Basic Views on Corporate Governance
The Group considers corporate governance to be a key management mechanism for transparent, fair, prompt and resolute decision-making, and all Group companies are thus actively committed to improving corporate governance. As part of our Group's corporate governance, we are enhancing internal control by proactively undertaking activities to advance compliance and risk management and we are expanding/strengthening the management oversight functions of our board of directors and the audit functions of our Audit and Supervisory Committee Members. These steps will enable us to construct a transparent corporate governance system worthy of the trust of shareholders and other stakeholders and fulfill our corporate social responsibilities, and will help us improve our corporate value through sustained growth.
The Company has made a transition to a Company with Audit and Supervisory Committee gaining in June 2017, to make more swift decision-making structure and an additional layer of strength in the supervisory functions by the Board of Directors who is Audit and Supervisory Committee Members with voting rights.
Overview of the Corporate Governance Structure
General Description of Governance Structure
To ensure fair and transparent company management, 6 Outside Directors attend Board of Directors meetings and there provide advice on company management. For fair and transparent procedures applied to nominate and to determine their compensation, the Company has Nomination/Remuneration Committee. An Executive Officer System has been introduced to permit rapid management decision-making and quicker execution of operations. The Audit and Supervisory Committee has also been given robust check-and-balance functions to help them monitor decision-making by the Board of Directors and the execution of operations by representative Directors.
The Company has taken the steps necessary to ensure that six Outside Directors are assigned and permitted to provide needed insights on the agenda and deliberations of the board of directors meetings so that they can contribute to appropriate corporate governance at the Company and offer advice on our standards of conduct.
Efforts to Strengthen the Functions of Audit and Supervisory Committee members
Audit and Supervisory Committee Members attend the Board of Directors meetings and other important meetings and audit Directors' performance of their professional duties, and full-time Audit and Supervisory Committee Members collaborate with Internal Audit Group and Accounting Auditor in conducting audits of the Company and the Group companies in accordance with all applicable laws and regulations and rules. The presence of three Outside Audit and Supervisory Committee Members with a considerable level of knowledge in financial affairs, accounting, and tax practice and law suitably ensures that the above functions are performed.
Posting of Information on Securing Independent directors
The Company has determined that Mr. Yamaguchi, Mr. Mita and Mr. Yoshihisa as outside directors and Mr. Kato, Mr. Horie and Ms. Kawai as outside Audit and Supervisory Committee members present no potential conflict of interest with general shareholders and, convinced that we can count on them to contribute to appropriate corporate governance at the Company and to offer advice on our standards of conduct, we have assigned them as independent directors.
Chart of IBIDEN Group's Internal Control System
Compensation of the Senior Management and Directors
Board Policies and Procedures in Determining the Compensation of the Senior Management and Directors
The compensation for the Company's Directors who are not Audit and Supervisory Committee Members and Executive Officers comprises monthly compensation and bonuses. The monthly compensation for Corporate Directors who are not Audit and Supervisory Committee Members is calculated based on their job positions, within the limits approved by the general meeting of shareholders, and is approved by the Board of Directors. Bonus allotments for Corporate Directors who are not Audit and Supervisory Committee Members are based on the degree to which each Director contributed to the Company's operations, within the scope of the total amount of bonuses calculated using the stipulated formula approved by the general meeting of shareholders, and are approved by the Board of Directors. The monthly compensation of Executive Officers is approved by the Board of Directors. In determining the compensation, broad consideration is given to a suitable balance between the monthly compensation for Corporate Directors who are not Audit and Supervisory Committee Members, assessments of respective Executive Officersʼ and Managing Officersʼ job performance, benchmarks of the same types of industries and the same size companies based on compensation surveys with external organization's participation, and other factors. The amounts of bonuses to be paid are approved by the Board of Directors. Bonus amounts are calculated in accordance with the degree of the Executive Officers' contribution to the Company's business results and other factors. The Nomination/Remuneration Committee, including Outside Directors who are not members of the Audit and Supervisory Committee, which was established as an advisory committee for the Board of Directors, prior to a resolution of the Board of Directors, deliberates on compensation and bonuses of Corporate Directors and Managing Officers who are not Audit and Supervisory Committee Members, and reports to the Board of Directors. Outside Directors who are not Audit and Supervisory Committee Members, because they are in positions independent of the execution of operations, are paid only a fixed, basic compensation.
