Corporate Governance System

Institutional Design

We adopt a company with Board of Corporate Auditors that has dual checking functions of supervision of management by the Board of Directors making decisions as to the execution of business.
In addition, in order to improve management transparency and fairness, we strengthen our auditing function by appointing multiple outside directors and utilizing voluntary committees.
We set up the Selection and Nomination Committee, Remuneration Committee, Management Strategy Committee, and Executive & Operating Officers Committee as our optional committees, whereat we deliberate and communicate important issues about executive nominations and remuneration, important management strategies of our Group, and supervision of execution of business to executive and operating officers.
We consider that this system is the optimal institutional design to ensure a highly effective supervisory function in our group, which has a wide range of business areas.

Corporate Governance System

Board of Director's Meeting

Roles and responsibilities

The Board of Directors and executives recognize the medium-term management plan, which includes specific numerical targets such as sales, operating income, ROIC, and dividend payout ratio, as one of the commitments of shareholders, and work toward its realization. When the plan is not realized, the Board of Directors and executives analyze the reasons for this, provide an explanation to shareholders of the same, and then reflect such analysis in our plans for the terms thereafter.

Composition

We consider the balance of the expertise and experience (including management and business experience and experience in developing global business) of each director candidate, and diversity, among other factors, to be able to realize effective corporate governance by the Board of Directors.

Board of Corporate Auditors

Roles and responsibilities

The Board of Corporate Auditors comprises external corporate auditors and standing corporate auditors. External corporate auditors fulfill their responsibilities as a corporate auditor by taking advantage of their strong independence.
In addition, external corporate auditors and standing corporate auditors carry out highly effective audits by making use of their expertise and abundant experience in management and various fields.
They actively give their opinions to management at the Board of Directors and Executive & Operating Officers Meeting.

Composition

We consider the balance of the expertise and experience (including management and business experience) of each corporate auditor candidate, and diversity, among other factors, to be able to realize effective audits by the Board of Corporate Auditors.

Selection and Nomination Committee

Roles and responsibilities

We have the Selection and Nomination Committee with the aim of securing transparency and objectivity of the decision-making process in appointment and dismissal of directors and corporate auditors, CEO and other top executive succession planning.
This Committee deliberates and reports regarding nomination of director and corporate auditor candidates, the dismissal of directors and corporate auditors, appointment and removal of the representative director and directors with managerial positions, and CEO and other top executive succession planning, when it receives a request of the Board of Directors for findings.
When deliberating and reporting, we confirm the status of business execution by the CEO, etc.

Composition

This Committee consists of more than half of the members, including the chairman, independent external directors, and external statutory auditor who are observers who have the right to express their opinions on the content of the deliberations.

Click here for details on Selection and Nomination of Officers.

Remuneration Committee

Roles and responsibilities

We have the Compensation Committee with the aim of securing transparency and objectivity of the decision-making process for compensation of directors and executive officers.
This Committee deliberates and reports regarding the compensation programs and levels of directors and executive officers, when it receives a request of the Board of Directors for findings.

Composition

This Committee is chaired by an independent external director, and a majority of its members are independent officers comprising external directors and external corporate auditors.

Click here for details on Executive Remuneration.

Management Strategy Committee

Roles and responsibilities

We have the Management Strategy Committee as an advisory organ that make more efficient and deepened discussions contributing to Chief Executive Officer's decision-making with regard to management strategic matters of our Group.
This Committee deliberates significant management strategies, business strategies and other matters to be brought before the Board of Directors meetings and similar important decision-making matters involving SHI and its Group and reports to the President.

Composition

The Management Strategy Committee consists of the president and directors related to the agenda items appointed by the president for efficient discussions.

Executive & Operating Officers Meeting

Roles and responsibilities

We have the Executive & Operating Officers Committee in order to supervise the execution of business within our Group by sharing information on the execution of business by each member of our Group and important matters that may affect the business operation.
This Committee follows up management of consolidated business performance and management measures by communicating the states of business execution, matters resolved by the Board of Directors meetings and the important company-wide policies within our Group.

Composition

The Executive & Operating Officers Committee is chaired by the President and consists of our executive directors, corporate auditors and executive officers, as well as executive and operating officers of each of the divisions of our Group in order to flexibly share information especially among the executive and operating officers.

CSR Committee

Roles and responsibilities

We have the CSR Committee for the purpose of formulating proper guidelines from the perspective of improvement of medium- and long-term corporate value and promoting activities of our Group, in order to fulfill our social responsibilities toward the realization of a sustainable society.
This Committee deliberates basic CSR policies and important issues, medium-term and annual plans, frameworks, and other progresses within our Group, and reports to the Board of Directors.

Composition

This Committee is chaired by the President and consists of our directors, corporate auditors and executive officers, as well as executive and operating officers of each of the business units in order to broadly deliberate company-wide matters.

Risk Management Committee

Roles and responsibilities

We have the Risk Management Committee for the purpose of promoting company-wide and comprehensive risk management through identification of potential risks that our Group may face in conducting business and proper management of risks that may have material effects on our Group.
This Committee deliberates matters relating to the formulation of risk management policy and the selection of critical risks and its responses, and reports to the Board of Directors.

Composition

In order to comprehensively deliberate risks of our Group with broad business areas from business operation, technical, and business management aspects.
This Committee is chaired by the President, and consists of officers in charge of internal control, officers in charge of finance, officers in charge of technology, and other related executive officers, and standing corporate auditors acting as observers.

Compliance Committee

Roles and responsibilities

We have the Compliance Committee to raise the trust of the society through compliance-based management practice and to promote compliance activities intended to improve corporate value of the Group as a whole.
The Compliance Committee deliberates basic compliance policy and what actions to take in case of the occurrence of any problem, and other compliance promotion plans, and reports to the Board of Directors.

Composition

In order to multifacetedly deliberate an ideal style of management given legal and ethical viewpoints and what actions to take in case of the occurrence of any problem contrary to such style of management in broad business areas of our Group, the Compliance Committee is chaired by the President, and consists of officers in charge of internal control, officers in charge of legal affairs, officers in charge of technology, and other related executive officers, and standing corporate auditors acting as observers.

Evaluation of Effectiveness of the Board of Directors

In order to enhance the effectiveness of the Board of Directors, we conduct an annual evaluation of the effectiveness of the Board of Directors.
From December 2019 to February 2020, we conducted a questionnaire on the operation and composition of the Board of Directors for all Directors and Corporate auditors and interviewed some of the Directors and Corporate auditors.
And we discussed the content and results at the board of external officers and the board of directors.
As a result, it was confirmed that the effectiveness of our Board of Directors was almost secured, and no critical problem was found. On the other hand, issues such as an increasing of the number of external directors, enhancing discussions of medium- and long-term strategic direction were recognized.
The Board of Directors will take measures leading to resolution of those issues and will proceed with efforts to further raise its effectiveness.

For the summary of results of our evaluation for FY2020, see below.