Basic Concept
Fujikura has chosen to become a company with the Audit and Supervisory Committee, as it aims to have a structure that allows for flexible and efficient business operations by delegating a large amount of authority from Board of Directors' Meeting to executive directors, while also allowing for thorough deliberation based on the diverse and advanced knowledge of multiple outside directors who are independent of the company's management.
Based on the above, we believe that an effective corporate governance structure for our company in the sustainable growth phase is as follows:
Board of Directors' Meeting
After the Ordinary shareholders' meeting for the fiscal year ending March 31, 2023, the total number of directors will be nine, including four outside directors (all of whom are Audit and Supervisory Committee members) and five inside directors. The outside directors, who make up nearly half of Board of Directors' Meeting, are independent of the Company's management and each has management experience and specialized knowledge in finance, accounting, legal matters, etc. Important matters related to management at Board of Directors' Meeting (drafting medium- to long-term strategy, reviewing business portfolio, etc.) are decided through thorough discussion between these outside directors with their diverse knowledge and specialized knowledge and the inside directors.
Board of Directors' Meeting is made up of three executive directors and six non-executive directors, and the non-Board of Directors' Meeting serves as chairman of Board of Directors' Meeting and leads the proceedings, strengthening the supervisory function of Board of Directors' Meeting. (Number of meetings held in fiscal 2022: 15 times)
Business Execution System
By resolution of Board of Directors' Meeting, we have established a structure in which we appoint a Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Technology Officer (CTO). The CEO is the chief executive officer for the entire corporate group consisting of our company and its subsidiary, the CFO is the chief officer in the field of finance, which requires an extremely high level of expertise, and the CTO is the chief officer in the field of technology development.
By adopting a so-called "three-headed system" in which the CEO is at the top and the CFO and CTO complement or support the CEO's functions, it will be possible to operate business based on more advanced and effective management decisions.
the Audit and Supervisory Committee
the Audit and Supervisory Committee will be composed of one full-time internal director and four outside directors who will be independent of the Company's management, a total of five members, after the conclusion of the Ordinary shareholders' meeting for the fiscal year ending March 2023. In addition, as organization to support the activities of the Audit and Supervisory Committee, the Audit and Supervisory Committee Office has been established under its direction, with a full-time dedicated person assigned to it. (Number of meetings held in fiscal 2022: 19)
Nomination and remuneration of directors
When Board of Directors' Meeting determines the following matters related to the nomination of directors, the Nomination Advisory committee which is an advisory body to the Board of Directors (comprised of a majority of outside directors and the chairperson of the committee by an outside director), is to verify the fairness and appropriateness of the decision-making process.
- Proposal for the shareholders' meeting regarding the appointment and dismissal of directors
- Succession planning
- Criteria for selection and dismissal of directors
- Independence Standards for Outside Directors
- Rules for determining directors' remuneration and its amount
- Remuneration for individual directors
Business Execution System
By resolution of Board of Directors' Meeting, we have established a structure in which we appoint a Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Technology Officer (CTO). The CEO is the chief executive officer for the entire corporate group consisting of our company and its subsidiary, the CFO is the chief officer in the field of finance, which requires an extremely high level of expertise, and the CTO is the chief officer in the field of technology development.
By adopting a so-called "three-headed system" in which the CEO is at the top and the CFO and CTO complement or support the CEO's functions, it will be possible to operate business based on more advanced and effective management decisions.
The Executive Directors supervise the execution of the business units, business units supporting unit or corporate departments or group companies under their jurisdiction, by themselves or by Corporate Officer assigned under their control, and are responsible for the compliance with and implementation of our internal controls system. The executive directors are also responsible for the appropriateness of the internal controls system in their capacity as members of Board of Directors' Meeting, which determines the internal controls system.
the Audit and Supervisory Committee (hereinafter referred to as "the Company") supervises the status of compliance with and implementation of the internal control system related to the execution of duties by the executive directors. For this purpose, he/she personally inspects the status of the Company and group companies as necessary, confirms and verifies the content of information provided by the executive side, and requests direct explanations from the executive directors and other parties involved in the execution of their duties. In addition to the above, the Audit and Supervisory Committee is responsible for the appropriateness of the internal controls system in its capacity as a member of Board of Directors' Meeting, which determines the internal controls system.