The Company has also introduced 'the Stock Distribution Trust for Officers' to Directors who are not Audit and Supervisory Committee Members and Executive Officers, so that they shall make a clearer linkage between the Company' s stock value and compensation for themselves and elevate their awareness of contributing to improving medium- to long term operating results and increasing corporate value.
Amount of compensation, etc., of Directors（Fiscal Year 2018）
（Millions of yen）
|Position||Number of recipients||Total remuneration paid||Total amount of remuneration by type|
|Basic remuneration||Bonus||Sharebased payment|
|Directors who are not Audit and Supervisory Committee Members||Directors||5||326||178||88||60|
|Directors who are Audit and Supervisory Committee Members||Directors||2||66||66||-||-|
1．The above includes Directors who retired during the fiscal year under review.
2．The maximum limit of remuneration for Directors who are not Audit and Supervisory Committee Members was approved at not more than ¥30 million per month at the 164th General Meetings of Shareholders held on June 16, 2017. Of the total, the amount for Outside Directors accounts for ¥5 million or less, with the remaining ¥25 million or less paid to the other Directors.
3．In addition to the remuneration mentioned above in 2, at the 164th General Meetings of Shareholders held on June 16, 2017, the resolution was approved stipulating that Directors who are not Audit and Supervisory Committee members, are to receive a bonus equal to 0.5% of the consolidated profit attributable to owners of parent for the fiscal year as well as 1.6% of the total amount of annual dividends for the applicable fiscal year. However, the maximum limit was also set at not more than ¥440 million by the resolution, with amounts less than ¥1 million being rounded down.
4．Although bonuses for Directors amounted to ¥94 million based on the above calculation in 3, a resolution to pay bonuses totaling ¥88 million for Directors was adopted by the Board of Directors meeting held on May 16, 2019, based on the reporting results on the amount of individual payments on the basis of the comprehensive discussion in consideration of titles and relevant departments' achievements of the target bonus recipients in the Nomination/Remuneration Committee..
5．The maximum limit of remuneration for Directors who are Audit and Supervisory Committee Members was approved at not more than ¥13 million per month at the 164th General Meetings of Shareholders held on June 16, 2017.
Timely disclosure, Communication with Shareholders and Investors
Relationships with Stakeholders and Timely Disclosure
Aiming to improve its corporate value, and based on our mission to meet our shareholders, our company group believes that we must fulfill our responsibilities to respective stakeholders other than shareholders, such as employees, business partners, investors, local residents, and local communities.
Based on the Disclosure Rules, which are intended to promote stakeholders' understanding of the Group and to facilitate proper assessments of the Group, we disclose in a fair, timely, and appropriate manner with decisions on management-related information related to the Group by the Disclosure Committee, consisting chiefly of the president, the Managing Officers in charge of the Financial Department, and other relevant officers.
In addition to making every effort to comply with the Financial Instruments and Exchange Act and relevant rules, as well as the stock exchangeʼs regulations, we maintain our social credibility in the securities market through education for employees and strict management regarding regulations on insider trading in accordance with the Insider Trading Guidelines.
Communication with Shareholders and Investors
The Company issued approximately 140 million shares and had about 26,000 shareholders as of March 31, 2019. We held a general meeting of shareholders in the multi-purpose hall in the IBIDEN Headquarters Building on June 14, 2019. We have sought to establish a more open environment by adopting the voting rights exercise platform from fiscal year 2006 and making possible the exercise of voting rights via the Internet and smart phones, etc., for shareholders who are unable to attend the meeting. (The ratio of voting rights exercised at the 166th general meeting of shareholders: 86.18%). In addition, to ensure prompt disclosure, the Notice of Ordinary General Meeting of Shareholders added elements of business report is available in our website and platform by a week before mailing it to shareholders. We will continue to promote prompt disclosure such as on our website before mailing.
Concept of our capital policies
Our company aims to increase shareholder value based on the growth of our business and improvement of profitability, and is disclosing our medium-term management plan. The basic policies of our capital policies are to maintain adequate capital stock standards and the shareholder composition required for stable business management in a changing business environment.
For return to shareholders, setting our target dividend payout ratio at 30%, we make a comprehensive examination of the balance between retaining sufficient earnings for investment in the business and long-term steady dividend payments to shareholders.