Corporate Governance
Enhancing corporate governance to earn stakeholder trust and confidence and increase corporate value
Basic philosophy of corporate governance
The UACJ Group manifests its corporate philosophy through business activities that contribute to creating a sustainable and prosperous society. In so doing, the Group aims to achieve sustainable growth and enhance its corporate value over the long term. One of the most important tasks of management to fulfill that objective is to establish and execute effective corporate governance.
UACJ Corporate Governance Guidelines (480KB)
Status of Compliance with the Corporate Governance Code
UACJ strengthens corporate governance based on the intent of the Corporate Governance Code. Disclosure of the 14 principles and supplementary principles required by the Tokyo Stock Exchange is presented in the Corporate Governance Report. We will continue strengthening our corporate governance as needed to respond to changes in the environment surrounding our company.
Corporate Governance Report (200KB)
Corporate governance system
Board of Directors
The Company utilizes an Audit & Supervisory Board system. Following the executive officer system for business execution, managerial decision-making and supervisory functions are separated from business execution, thereby strengthening the functions of the Board of Directors and accelerating the speed of business execution. To further clarify this separation and improve the supervisory function, the Articles of Incorporation stipulate that the president serves as the chief executive officer in charge of business execution.
As of June 21, 2023, our Board of Directors consists of 10directors (including five independent outside directors) and five Audit & Supervisory Board members (including 3 independent outside auditors).
The Board of Directors meets monthly to discuss important management matters and report on the status of business execution in accordance with laws, the Articles of Incorporation, and internal regulations. The Chair of the Board of Directors is elected by mutual selection. As of June 2023, the Representative Director serves in this position. In fiscal 2022, the board focused primarily on overseeing the completion of structural reforms and discussing the Group’s future strategy.
In addition, a dedicated department for the Board of Directors’ secretariat has been established to help implement measures to improve the board’s effectiveness and to provide information to outside officers.
Going forward, we will maintain appropriate operation of the Board of Directors in order to enhance the Group’s medium-to long-term corporate value.
Corporate Governance System
Overview of corporate governance structure
Institutional format | Company with an Audit & Supervisory Board |
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Total number of directors | 10 (including 5 outside directors) |
Total number of Audit & Supervisory Board members | 5 (including 3 outside auditors) |
Ratio of female directors | 20% |
Directors’ term of office | 1 year |
Adoption of an executive officer system | Yes |
Voluntary advisory body to the Board of Directors | Nomination and Remuneration Advisory Committee |
Accounting Auditor | Deloitte Touche Tohmatsu LLC |
Main agenda of the Board of Directors
Category | Main agenda items |
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Management |
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Sustainability |
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Board of Directors/Officers |
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Stocks/Shareholders’ Meeting/Investors |
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Rationale for Selection of Independent Outside Directors
Name | Independent officer | Reason for appointment | Activity status |
---|---|---|---|
Takahiro Ikeda | ○ | Mr. Takahiro Ikeda was appointed as an outside director and member of the board based on his extensive experience as a director at a major chemical manufacturer, where he was involved in management of the company and a corporate group company. He is expected to use his broad understanding of management to continue providing an objective perspective and applicable advice for the Group’s domestic and overseas business development and risk management and to fulfill a supervisory function as part of the Board of Directors. Mr. Ikeda was appointed as an independent officer after being deemed to have no conflict of interest with the Company’s ordinary shareholders. His former company, Mitsubishi Chemical Corporation, sells Company products, but he has not been involved in the execution of the company’s business since retiring as company advisor in March 2016. In addition, business transactions between the companies account for less than 0.1% of either company’s consolidated sales, and it is not a specified associated service provider of the Company. |
Board of Directors meeting attendance: 15 of 15 meetings Nomination and Remuneration Advisory Committee meeting attendance: 12 of 12 meetings |
Akio Sakumiya | ○ | Mr. Akio Sakumiya was appointed as an outside director and member of the board based on his extensive experience and deep insight to corporate governance as an executive vice president of a major electrical equipment manufacturer, where he was involved in management of the company and corporate group companies and served as a member and vice-chairman of various advisory committees related to personnel and remuneration for directors of the company. He is expected to use his broad understanding of management to continue providing an objective perspective and applicable advice for Group management strategy and corporate governance and to fulfill a supervisory function as part of the Board of Directors. Mr. Sakumiya was appointed as an independent officer after being deemed to have no conflict of interest with the Company’s ordinary shareholders. |
