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.
Overview of the Corporate Governance Structure
We have adopted a governance structure of a Company with Audit and Supervisory Committee. To ensure fair and transparent company management, six (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. A Senior Management System has been introduced to permit rapid management decision-making and quicker execution of operations, which can clarify each role for Executive Directors and Senior Executive Officers and can get the right person in the right place with flexibility and mobility. 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.
Chart of IBIDEN Group's Internal Control System
Efforts to Enhance Corporate Governance
Currently, the Electronics and Ceramics Operations, which are both our main businesses, are confronted with a rapidly changing business environment. Against this backdrop, in 2017, we transitioned to a Company with an Audit and Supervisory Committee with the aim of streamlining management, accelerating decision-making and reinforcing supervisory function. Concurrently, we increased the number of Outside Director, and since then, have worked to strengthen the supervisory function of the Board of Directors by keeping the ratio of Outside Directors, while taking diversity among the directors into consideration. Moreover, we considered the further acceleration of decision-making and execution speed as necessary for maintaining and increasing our competitiveness. Accordingly, as of April 1, 2020, we streamlined the structure of our executive system.
Overall Balance of Knowledge, Experience and Skill, Diversity, and Size of the Board of Directors
In selecting Director candidates, to allocate a right person to right work, as a comprehensive deliberation, the sufficient number of the Board of Directors Members that enables the Board of Directors to make eligible and prompt decision and overall balance of knowledge, experience and skill with diversity including gender, internationality, career and age among the members of the Board of Directors are considered while referring to the reports by the Nomination/Remuneration Committee.
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 Division 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 (3) Outside Audit and Supervisory Committee Members with a considerable level of knowledge in financial affairs, accounting, and tax practice and governance suitably ensures that the above functions are performed.
Posting of Information on Securing Independent Directors
Our company adopts a principle of ensuring that outside directors account for one-third or more of the Board of Directors so that they can contribute to appropriate corporate governance at the Company and offer advice on our standards of conduct. The Company has determined that Mr. Yamaguchi, Mr. Mita and Ms. Asai as Outside Directors and Mr. Kato, Mr. Horie and Ms. Yabu 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.
Corporate Governance Report
|Corporate Governance Report 2021 (June 28, 2021 / PDF 1,022KB)|
Compensation of the Senior Management and Directors
Board Policies and Procedures in Determining the Compensation of the Senior Management and Corporate Directors
Based on the corporate philosophy, the Company has designed its officers' compensation system in a way that clarifies management responsibilities while also providing an incentive toward improving our corporate value over the medium-to long term through sustained growth.
The remuneration for the Company's Corporate Directors who are not Audit and Supervisory Committee Members and Senior Executive Officers comprises (1) a fixed monthly remuneration, (2) bonuses, as performance-linked remuneration, and (3) stock compensation, at a ratio of roughly 50%, 35%, and 15%, respectively. The monthly remuneration for Corporate Directors who are not Audit and Supervisory Committee Members is calculated within the limits approved by the general meeting of shareholders, based on the remuneration table provided in the internal regulations according to their job positions, with broad consideration to their job responsibilities and external remuneration survey data, among others. The Board of Directors has resolved to subsequently re-entrust the determination of such remuneration to President & CEO (Takeshi Aoki, mainly in charge of overseeing overall business execution), who is best qualified to make a comprehensive assessment of each recipient including their job performance, in accordance with deliberations and reports by the Nomination/Remuneration Committee on individual payment amounts. In addition, bonuses are paid in cash once a year after the end of each fiscal year within the scope of a total amount based on a prescribed formula approved by the general meeting of shareholders. The amount allocated to each individual is determined based on the degree of contribution to the Company's operations made by each Corporate Director who is not an Audit and Supervisory Committee Member. The Board of Directors has resolved to subsequently re-entrust the determination of such bonuses to President & CEO, who is best qualified to make a final assessment on the degree of contribution to the Company's operating results made by each recipient, in accordance with deliberations and reports by the Nomination/Remuneration Committee on individual payment amounts.