corporate governance System
governance system Diagram (After the 176th Ordinary shareholders' meeting)
committee Activities
Fujikura Group has voluntarily established and operates the following organizations:
| name | overview | composition | Number of events *2 |
|---|---|---|---|
| Nomination Advisory committee | An advisory body to Board of Directors' Meeting established to ensure objectivity and transparency in the decision-making process for the nomination of director candidates | the chairperson of the committee: Director Yamaguchi *1 Member: Director Hanasaki *1 Director Yoshikawa *1 President Director, President and CEO Okada |
6 times |
| Remuneration Advisory committee | An advisory body to Board of Directors' Meeting established to ensure objectivity and transparency in the decision-making process regarding director compensation. | the chairperson of the committee: Director Yoshikawa *1 Member: Director Yamaguchi *1 Meguro Director *1 President Director, President and CEO Okada |
7 times |
| Business Innovation committee | Organization for considering and promoting the efficiency of management resources (including governance) and business portfolio optimization | the chairperson of the committee: Representative Director, President and CEO Okada, consisting of executive directors and Corporate Officer | 23 times |
| Sustainability strategy Meeting | An organization that promotes activities necessary for "sustainable corporate management," including the formulation of sustainability goals that include the perspectives of environmental, social, and financial materiality. | Chairman: Representative Director, President and CEO Okada (Consists of Executive Directors and Corporate Officer | 3 times |
| risk management committee (Including the Group Crisis Response committee) |
An organization that examines the Company's business execution system and execution status from the perspective of risk (including compliance), prevents and evaluates the occurrence of losses, formulates policy, and shares information. | the chairperson of the committee: Representative Director, President and CEO Okada, consisting of executive directors and Corporate Officer | 19 times |
*1 Outside director
*2 Number of events held in 2022
Directors' Remuneration, etc.
① policy for determining director remuneration
The Remuneration Advisory policy committee, which is an advisory body to Board of Directors' Meeting, is composed of the director in charge of human resources and three outside directors, and the chairperson of the committee is an outside director in determining the remuneration of directors who are not members of the Audit and Supervisory Committee. After the report, it will be resolution by Board of Directors' Meeting. Determination on the details of remuneration for individual directors The contents of policy are as follows.
In addition to handling a wide variety of products, we are developing business globally, and the duties of directors are advanced and diverse. For this reason, the level of remuneration for directors is based on a level appropriate for excellent human resources who can handle these tasks, and the remuneration of directors is structured in the following three categories with reference to the results of surveys conducted by multiple research organizations, mainly for listed companies. In addition to being based on objective indicators and evaluations, we have re-established a remuneration system that is more linked to business performance.
Basic Remuneration
This portion corresponds to the monitoring and supervision function of directors and is set at a fixed amount according to position and grade.
Short-term performance-linked compensation
A basic amount is set for each position and grade according to the company's overall performance or the performance of unit in charge, and payment is made in the range of 0% to 200% of the basic amount based on certain indicators (operating profit margin, return on equity (ROE), return on invested capital (ROIC)). These are indicators that are "indicators that easily reflect management policies" and "indicators that have a strong correlation with the degree of profit return to shareholders," and are adopted because they are highly compatible with the Company's growth strategy. The targets for indicators related to "short-term performance-linked compensation" in this business year were the above-mentioned indicators calculated from the consolidated fiscal year plan for the fiscal year ending March 2022, which was resolution by Board of Directors' Meeting at the end of the fiscal year ending March 2021. The amount of short-term performance-linked compensation to be paid in this fiscal year is determined by measuring the degree of achievement by comparing these indicators with the same indicators calculated from the consolidated business year results for the same period.
Stock-Based Compensation
In addition to the "basic remuneration" and "short-term performance-linked remuneration," the Company will offer common stock to directors as remuneration. The main purpose of this scheme is to increase directors' awareness of contributing to the improvement of corporate value by having them not only enjoy the benefits of rising stock prices, but also bear the risks of falling stock prices, thereby sharing the benefits and risks of stock price fluctuations with shareholders.
In principle, the shares will be delivered when the directors who are not audit and supervisory committee members retire from their positions.
Compensation that varies with business performance and stock prices (short-term performance-linked compensation and stock compensation) is expected to account for a maximum of approximately 40% of total compensation.
On the other hand, non-executive directors will receive only basic compensation, which is a fixed amount in consideration of their roles, and will not receive short-term performance-linked compensation or stock-based compensation.
policy for determining the compensation of Directors who are Audit and Supervisory Committee members and the determination of compensation, etc., are to be fixed compensation based on their responsibilities and taking into account the market environment, and the amount of compensation, etc., for each Director who is an Audit and Supervisory Committee member is to be determined through discussion among the Directors who are Audit and Supervisory Committee members within the compensation limit approval at the General Meeting of shareholders' meeting.