Board of Directors meeting attendance: 14 of 15 meetings Nomination and Remuneration Advisory Committee meeting attendance: 12 of 12 meetings |
Yoshitaka Mitsuda | ○ | Mr. Yoshitaka Mitsuda was appointed as an outside director and member of the board based on his academic background in materials and extensive experience in university management and public-private-academic partnerships. He is expected to use his broad understanding of management to continue providing an objective perspective and applicable advice for the Group in the areas of research & development and sustainability and to fulfill a supervisory function as part of the Board of Directors. Mr. Mitsuda was appointed as an independent officer after being deemed to have no conflict of interest with the Company’s ordinary shareholders. |
Board of Directors meeting attendance: 12 of 12 meetings (post appointment) Nomination and Remuneration Advisory Committee meeting attendance: 12 of 12 meetings (post appointment) |
Ryoko Nagata | ○ | Ms. Ryoko Nagata was appointed as an outside director and member of the board based on her extensive experience as an executive officer and auditor of a major food manufacturer, where she was involved in management of the company and corporate group companies. She is expected to use her broad understanding of management to provide an objective perspective and applicable advice for the Group in the areas of management strategy, sales, marketing, legal, and governance and to fulfill a supervisory function as part of the Board of Directors. Ms. Nagata was appointed as an independent officer after being deemed to have no conflict of interest with the Company’s ordinary shareholders. |
(Newly appointed) |
Makiko Akabane | ○ | Ms. Makiko Akabane was appointed as an outside director and member of the Board based on her extensive knowledge and experience consulting and providing support related to sustainability to multiple companies, the Ministry of the Environment, universities, and other organizations. She is expected to provide an objective perspective and applicable advice for the Group in the areas of sustainability and overseas business and to fulfill a supervisory function as part of the Board of Directors. Ms. Akabane was appointed as an independent officer after being deemed to have no conflict of interest with the Company’s ordinary shareholders. |
(Newly appointed) |
Message from the Chair of the Board of Directors
The UACJ Board of Directors consists of members with diverse backgrounds, with each member engaging in lively discussions utilizing the wealth of knowledge and experience they possess. In fiscal 2022, the board focused on the oversight of completing structural reforms. We also furthered discussions on the topic of diversity in the Board of Directors, an issue recognized in the previous year’s effectiveness evaluation. As a result of these discussions, we decided to increase the number of outside directors by one and to have half of the Board of Directors composed of independent outside directors starting in fiscal 2023. In addition, both of the two newly appointed female outside directors are active on the front lines and are expected to bring new insights to the Company. As a company with an Audit & Supervisory Board, we emphasize the decision-making and supervisory functions of the Board of Directors and take steps to strengthen these mutually essential functions in the interest of the Group’s sustainable growth and enhancement of corporate value over the medium to long term. Fiscal 2023 marks the final year of the third mid-term management plan, which began in fiscal 2021. This upcoming year is when we will be formulating our next mid-term management plan. The Board of Directors will oversee the progress of the third mid-term management plan and discuss the following plan, determining the best direction for UACJ toward the realization of UACJ Vision 2030, our long-term management vision. Furthermore, as Chair of the Board of Directors, I intend to continue leading the Board of Directors in improving its effectiveness and properly fulfilling the roles and responsibilities expected of its chair.
Miyuki Ishihara Representative Director & President
Audit & Supervisory Board
As an independent body that plays a role in corporate governance, the Audit & Supervisory Board is tasked with auditing the execution of duties by the board members. To improve the quality of auditing, a three-way audit system has been adopted for cooperation among Audit & Supervisory Board audits, internal audits, and audits by accounting auditors. Following the auditing policies and plans set out by the Audit &Supervisory Board and according to its regulation, these audits are conducted, in principle, once a year and focus primarily on the execution of duties by the board members in areas including the development and operation of internal control systems, prevention of risks, and initiatives to address managerial issues.
The Audit & Supervisory Board consists of five Audit & Supervisory Board members (including three independent outside members), two of which have knowledge of finance and accounting.
