi Akiyama||14／14（100％）|
|Outside Director||Masaharu Oshima||14／14（100％）|
|Outside Director||Kiyoshi Nishioka||11／11（100％）|
Audit & Supervisory Board Members
|Board of Directors||Audit & Supervisory Board|
|Audit & Supervisory Board Members||Saburo Muto||14／14（100％）||13／13（100％）|
|Audit & Supervisory Board Members||Tetsu Moriki||11／11（100％）||10／10（100％）|
|(Outside Member)||Hiroyuki Tezuka||13／14（93％）||13／13（100％）|
|(Outside Member)||Kiyomi Saito||14／14（100％）||13／13（100％）|
|(Outside Member)||Setsu Onishi||11／11（100％）||10／10（100％）|
Attendance at Nomination Advisory Committee and Remuneration Advisory Committee（April 2018～March 2019）
Nomination Advisory Committee
|Representative Director, Chairman of the Board||Hideo Ichikawa||3／3（100％）|
|Representative Director, President||Kohei Morikawa||3／3（100％）|
|Outside Director||Tomofumi Akiyama||3／3（100％）|
|Outside Director||Masaharu Oshima||3／3（100％）|
|Outside Director||Kiyoshi Nishioka||3／3（100％）|
Remuneration Advisory Committee
|Representative Director, President||Kohei Morikawa||4／4（100％）|
|Outside Director||Tomofumi Akiyama||4／4（100％）|
|Outside Director||Kiyoshi Nishioka||4／4（100％）|
|Outside Auditor||Setsu Onishi||4／4（100％）|
Board of Directors
Showa Denko introduced the corporate officers system to clearly separate the business execution function from the management supervision function. Under the system, a top management team composed of the president and corporate officers makes prompt and dynamic decisions on management. At the same time, the number of Board of Directors members has been substantially reduced while the number of independent outside directors has been kept at two or more for the enhancement of the supervision function.
The Board of Directors decides basic policies of the Company. It also thoroughly discusses and makes decisions regarding matters specified in the Companies Act or the Company's Articles of Incorporation as well as important issues in executing business operations, while promoting prompt and dynamic decision making on management.
We appoint directors with emphasis on the viewpoint of corporate governance, aiming to strengthen the Board of Directors' monitoring and supervisory functions and ensure the propriety of decision making process. We have adopted a management system in which corporate officers dedicate themselves to business execution, which is their primary duty, but do not concurrently serve as directors, in principle. Furthermore, we have abolished the system of officer directors except the Chairman and the President, while strengthening monitoring by Audit & Supervisory Board Members including outside Memberss and mutual supervision among directors.
The term of office of directors is set to one year to ensure a quick and flexible formation of management team corresponding to changes in the business environment.
Audit & Supervisory Board Members
Showa Denko employs an auditor system. The Audit & Supervisory Board Members attend the Board of Directors meetings and other important internal meetings, offering opinions as necessary. They conduct audits on execution of business operations through on-site investigations, interviews with responsible persons, and reference to important documents so as to provide suggestions, advice, and recommendations for securing soundness in management. They also audit group companies in cooperation with auditors of major affiliated companies.
Showa Denko concluded an auditing contract with KPMG AZSA, and this audit corporation performs accounting audits for the Company.
The Accounting Auditor confirms the annual audit plan with the Audit & Supervisory Board Members and reports the audit results to them. The Accounting Auditor and the Audit & Supervisory Board Members also exchange information and views as required, to promote their cooperation.
Management Committee and R&D Committee
The Management Committee, which is chaired by the President, deliberates and decides on matters to be referred to the Board of Directors' meetings and important matters pertaining to overall management of the Company. The decisions are made after deliberations on two occasions. As for the investment issues to be submitted to the Management Committee, risk analysis as well as achievement/progress management are conducted in advance, through preliminary risk reviews and examinations by a relevant task team. The basic business policies including Company's medium-term business plans are decided not only through the deliberation of the Management Committee but also through sufficient examination by all corporate officers.
The R&D Committee deliberates and makes decisions on important issues related to research and development.
Internal Audit Department
We have the Internal Audit Department reporting directly to the President. The Internal Audit Department investigates the overall execution of business including group companies and verifies its accuracy, validity and efficiency. It also investigates and verifies the functional state of management policies, business plans and internal control systems. The results of internal auditing are also reported to the Audit & Supervisory Board Members for mutual cooperation with Auditors' auditing.
Committees and Promotion Councils
For specific issues to be addressed to ensure appropriate business execution, Showa Denko operates the Security Export Control Committee and Safety Measures Committee, which report directly to the president. Moreover, under the Management Committee chaired by the president, we have the Responsible Care Promotion Council, Risk Management Promotion Council, Human Rights/Corporate Ethics Promotion Council, and IR Promotion Council. Each of these councils conducts surveys and research and holds deliberations regarding the issues entrusted to them.
Sustainability Promotion Council
The Sustainability Promotion Council examines the Showa Denko Group’s important CSR issues, with a focus on compliance and risk management. With regard to compliance, the Council examines the medium- to long-term action plans and other important issues, decides on the measures to be taken in line with the action plans and evaluates the implementation of the measures. The Council also collects data and make assessments about risks on a regular basis, formulates measures to deal with high-level risks that might adversely affect the Group and checks how the measures are being implemented.
Responsible Care Promotion Council
The Showa Denko Group conducts activities based on the Responsible Care Action Guidelines, which set forth the Group’s management policies related to the environment, safety and health. The Responsible Care Promotion Council conducts preliminary discussions concerning important issues around Responsible Care.
These issues are reported to and approved by the Management Committee (Menbers: President, Corporate Officers in Charge, and other Corporate Officers and General Managers of Staff Departments as deemed necessary by the President. Chairperson: President).
IR Promotion Council
The IR Promotion Council is chaired by the CFO. The Council examines the comprehensive measures and basic plans for IR, centrally manages the important factual data, such as the financial results, in line with the Tokyo Stock Exchange’s timely disclosure rules, and ensures the appropriate disclosure of important facts.
Showa Denko conducts information disclosure and IR activities to help shareholders and investors deepen their understanding of its corporate management, business activities, and strategies so that they can evaluate its corporate value in an appropriate manner. To this end, we work to communicate proactively with shareholders and investors, improve management transparency, and strive to disclose information concerning Showa Denko in an easy-to-understand, fair, timely, and accurate manner. In April 2018, the Revised Financial Instruments and Exchange Act was enforced in Japan, and to ensure compliance with the fair disclosure rules of this law, we revised our disclosure policy and made it public on our website.
Security export control Committee
For all export products, the Security Export Control Committee determines whether or not government permission is required, investigates customers, and makes a decision on whether to enter into each transaction through systematized procedures.
Safety Measures Committee
The Safety Measures Committee examines comprehensive measures and basic plans for the environment, safety and health, and offers relevant opinions to the related agencies.