This policy is decided through discussion among directors who are audit and supervisory committee members.
② Total amount of remuneration for directors
| Classification | Total amount of remuneration, etc. | Total amount by type of remuneration, etc. | Number of people provided | ||
|---|---|---|---|---|---|
| Basic Remuneration | Performance-linked remuneration | Stock-Based Compensation | |||
| Directors who are not audit and supervisory committee members | 261 million yen | 261 million yen | 56 million yen | 30 million yen | 6 people |
| Directors who are audit and supervisory committee members (Excluding outside directors) |
30 million yen | 25 million yen | 5 million yen | - | 1 person |
| Directors who are audit and supervisory committee members (Outside Director) |
67 million yen | 67 million yen | - | - | 5 people |
1. The Company has no outside directors who are not Audit and Supervisory Committee members.
2. The above includes one director who is not an audit and supervisory committee member and who retired due to the expiration of his/her term at the conclusion of the 174th Ordinary shareholders' meeting held on June 29, 2022.
3. The targets and actual results for major indicators related to “short-term performance-linked remuneration” for the business year under review are as follows:
Performance-linked coefficient
| Indicator type | Target value (Consolidated management plan for the fiscal year ending March 2022) |
actual value (Consolidated management plan for the fiscal year ending March 2022) |
|---|---|---|
| Consecutive operating profit | 3.3% | 5.7% |
| Consolidated return on equity (ROE) | 3.9% | 20.4% |
4. Performance-linked remuneration for Directors who are Audit and Supervisory Committee Members was determined as remuneration for Directors who are Audit and Supervisory Committee Members based on the business performance results during the period in fiscal 2020 when they were Directors who were not Audit and Supervisory Committee Members.
5. Board of Directors' Meeting determines that the amount of remuneration for individual directors who are not members of the Audit and Supervisory Committee for the fiscal year under business is in line with Determination policy because the amount of remuneration for each individual director has been determined through the procedures described in (1) "policy Determination of Remuneration for Directors" above. In determining the remuneration of directors who are not members of the Audit and Supervisory Committee, the Remuneration Advisory committee verifies the fairness and appropriateness of the decision-making process with respect to the performance evaluation of each director, the marketability of the remuneration level, the remuneration system, and the specific amount of remuneration, and the Remuneration Advisory committee has reported that it is fair and appropriate. 6. the Audit and Supervisory Committee received a report from an Audit and Supervisory Committee member who attended the Remuneration Advisory committee with respect to the individual remuneration of directors who are not Audit and Supervisory Committee members for the fiscal year under business, and as a result of discussion, the process for determining the remuneration of directors who are not Audit and Supervisory Committee members in the Remuneration Advisory committee is appropriate, and in accordance with the provisions of Companies Act shareholders' meeting We have come to the conclusion that there is nothing special to be stated in the report.
7. Matters concerning resolution at shareholders' meeting regarding director remuneration, etc.
①The amount of compensation for directors who are not audit and supervisory committee members was resolution to be up to 600 million yen per year at the 169th Ordinary shareholders' meeting held on June 29, 2017. In addition, separately from the monetary compensation, the amount of stock compensation was resolution to be up to 120 million yen per year, with the upper limit of the number of shares being up to 285,000 shares per year (not applicable to outside directors). As of the conclusion of the Ordinary shareholders' meeting shareholders' meeting the time of the identification, the number of directors who are not audit and supervisory committee members is nine (of which there are no outside directors).
②The amount of remuneration for directors who are audit and supervisory committee members was resolution be up to 150 million yen per year (of which, up to 100 million yen is for outside directors) at the 174th Ordinary shareholders' meeting held on June 29, 2022. As of the conclusion of shareholders' meeting at that time, there are six directors who are audit and supervisory committee members (of which, five are outside directors).
Skills matrix for directors and Corporate Officer
The skills matrix below shows the main skills we believe are necessary to achieve the goals of 2025 Mid-Term Management Plan and the skills possessed by our directors and Corporate Officer.