Rationale for Selection of Independent Outside Audit & Supervisory Board Members
Name | Independent officer | Reason for appointment | Activity status |
---|---|---|---|
Yuki Iriyama | ○ | Mr. Yuki Iriyama was appointed as an independent Audit & Supervisory Board member to contribute from his extensive experience as a managing director and corporate manager at a major steel manufacturer and his advanced legal expertise as a lawyer specializing in corporate law to ensure appropriate audits and provide applicable advice to the Group. Mr. Iriyama was appointed as an independent officer after being deemed to have no conflict of interest with the Company’s ordinary shareholders. |
Board of Directors meeting attendance: 15 of 15 meetings Nomination and Remuneration Advisory Committee meeting attendance: 14 of 14 meetings |
Hiroyuki Yamasaki | ○ | Mr. Hiroyuki Yamasaki was appointed as an independent Audit & Supervisory Board member to contribute from his extensive experience in finance and accounting as a certified public accountant specializing in corporate accounting and his advanced accounting expertise cultivated during his career to ensure appropriate audits and provide applicable advice to the Group. Mr. Yamasaki was appointed as an independent officer after being deemed to have no conflict of interest with the Company’s ordinary shareholders. |
Board of Directors meeting attendance: 15 of 15 meetings Nomination and Remuneration Advisory Committee meeting attendance: 14 of 14 meetings |
Yoshiro Motoyama | ○ | Mr. Yoshiro Motoyama was appointed as an independent member of the Audit & Supervisory Board to contribute from his extensive experience as an executive vice-president of a major automobile manufacturer and his broad perspective on management cultivated during his career to ensure appropriate audits and provide applicable advice to the Group Mr. Motoyama was appointed as an independent officer after being deemed to have no conflict of interest with the Company’s ordinary shareholders. |
Board of Directors meeting attendance: 15 of 15 meetings Nomination and Remuneration Advisory Committee meeting attendance: 14 of 14 meetings |
Nomination and Remuneration Advisory Committee
In order to strengthen corporate governance, the Company has established the Nomination and Remuneration Advisory Committee as an advisory body to the Board of Directors to enhance objectivity and transparency in the decision-making process for nominating directors, executive officers and auditors, as well as in determining the remuneration of directors and executive officers.
The committee places high priority on independence, with an independent outside director serving as the committee chair and five of the seven committee members being independent outside directors.
In fiscal 2022, the committee mainly deliberated and reported to the Board of Directors on a case-by-case basis on topics such as the following: the composition of the Board of Directors and other bodies for fiscal 2023, outside director candidates, the term of office and reappointment for outside directors, and fiscal 2023 policy for officer remuneration.
Director and Audit & Supervisory Board Member Training
UACJ’s policy is to ensure that Directors and members of the Board and Audit & Supervisory Board are fully equipped to perform their duties by providing the following training at the time of their appointment and during their term of office.
Newly appointed outside officers are provided opportunities to ensure an understanding of the roles and responsibilities of the directors and corporate auditors and to deepen their understanding of the Company’s business, finances, organization, and other matters. Training is also provided throughout the terms of appointment through opportunities for deepening understanding of governance, discussions of Group issues, and training opportunities appropriate for the knowledge, experience, and abilities of each individual director and corporate auditor.
In fiscal 2022, we conducted executive training on governance and compliance. In fiscal 2023, we will continue to provide training on governance and compliance while also providing opportunities for newly appointed outside directors to deepen their understanding of our business through visits to business sites and Group companies in Japan and overseas.
Support Structure for Directors and Audit & Supervisory Board Members
With the aim of enhancing discussions at the Board of Directors, we continue to provide support, such as presentations by external experts on governance, for each officer to deepen their awareness and understanding.
We also hold opinion exchange meetings between outside directors and outside Audit & Supervisory Board members which are separate from Board of Directors meetings, make efforts to actively incorporate the opinions of outside directors into business execution, convene meetings for only the outside officers, and support cooperation between outside directors and outside Audit & Supervisory Board members. Outside officers are provided materials in advance of Board of Directors meetings and opportunities are provided as necessary for outside officers to receive advance explanations of important matters and to meet with key working groups of internal officers.
Evaluation of the Effectiveness of the Board of Directors
Each year, the Company evaluates and takes steps to improve the effectiveness of the Board of Directors.
At appropriate intervals, we also engage third-parties to conduct analysis and evaluations with the intention of ensuring the neutrality and objectivity of our evaluations and to make our improvement measures even more effective. The most recent third-party evaluation was conducted in fiscal 2020.