The monthly remuneration for Senior Executive Officers is calculated based on the remuneration table provided in internal regulations according to their job positions, with broad consideration to the suitable balance with Corporate Directors who are not Audit and Supervisory Committee Members, evaluation of their individual job performance, and external remuneration survey data. The Board of Directors has resolved to entrust the determination of such remuneration to President & CEO in accordance with deliberations and reports by the Nomination/Remuneration Committee. In addition, bonuses are calculated based on the degree of contribution to the Company's operating results made by each Senior Executive Officer, and the Board of Directors has resolved to entrust the determination of such bonuses to President & CEO in accordance with deliberations and reports by the Nomination/Remuneration Committee.
Amount of compensation, etc., of Directors (Fiscal Year 2020)
(Millions of yen)
|Position||Number of recipients||Total remuneration paid||Total amount of remuneration by type|
|Basic remuneration||Bonus||Sharebased payment|
|Director who are not Audit and Supervisory Committee Members||Directors||4||411||185||155||71|
|Director who are Audit and Supervisory Committee Members||Directors||2||68||68||-||-|
1. The basic remuneration for Directors who are not Audit and Supervisory Committee Members was approved at not more than 30 million yen per month at the 164th Ordinary General Meeting of Shareholders held on June 16, 2017. Of the total, the amount for Outside Directors (of whom there were three (3) at the time of the resolution) accounts for 5 million yen or less, with the remaining 25 million yen or less paid to the other Directors (of whom there were four (4) at the time of the resolution).
2. At the 164th Ordinary General Meeting of Shareholders held on June 16, 2017, the total amount of bonuses to be paid to Corporate Directors who are not Audit and Supervisory Committee Members (of whom there were four (4) at the time of the resolution) was resolved to be the sum of 0.5% of the profit attributable to owners of parent for each fiscal year and 1.6% of the annual dividends for such fiscal year (provided, however, that the sum shall not exceed 440 million yen annually, with any amount less than 1 million yen resulting from the calculation to be rounded off). As performance indicators for the calculation of the total amount of bonuses, profit attributable to owners of parent and the total amount of annual dividends have been adopted, as indicators that function as incentives toward the Group's sustained growth and the enhancement of corporate value, while also being linked to the interests of shareholders.
3. With regard to stock compensation for Corporate Directors who are not Audit and Supervisory Committee Members, a resolution was passed at the 164th Ordinary General Meeting of Shareholders held on June 16, 2017, to introduce a stock compensation plan using a trust for a period of three years, with the amount of cash contribution during the trust period limited up to 270 million yen, for Corporate Directors who are not Audit and Supervisory Committee Members (of whom there were four (4) at the time of the resolution), in order to clarify the link between the Company's stock value and the remuneration for Directors, and thereby elevate their awareness of contributing to improving medium-to-long-term operating results and increasing corporate value. Under the plan, points are granted according to the amount of payment calculated using a formula provided in internal regulations on the basis of the recipients' position and the amount of monthly remuneration and bonus for the previous fiscal year, converted at one point to one share (provided, however, that the total number of points to be granted is limited to 100,000 points per fiscal year), and shares are granted accordingly to the recipients at the time of their retirement.
4．At the 164th Ordinary General Meeting of Shareholders held on June 16, 2017, the amount of remuneration for Director who are Audit and Supervisory Committee Members (of whom there were five (5) at the time of the resolution) was resolved to be not more than 13 million yen per month.
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 Regulations, 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.
In addition to making every effort to comply with the Financial Instruments and Exchange Act and relevant rules, as well as the stock exchange's 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 25,000 shareholders as of March 31, 2021. We held a general meeting of shareholders in the multi-purpose hall in the IBIDEN Headquarters Building on June 18, 2021. 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 168th Ordinary General Meeting of Shareholders: 85.75%).
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 shareholder returns, we make a comprehensive examination of the balance between retaining sufficient earnings for investment in the business and long-term stable dividend payments to shareholders. For the time being, while prioritizing large-scale investments for IC package substrates in the electronics business in order to cater to the next generation, we will also continue to pay stable dividends.