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 senior management reports as appropriate to the Board of Directors on critical management issues and high-risk management challenges, thereby ensuring effective supervision over the senior management and directors. The Board of Directors has also appropriately built up the internal control system and risk management system, pursuant to the Companies Act and other relevant laws and regulations, while supervising the operation of those systems as appropriate by receiving reports from the Internal Control Department on its annual plan and operational status and giving necessary instructions. The Board of Directors meets once a month in principle.
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
The Board consists of nine directors (including three outside directors), including the Chairman of the Board, who is the chairman of the Board. Outside directors are responsible for supervising management from a standpoint independent of management and appropriately reflecting stakeholder perspectives.
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.
General Meetings of Shareholders | ・ Convocation of Ordinary General Meetings of Shareholders | Human resources | ・Human resource hiring plan ・ Revision of various human resource systems |
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Corporate philosophy, etc. | ・Establishment of our Purpose | ||
Settlement of accounts, etc. | ・Budgets and financial results | Sustainability | ・Progress in promoting sustainability (climate change, human rights, information disclosure, etc.) ・Review of material issues and setting indicators |
Medium-term management plans | ・Reports on the progress of medium-term management plans from each business division ・Formulation of the Medium Term Management Plan 2026 |
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Governance | ・Board of Directors effectiveness evaluations ・Implementation of dialogues with shareholders ・Revision of the stock-based remuneration system for officers ・Progress of succession plan for the CEO and other top executives ・Appointment of officers and other key HR matters |
Compliance | ・Reports on the deliberations of the Compliance Committee |
Technology/Quality | ・R&D strategies ・Status of product quality improvements |
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Risk management | ・Reports on the deliberations of the Risk Management Committee | ||
Financials | ・Our financial strategy ・Acquisition of treasury shares |
Group management | ・Mergers with subsidiaries |
Audits | ・ Reports on the plans and results of audits conducted by corporate auditors | Other matters | ・Capital investments |
Corporate Auditors and 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. The Committee is held as needed. (Four meetings were held in FY2023)
Composition
The majority of the committee members are composed of independent outside directors, and one of them is the chairman.
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. In principle, this committee is held once a year, and also held as needed. (Two meetings were held in FY2023)
Composition
The majority of the committee members are composed of independent outside directors, and one of them is the chairman.
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. In principle, this committee is held once a month, and also held as needed.
Composition
The Committee is chaired by the President and consists of the President and directors and others appointed by the President.
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. In principle, this committee is held once a month.
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.
Sustainabiity Committee
Roles and responsibilities
We established the Sustainability Committee in March 2021 for the purpose of deliberating and monitoring sustainability issues from medium- to long-term perspective, and executing and driving Group-wide sustainability strategies.
This committee is chaired by the president (Member of the Board), composed of executive officers and executive officers of each business division. In addition, outside directors attend the meeting to reflect external knowledge and experience in the committee's decision-making, and corporate auditors also attend the meeting as observers from the standpoint of auditing business execution.
This Committee deliberates policies, material issues, and measures relating to the promotion of sustainability, 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
The Company evaluates the effectiveness of the Board of Directors every year aiming to improve the function of the Board of Directors through the ongoing process to verify if the Board of Directors is functioning properly and take necessary measures to improve the issues and reinforce it based on the results.
For the summary of results of our evaluation for FY2023, see below.