Flow of Effectiveness Evaluation
- For ongoing follow-up, a survey is created based on the fiscal 2020 third-party evaluation questionnaire
- Directors and auditors respond in writing, and the secretariat analyzes the results of their responses
- The Board of Directors discusses the analysis findings
Major items for evaluation
- Roles and responsibilities of the Board of Directors
- Decision making by the Board of Directors
- Supervisory functions of the Board of Directors
- Composition of the Board of Directors
- Operation of the Board of Directors
- Role of the Nomination and Remuneration Advisory Committee
- Relations with investors and shareholders
Results of evaluation in fiscal 2022
- The scope and composition of internal and external members of the Board of Directors is appropriate
- Operation of the Board of Directors is appropriate with regard to the frequency of meetings and the deliberation time, content, and number of discussions
- The Nomination and Remuneration Advisory Committee conducted active discussions
- Appropriate efforts were made to “deepen discussions on diversity in the Board of Directors” and “enhance support for outside directors,” which were raised as issues in fiscal 2021
Future topics and measures
- Continuing and enhancing discussion on cultivating and increasing diversity of global human resources, continue conducting full discussions about human resources strategy
- Expand the development of themes for medium- and long-term material issues, and further strengthen the monitoring function
Remuneration of officers
UACJ’s officer remuneration system is intended to provide management incentive to respond to the expectations of a variety of stakeholders and to promote steady and sound business development to continue generating the profits needed to contribute to society. The system is also designed to share the benefits and risks of stock price fluctuations with shareholders and increase our officers' desire to help increase share prices, raise corporate value, and improve our performance in the medium and long term. The remuneration system is periodically reviewed to ensure it is functioning appropriately and effectively. From fiscal 2023, the number of outside directors was increased by one to a total of five, accounting for half of all directors, and the maximum amount of remuneration was revised in consideration of the increased roles and responsibilities expected of outside directors. The Nomination and Remuneration Advisory Committee annually reviews the remuneration system and assesses the need for revisions based on changes in the business environment and how the system is actually operating.
Resolutions regarding the remuneration of directors and Audit & Supervisory Board members were passed as described below at the 5th Annual General Meeting of Shareholders on June 21, 2018, the 8th Annual General Meeting of Shareholders on June 22, 2021, and the 10th Annual General Meeting of Shareholders on June 21, 2023.
- Basic remuneration and short-term performance-linked remuneration shall be limited to a total of ¥650 million per year for all Board of Directors members combined. (This amount excludes amounts paid as employee salaries. Remuneration for outside directors is limited to basic remuneration only and will not exceed a total of ¥110 million per year, included in the amount above, for all outside directors.)
- Medium-to long-term performance-linked remuneration for directors excluding outside directors shall be composed of a restricted stock units (RSU) plan and performance share units (PSU) plan. Monetary compensation receivables issued shall be no more than 180,000 shares for the three fiscal years of each period covered and the total monetary value shall be no more than the number of shares multiplied by the share price at the time of granting. In addition, the total number of common shares granted to directors shall be no more than 90,000 shares for each period covered.
- Total remuneration for all Audit & Supervisory Board members shall not exceed ¥100 million per year.
a. Concepts on remuneration for officers
- A remuneration system that adds motivations towards achieving the performance targets (short-term and medium- to long-term) based on the Company’s business strategy;
- a remuneration level that is competitive enough to attract talented human resources who can lead the Company’s growth and to enhance their motivation to contribute to the Company;
- a remuneration system that involves a highly objective and transparent decision-making process; and
- a remuneration system that can contribute to the sharing of common interests with shareholders and leads to an increased shareholder value.
b. Remuneration System
- The officer remuneration for the Company’s Directors comprises of basic remuneration in the form of fixed remuneration, short-term performance-linked remuneration tied to the level of achievement of the Company’s performance in a single fiscal term, and medium- to long term performance-linked remuneration that is tied to the level of achievement of the Company’s medium- to long-term performance. The remuneration for Outside Directors consists solely of the basic remuneration, as the main responsibility of Outside Directors is the supervision from an objective and independent perspective.
- Basic remuneration for each officer position is set by referring to remuneration survey data provided by an outside institution specialized in the gathering of this kind of data. Remuneration levels are determined based on comparisons to companies that are in similar industries and are of similar size to the Company.
- For each eligible Director, the standard amount of short-term performance-linked remuneration (in cases where the payment rate is 100%; the same applies below) is set at 35% to 40% of his/her basic remuneration.
- For each eligible Director, the standard amount of medium-to long-term performance-linked remuneration is set at approximately 25% of his/her basic remuneration.
