Governance
/ Corporate Governance /
Basic Approach to Corporate Governance
As a chemical materials manufacturer that aims to increase our corporate value through efficient and sound corporate management, we position corporate governance as an important management issue in order to become a company that is widely trusted by society.
In addition, we have established "Corporate Governance Policy"; to show our specific direction for strengthening corporate governance, and review it from time to time.
New Japan Chemical’s Corporate Governance
Corporate Governance System
Roles and functions of each institution and committee
Board of Directors
Four of the nine directors of the Board of Directors are external directors. External directors possess various backgrounds such as experience in corporate management, finance and accounting expert knowledge, and legal specialization. We ensure that the Board of Directors is able to discuss issues from multiple perspectives.
In principle, the Board of Directors meets once a month, and extraordinary meetings are held as necessary to make decisions on important management matters and to supervise the execution of duties by executive directors and corporate officers.
Nomination & Compensation Committee
As an advisory committee for the Board of Directors, we established the Nomination and Remuneration Advisory Committee, consisting of five directors, including four outside directors, and is chaired by an outside director.
The Board of Directors decide on the appointment and dismissal of Directors and remuneration, etc. based on the reports of the Nomination and Remuneration Advisory Committee.
Audit and Supervisory Committee
The Audit and Supervisory Committee consists of three directors, including two external directors; the one who possess finance and accounting expertise, the one an attorney. Full-time Audit and Supervisory Committee members attend the Board of Directors’ meetings, management meetings as well as other important conferences to effectively audit the management policy, decisions on important matters, and Directors’ execution of operations.
In addition, employees of the Audit Office, who are independent from the Executive Directors, assist the Audit and Supervisory Committee.
Accounting Auditor
We have appointed Ernst&Young ShinNihon LLC. as our Accounting Auditor. The Accounting Auditor conducts appropriate accounting audits in accordance with the audit plan and in accordance with laws and regulations at the interim and fiscal year-end, as well as during the fiscal year, as appropriate. In addition, the Accounting Auditor works closely with the Audit and Supervisory Committee by exchanging audit information as necessary.
Management Meeting
Consisting mainly of Directors and Executive Officers, makes decisions on specific matters related to business execution and deliberates in advance on matters to be resolved by the Board of Directors.
CSR Committee
With the President as the Chairman makes decisions and coordinates activities to promote and strengthen CSR management.
Compliance Committee
Consisting mainly of Executive Officers and presidents of our domestic consolidated subsidiaries, promotes compliance measures, including the effective management and improvement of the internal reporting system.
Governance Strengthening Advancements
In FY2016, we transitioned into a company with an Audit and Supervisory Committee. In addition, in FY2019, we established a Nomination & Compensation Committee, and in FY2020, we increased the ratio of external directors to the majority. In FY2023, we elected one woman board member to improve the diversity in the board of directors.
The Board of Directors Activities
The Board of Directors held 16 meetings in FY2023.
Main activities of The Board of Directors in 2023
| Capital Efficiency | Improve financial strength through reduction of policy shareholdings, etc. |
| Risk Management | Review to the Group business strategy with a focus on joint venture subsidiaries |
| Business Restructuring | Analysis of each product and Review of production system for business portfolio optimization |
Nomination and Compensation Committee Activities
In order to strengthen the objectivity and transparency of the decision-making process of the Board of Directors, we have established a Nomination and Compensation Committee as a consultative body. The committee held 4 meetings, in FY2023.
Main activities of Nomination and Compensation Committee in 2023
| Regarding Nomination | Regarding Nomination of Director Candidates |
| Regarding Nomination of Executive Officer Candidates |
| Regarding Compensation | Regarding Director Individual Remuneration for this Fiscal Year |
| Regarding Evaluation of executive officers' achievement of goals and performance of duties | |
| Regarding executive officers' Individual Remuneration, including evaluation-linked remuneration, for this Fiscal Year |
Director Remuneration
In regards to our company’s policy for determining director remuneration, we decide as listed in the following. In the revision of this policy, the Nomination and Compensation Committee is consulted on the draft, and the Board of Directors adopts a resolution based on its report.
Director Remuneration (Excluding Audit and Supervisory Committee Members, and External Directors)
Director remuneration only includes base remuneration. Base remuneration is paid in the monthly prorated amount for 12 months according to the director position and role. However, if we conclude it is not appropriate to pay the amount of base remuneration due to a significant deterioration in the company's performance, we will reduce the amount. Regarding performance-linked bonuses, we will consider its introduction based on select performance indicators and calculation methods for the amount of remuneration.
Remuneration for Audit and Supervisory Committee Members, and External Directors
From the viewpoint of independency and role, we will only pay the basic remuneration that is established according to the role. The monthly prorated amount will be paid every month for 12 months.
FY2023 Directors Remuneration Total Amount
| Total Amount of Remuneration, etc. （Millions of Yen） |
Number of Eligible Directors （Number of people） |
|
| Directors (Excluding Audit and Supervisory Committee Members) (External Directors) |
103 （12） |
7 （3） |
| Directors (Audit and Supervisory Committee Members) (External Directors) |
30 （16） |
4 （3） |
Evaluation of the Board of Directors efficiency
Every year, we strive to improve the function of the Board of Directors by evaluating the effectiveness of the Board of Directors. For the 8th evaluation, we conducted a questionnaire survey on each director for the Board of Directors meeting held in FY2023, and discussed it at the Board of Directors based on the results.
Results of the evaluation (Target : Board of Directors held in FY2023)
| Evaluation Agenda | Evaluation Summary |
|---|---|
| Board of Directors’ Structure | The diversity of the Board of Directors is maintained to a certain degree with one female director appointed in addition to the four external directors. In the future, consideration should be given to appointing technical personnel to the Board of Directors. |
| Board of Directors’ Operations | Meeting frequency and reported content are generally appropriate. However, due to the broad scope of proposals to the Board of Directors, it is difficult to deepen the discussion on medium- and long-term strategies and management risks. It should be proceeded that individual cases delegate to the executive side. |
| Board of Directors’ Discussion | Active discussions take place, including external directors. However, the focus tends to be on deliberation of individual proposals, so it would be better to have an opportunity to discuss strategic direction and issues from the earlier business conception stage. |
| Provision of information to External Directors | Prior explanations and information on matters to be discussed at Board of Directors meetings are generally provided appropriately. Further, it should be provided more information about the risks our group faces and how to manage them should be provided. |
Compliance
Based on our management philosophy and CSR policy, we have established a "Code of Conduct" that defines the standards to be observed by the officers and employees of our group in the course of their corporate activities, and we are working to ensure thorough compliance.
By distributing handbooks that explain the Code of Conduct in an easy-to-understand manner and conducting training sessions, we are working to prevent and quickly correct compliance-related problems.
CSR
/ Social Responsibility /
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CSR of New Japan Chemical
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Environment
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Society
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Governance
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Health and Safety Initiatives
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Quality Assurance Initiatives