| Enforcement/Non-enforcement | management | plan | Human Resources | governance | global | Finance | R&D | Technology | legal matters / compliance |
business experience * | gender | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Directors (names marked with an * indicate that the director is an outside director independent of the company's management) | ||||||||||||
| Masahiko Ito | Non-execution | C | male | |||||||||
| Naoki Okada | Execution | I, S, C | male | |||||||||
| Tatsuya Sakano | Execution | I, S, C | male | |||||||||
| Kazuto Iijima | Execution | male | ||||||||||
| Koji Naruke | Non-execution | I, T | male | |||||||||
| Hamako Hanazaki * | Execution | woman | ||||||||||
| Keiji Yoshikawa * | Non-execution | male | ||||||||||
| Yoji Yamaguchi * | Non-execution | male | ||||||||||
| Meguro Senior High School * | Non-execution | male | ||||||||||
| Corporate Officer (not serving concurrently as Director) | ||||||||||||
| Toru Hamasuna | Execution | I, S, T | male | |||||||||
| Keiko Shindo | Execution | woman | ||||||||||
| Yuuki Mori | Execution | male | ||||||||||
| Kawanishi Toriyuki | Non-execution | I, S | male | |||||||||
| Junji Fukuhara | Execution | S, T | woman | |||||||||
| Shuichi Nasu | Execution | T, C | male | |||||||||
| Tetsuya Mandama | Execution | male | ||||||||||
* Two items that are considered to be the main items are marked with circles as the upper limit.
* "business experience" corresponds to the business area fried in "2025 Mid-Term Management Plan".
"I" (Information Infrastructure) We will contribute to the construction of an information and communication infrastructure for the realization of a digitalized society through optical wiring solutions based on innovative optical technology and high-speed wireless communication technology of the future.
"S" (Information Storage) Unique electronic component technology and ultra-high-density optical wiring technology contribute to the construction of large-capacity components and data center for storing huge amounts of data.
"T" (Information Terminal) We contribute to the evolution of high-speed, large-capacity, and high-performance information terminals with high-definition electronic components, wiring, and mounting technologies. In addition, we regard automobiles as information terminals and contribute to the realization and evolution of CASE.
"C" (Carbon Neutral) Since carbon neutrality as an initiative to realize a sustainable society is an opportunity to create businesses, we will promote the business of our superconductivity technology and other technologies.
policy and procedures for nominating candidates for directors
policy for determining director candidates
For our company, a "Monodukuri company," to grow sustainably, it is important to establish a strong financial foundation and to formulate strategy backed by high technological capabilities. We believe that Board of Directors' Meeting should establish a system that allows it to decide important matters that are the core of our company's direction and growth strategy through sufficient and substantial discussion. As executive directors, we appoint human resource are capable of planning and promoting company-wide strategy with a high level of perspective, while as non-executive directors, we appoint human resource can appropriately and accurately supervise or advise on important matters that are the core of our company's direction and growth strategy, as well as business operations.
Procedures for deciding on candidates for directors
At Fujikura Group, when Board of Directors' Meeting decides on proposals for shareholders' meeting regarding the appointment and dismissal of directors who are not Audit and Supervisory Committee members (excluding outside directors), the chairperson of the committee are deliberated by the Nomination Advisory committee, an advisory body to Board of Directors' Meeting (consisting of Director, President and CEO, the Director in charge of human resources (currently Director, President and CEO also serves as such), and three outside directors, with an outside director as the chairperson). The Nomination Advisory Committee verifies that the decision-making process is fair and appropriate by deliberating on the original candidate proposals presented by Board of Directors' Meeting, including the director appointment criteria and the reasons for appointment, including the track record of each candidate, and reports the results of its deliberations to Board of Directors' Meeting. Based on this report, Board of Directors' Meeting decides on the director appointment proposals to be submitted to shareholders' meeting.
Analysis and evaluation of the effectiveness of Board of Directors' Meeting as a whole
As part of efforts to improve the effectiveness of Board of Directors' Meeting, we conduct a survey of all directors every year regarding the appropriateness of the meeting as a meeting body (length, frequency, meeting management, minutes, etc.), the appropriateness of the items on the agenda (timing of items on the agenda, importance, amount of information, etc.), the attitude of directors (participation in deliberations, etc.), and the secretariat system. We are continually working to improve the issues raised in the survey. Specifically,
- To enhance deliberations at Board of Directors' Meeting, improve various materials and hold information sessions for outside directors
- Anticipating, analyzing and deepening risk in order to avoid or reduce losses in business operations, and strengthening the system for rapid response when risks occur
- Improve the system so that Board of Directors' Meeting can focus on discussions centered on mid- to long-term Corporate Strategy etc., by reviewing the criteria for matters to be discussed at Board of Directors' Meeting meetings, etc.
We have been working on this.
As for issues going forward, further expansion of medium- to long-term strategy discussions is required. Meanwhile, there has been a noticeable increase in the frequency of Board of Directors' Meeting meetings and the amount of time spent on discussion. In order to enable more efficient discussions, issues have been raised such as the creation of materials that clearly focus on key issues and the earlier provision of information to directors.