Officer Remuneration System
(when 100% of short- and medium-term goals are achieved)
c. Composition of the performance-linked remuneration
Short-term performance-linked remuneration system
Evaluation factors | Company-wide performance | Consolidated net income, consolidated ROE, consolidated ROIC, consolidated ordinary income before inventory valuation |
Divisional performance | Divisional ordinary income, divisional ROIC, divisional ordinary income before inventory valuation | |
SDGs | Evaluation of the level to which activity targets in the six materiality issues set out in our long-term management vision were achieved (weighting is approximately 10% of total short-term performance-linked remuneration) | |
Individual performance | Mainly qualitative evaluation of important initiatives, etc., not reflected in company-wide or divisional performances for a single fiscal year (weighting is approximately 10% of total short-term performance-linked remuneration) | |
Evaluation period | Single fiscal year | |
Range of variation in performance-linked remuneration | Changes within a range of 0 to 200% in accordance with the level of achievement, based on a payment ratio of 100% for 100% achievement of the goal | |
Content of remuneration | Paid in cash |
Medium-to long-term performance-linked remuneration system
Restricted stock units (a system of providing shares and cash payments conditional on continuing service for three further years)
Evaluation factors | Conditional on continuing service |
Evaluation timing | Three fiscal years |
Range of variation in performance-linked remuneration | No change due to performance |
Content of remuneration | Half of the assigned units with vested rights are provided as shares, with the remainder paid in cash |
Performance share units (a system of providing shares and cash payments in accordance with the level of achievement of medium- and long-term performance goals for the entire Company)
Evaluation factors | Company-wide performance | Consolidated ROIC, consolidated adjusted EBITDA, consolidated D/E ratio |
Total shareholder return | Evaluation based on the growth rate of the Company's total shareholder return divided by the growth rate of the TOPIX Index during the evaluation period | |
Evaluation period | Three fiscal years | |
Range of variation in performance-linked remuneration | Varies within a range of 0 to 200% in accordance with the level of achievement, based on a payment ratio of 100% for 100% achievement of the goal | |
Content of remuneration | Half of the assigned units with vested rights are provided as shares, with the remainder paid in cash |
d. Remuneration determination procedure
- The policies and specific contents of the Company’s officer remuneration are deliberated at the Nomination and Remuneration Advisory Committee and determined by the Board of Directors referring to the Committee’s report. Over half of the Nomination and Remuneration Advisory Committee is comprised of Independent Outside Directors and Independent Outside Audit & Supervisory Board Members. Furthermore, advice from external specialists is sought as necessary to provide sufficient information to its members.
- Regarding short-term performance-based remuneration for Directors, the Nomination and Remuneration Advisory Committee confirms, at the beginning of the evaluation period, the targets for: 1) the portion based on the company-wide performance evaluation; 2) the portion based on the divisional performance evaluation; and 3) the portion based on the SDGs evaluation, and, at the end of the evaluation period, the level of achievement of these goals and the amount of payment according to the level of achievement. The Committee also confirms the appropriateness of the portion based on the individual performance evaluation. For medium-to long-term performance-based Director remuneration, the Nomination and Remuneration Advisory Committee confirms the targets at the beginning of the evaluation period, as well as the level of achievement and the amount of remuneration based on the achievement level at the end of the evaluation period.
- The Board of Directors has delegated, to Mr. Miyuki Ishihara, the Representative Director & President, the decision on the individual evaluation for the short-term performance-linked remuneration on the basis of the amount of basic remuneration for each Director and the performance of divisions supervised by respective Directors excluding Outside Directors. The reason for the delegation is that the Representative Director & President is considered competent to evaluate respective directors’ significant efforts that are not reflected in the company-wide or divisional performance, taking into consideration the performance of the Company as a whole. The appropriateness of the decisions made on the delegated matters is reviewed in advance by the Nomination and Remuneration Advisory Committee.
- The amount of remuneration for Audit & Supervisory Board Members is determined by consultation among the Audit & Supervisory Board Members within the range approved by the general meeting of shareholders.
(For your reference)
[Shareholding Guidelines]
The Company recommends its Directors (excluding Outside Directors) and Executive Officers to own the Company’s shares with the value equal to approximately 25% of their basic remuneration (annual amount) within five years from the date of appointment as an officer.
Initiatives to date
2018 | Reviewed the remuneration system and implemented short-term performance-linked remuneration* and medium-to long-term performance-linked remuneration (PSU: Performance Share Unit) |
2020 | As the Company worked towards structural reform, increased the short-term performance-linked remuneration ratio, and introduced total shareholder return to the system of medium-to long-term performance-linked remuneration |
2021 | Introduced SDGs evaluation to short-term performance-linked remuneration, and restricted stock units (RSU) to medium-to long-term performance-linked remuneration
|
2023 | Revised the maximum amount of remuneration for outside directors, taking into consideration the increase in the ratio of outside directors and the increased roles and responsibilities expected of outside directors |
- * Outside directors are not subject to the performance-linked remuneration system, as their primary duty is to provide supervision from an independent, objective standpoint.
Total remuneration of directors and Audit & Supervisory Board members in fiscal 2022
Positions | Number of members | Total amount by type of remuneration | Total remuneration | ||
---|---|---|---|---|---|
Base salary | Short-term performance-linked remuneration | Medium- to long-term performance-linked remuneration | |||
All directors (Outside directors) |
12 (5) |
¥280 million (¥49 million) |
¥20 million (–) |
¥55 million (–) |
¥355 million (¥49 million) |
All Audit & Supervisory Board members (Outside members) |
7 (4) |
¥83 million (¥32 million) |
– (–) |
– (–) |
¥83 million (¥32 million) |
Total (Outside directors and Audit & Supervisory Board members) |
19 (9) |
¥362 million (¥81 million) |
¥20 million (–) |
¥55 million (–) |
¥437 million (¥81 million) |
Note: The above table includes one director who retired and one Audit & Supervisory Board member who resigned at the conclusion of the 8th Ordinary General Meeting of Shareholders held on June 22, 2022.
Succession plans
The Company has succession plans in place for the president, officers, and other senior management positions. All officers participate in an internal selection process that encompasses multiple perspectives and human resource data with the aim of providing a well-rounded approach to identifying candidates for officer positions. We clarify any issues associated with each candidate and train them through challenging assignments, transfers, and education so they have abundant opportunity to gain the competencies and experience needed to serve as senior management. The status of the succession plan status is periodically reported to the Nomination and Remuneration Advisory Committee (which includes five independent outside officers), which monitors the processes to ensure objectivity. The Board of Directors, meanwhile, verifies and supervises the process.
The system also includes succession plans for departmental and sectional managers with the aim of systematically cultivating human resources for organizational management positions. The coordinated implementation of these succession plans for senior management enables the methodical development of human resources for the entire Group.
Succession plan for the Company president
Creation
A company-wide management human resources development review committee (consisting of the Company president, members of each business division, and the officer in charge of human resources) carries out the following:
- Checks officer candidates and shares information about their associated training issues and organizational management training plan
- Checks and amends the above content from a cross-divisional, company-wide viewpoint
Assessment
The Company president carries out the following:
- Decides on candidates for the presidential succession based on the discussions of the company-wide management human resources development review committee
- Evaluates the above personnel, and after identifying strengths and areas for development, reviews methods of training (including difficult assignments and transfers)
- Reports the proposed candidate list based on the results of this assessment to the Nomination and Remuneration Advisory Committee
Checking and optimization
The Nomination and Remuneration Advisory Committee carries out the following:
- Checks personnel selection and development issues and measures for president successor candidates, checks personnel selection and development measures for the executive successor pool personnel, and checks and discusses whether internal processes and initiatives including these are appropriate
- Supervises training (monitoring)
- Reports president/officer candidate numbers and the status of training to the Board of Directors
- Observes successor candidates
The Board of Directors:
- Reviews the report of the Nomination and Remuneration Advisory Committee and oversees (monitors) development efforts and progress
Selection and nomination of officers
The Nomination and Remuneration Advisory Committee deliberates and decides on the nomination of directors and other senior management by evaluating candidates based on elements such as their career history and capabilities. The Board of Directors makes the final decision on officer appointments based on the committee’s recommendations. Candidates for the Audit & Supervisory Board must also be approved by the Audit & Supervisory Board. When selecting independent outside directors, the Company considers candidates based on its criteria for independence, and seeks individuals who can be expected to contribute to the Company through frank, active, and constructive dialogue at the Board of Directors meetings. Opportunities are provided to evaluate their contributions after appointment. Currently two of the five independent outside directors are women, and four of the directors have experience in corporate management. UACJ will continue its focus on achieving a balance in the overall knowledge, experience, and abilities of the Board of Directors, and in developing systems that take into account diversity and scale.
Criteria for Independence for Outside Directors and Audit & Supervisory Board Members (67.0KB)
Skill matrix
The Board of Directors and the Nomination and Remuneration Advisory Committee conducts specific discussions on the skills (knowledge, experience, and abilities) that a member of the Board of Directors should possess in order to implement and oversee the three main strategies of the third medium-term management plan and realize the long-term UACJ Vision 2030.We intend to create a Board of Directors that is overall equipped with nine skill sets for executing effective management oversight. The following table shows these skills.
Reason for selection as a desired skill field
Skill fields Reasons for appointment | Corporate | |
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ⅰ | Corporate management/Strategy | A wide range of knowledge, experience, and ability in corporate management and strategies—of our Company or other companies—is indispensable as the Group considers enhancing earnings capability and strengthening management systems essential to our structural reform. |
ⅱ | Finance/ Accounting | Finance and accounting knowledge, experience, and ability are indispensable to appropriately preparing, supervising, and auditing financial statements as well as to management aimed at improving our financial position through careful investment scrutiny and capital efficiency, which is essential to our structural reform. |
ⅲ | Finance/ Accounting | Sales and marketing knowledge, experience, and ability are indispensable to strengthening the foundations for growth as we seek to increase the added value of our enhanced materials business and focus on growth markets (North America and Southeast Asia) and growth sectors (can stock and automotive components). |
ⅳ | Overseas business | With overseas operations accounting for roughly half of Group sales, overseas business knowledge, experience, and ability are indispensable to leveraging our three-point—Japan, North America and Thailand—global supply network to further expand our presence on the global stage. |
ⅴ | R&D/Manufacturing | Research and development and manufacturing knowledge, experience, and ability are indispensable to developing aluminum products that help reduce environmental burden as well as to creating and providing added value in enhanced materials and developing mechanisms and systems to create new business domains. |
ⅵ | Legal/Governance | Legal and governance knowledge, experience, and ability are indispensable to ensuring comprehensive compliance and risk management and to executing the corporate governance required of a listed company in the prime market and enhancing corporate value. |
ⅶ | IT/Digital | IT and digital knowledge, experience, and ability are indispensable to strengthening the foundations for growth, effectively allocation management resources to digital technology activities and advancing our digital transformation, pursuing the potential of aluminum, and creating new business domains. |
ⅷ | Sustainability | Sustainability knowledge, experience, and ability is indispensable to achieving a better world and to focusing our efforts to address climate change and other challenges as well as to fulfill our plan to use diverse human resources in our business and promote the development and diversification of our human resources. |
ⅸ | Other industries/fields | Knowledge, experience and ability in other fields and industries is indispensable to fulfilling the UACJ Vision 2030 and to providing an outside perspective to supervising management and diversity to the Board of Directors. |
Board of Directors Composition and Areas of Expertise
Click on the image to open the PDF file. (76KB)
Note: The above table does not indicate the complete range of each individual’s knowledge, experience, and ability
Internal Controls
The UACJ Group endeavors to strengthen its internal control system to help ensure that its business activities are in line with management objectives, within the law and rational. Furthermore, as regards the status of internal controls stipulated by the Financial Instruments and Exchange Act, the Internal Auditing Department conducts tests and assessments with the aim of ensuring the reliability of financial reporting.
Status of the Internal Control System
As described below, the UACJ Group’s internal control systems (Systems for ensuring that the execution of duties by the Directors and employees of the Company and the Group complies with laws and ordinances, and the Articles of Incorporation, and for ensuring the propriety of the business activities of the corporation and of the corporate group consisting of the corporation and its subsidiaries) have been established in accordance with Japan’s Companies Act and Ordinance for Enforcement of the Companies Act.
a. Systems for ensuring execution of duties by Directors and employees of the Company and the Group is in compliance with the laws and regulations and the Articles of Incorporation
- The Company and its Group aim to be a corporate group that acts in accordance with the management philosophy and action guidelines and complies with laws and regulations and the Articles of Incorporation.
- Employee training is provided mainly by the CSR Committee by holding seminars and distributing manuals. Moreover, compliance activities are promoted by taking such measures as detecting regulatory violations.
- An internal reporting system has been put in place for early detection and correction of compliance violations.
- The Internal Auditing Department acts as the Company’s internal audit unit. It monitors the performance of duties in individual business units, audits the effectiveness of internal control system, and reports findings to the Board of Directors.
b. Systems for the retention and management of information on the execution of duties by Directors
- Information on the execution of duties by Directors, including Board meeting minutes and approval documents, is prepared and retained in accordance with internal rules.
- Directors and Audit & Supervisory Board Members can access necessary information whenever they need.
c. Provisions and other systems concerning the management of the risk of loss for the Company and its Group
- The Company and its Group properly address, in accordance with internal rules, environmental, safety, health, quality, information security, export management, and other risks shared by the Company and its Group as a whole. Risks specific to particular business units are managed by the units and reported to the CSR Committee for cross-sectional risk management.
d. Systems for ensuring efficient execution of duties by Directors of the Company and its Group
- The Company and its Group ensure that effective execution of duties is carried out by such means as establishing a division of duties in accordance with internal rules.
- Individual business units are responsible for setting specific targets for the mid-term management plans and single fiscal year budgets prepared by the Company and managing their achievement.
e. Systems for ensuring the propriety of operations by the subject corporation and the corporate group consisting of it and its parent company and/or subsidiaries
- The UACJ Group establishes and puts in place an internal control system.
- The Internal Auditing Department conducts operational audits. The audit results are reported to the Audit & Supervisory Board Members and the Representative Director to ensure strict compliance by the UACJ Group as a whole. Furthermore, the Company’s affiliates are required to consult with the Company on important management issues according to their own internal rules. If required by circumstances, the Company will review its rules concerning the management of affiliates to ensure the propriety of business activities carried out by the Group.
f. Matters concerning employees to be assigned to assist the Audit & Supervisory Board Members at their request
- The Company appoints employees who are to assist the duties of the Audit & Supervisory Board Members under the instructions of the Members.
g. Matters concerning the independence of the employees referred to in the previous item from Directors and the issuance of effective instructions to the employees
- The employees referred to above are kept independent from the Directors’ instructions and supervision and their personnel affairs must be agreed on in advance by the Audit & Supervisory Board.
h. Systems enabling Directors and employees of the Company and its Group to make a report to the Audit & Supervisory Board Members and systems for other reports to the Audit & Supervisory Board Members
- When any of the following are found during the course of duties, Directors, Executive Officers, and employees of the Company and its Group must report them immediately to the Company’s Audit & Supervisory Board Members: any violations against laws and regulations or the Articles of Incorporation; fraudulent activities committed; or any facts that may cause serious damage to the Company or its Group.
- Directors, Executive Officers, and employees must make a report or resolution based on the Board of Directors Rules and other internal rules at the Board meetings or other meetings attended by the Audit & Supervisory Board Members.
- It is prohibited to give disadvantageous treatment to the Company’s or its Group’s Director, Executive Officer, or employee who made a report to the Company’s Audit & Supervisory Board Members for the reason that he/she made that report.
i. Other systems for ensuring that audits by the Audit & Supervisory Board Members can be performed effectively
- The Board of Directors must ensure the attendance of the Audit & Supervisory Board Members at important meetings including Board meetings and management meetings.
- Audit & Supervisory Board Members and the Representative Director must hold meetings regularly to exchange views.
- When a request is received from the Audit & Supervisory Board Members to ensure the effectiveness of their audits, Directors, Executive Officers, and heads of relevant units must respond in good faith.
- Expenses stipulated in Article 388 of the Companies Act shall be handled in accordance with rules.
Strategic shareholdings
The Company holds shares in companies that we deem necessary for the sustainable growth and smooth execution of our business, such as to maintain and strengthen trade transactions, business alliances, and stable procurement of raw materials.
Our basic policy is to reduce strategic shareholdings to the minimum necessary volume and maintain that level. The Board of Directors annually reviews and comprehensively examines each shareholding from both quantitative and qualitative perspectives, including the significance of the shareholding and its economic rationale. Holdings deemed to be no longer practical or rational will be divested in an orderly manner.
The voting rights of strategic shareholdings (rights granted to shareholders), are, in principle, exercised at all times. Decisions to vote for or against a proposal are made after comprehensively considering a proposal’s compatibility with the purpose of our holding of the shares, as well as whether or not it contributes to the sound management of the issuing company and ultimately improves the corporate value of the Company and the issuing company.
As of March 31, 2023, the total number of companies with which we possess strategic shareholdings was 29. The amount of these shareholdings on the balance sheet as of the end of fiscal 2022 was ¥5,129 million, which represents 1.9% of consolidated net assets.
Anti-takeover Measures
Presently, UACJ has not adopted any anti-takeover measures.