Basic Policy on Corporate Governance
Through fair and efficient corporate activities, the Company always intends to be trusted by all our stakeholders including shareholders, customers, partner companies, local communities and employees, and to be a continuously growing company, while making a further contribution to the international community. In order to realise that intention, the Company considers that the enhancement of corporate governance is one of the most important issues for proper corporate management and is aggressively taking various kinds of measures.
Also, in order to be trusted further by society and stakeholders, we will disclose information quickly in fair and accurate manner prescribed in laws and regulations and actively disclose information that we consider is beneficial to deepen their understanding of the Company. Thus we will further enhance the transparency of the Company.
Corporate Governance System
The Company has adopted the current system with the thought of traditional statutory auditor system being the foundation and establishment of Advisory Committee on Personnel and Remuneration, etc. and appointment of highly independent Outside Directors enables enhancement of governance.
[Board of Directors]
The Board of Directors consists of 7 members. As a general rule, the Board of Directors is held to discuss important management issues in addition to the matters stipulated in laws, regulations and the Articles of Association once a month, and as required. It arrives at a decision after sufficient discussion from the viewpoint of the compliance to laws, regulations and business ethics, etc. Moreover, the Board of Directors is trying to reinforce the monitoring of business execution. In addition, the Company has elected 2 Outside Directors who maintain high degree of independence and have no possibility of causing conflict of interest between them and shareholders to further enhance supervision to management and receiving beneficial advice and indication to the management of the Company based on rich experience and professional knowledge.
Also, the Company has introduced Managing Officers system for the purpose of enabling the agile execution of operation and clarifying individual responsibilities.
In order to clarify managerial accountability for individual Directors and flexibly respond to the changing business environment, the term of each Director is set to one year.
[Executive Committee and other various meetings on management and execution of operation]
The Company holds meetings attended by Representative Directors and other Directors and Managing Officers concerned to quickly deliberate and decide important managerial issues and measures to be taken. In addition, the Company holds meetings attended by Directors, Company Auditors, Managing Officers and Executive General Managers, etc. to report and exchange information related to management. Both meetings are regarded as Executive Committee meetings and are held periodically and whenever necessary.
Also, various meetings are held periodically and whenever necessary to deliberate business plans etc. and to receive reporting on operation of the company, enabling the Company to appropriately plan, identify administrative issues and grasp the situation on execution of operation.
In such way, the Company is enhancing efficiency of decision making at the Board of Directors meetings and supervision on execution of operation.
[Advisory Committee on Personnel and Remuneration, etc.]
Aimed to enhance fairness, clarity and objectivity upon electing candidates for Directors and Auditors, as well as deciding remuneration of Directors, as an advisory committee for the Board of Directors, the Company establishes “Advisory Committee on Personnel and Remuneration, etc.”.
The majority of the committee is Outside Directors/Company Auditors.
The Committee discusses issues such as election standards and adequacy of candidates for Directors and Auditors, as well as adequacy of system and level of Director’s remuneration. The Board of Directors decides based on their results.
Decision for election and remuneration of Managing Officers are also based on results of the Committee’s discussion.
[Corporate Governance Committee]
For sustainable growth and enhancing the mid- and long-term corporate value of the Group, the Corporate Governance Committee has been in place to advance compliance with laws and relations and examine matters including risk management as well as promote the implementation of measures and policies thereof.
[Company Auditor’s Audit]
The Audit & Supervisory Board of the Company is composed of 5 Company Auditors including 3 Outside Company Auditors.
Each Company Auditor complies with the audit standards for Company Auditors defined by the Board of Auditors, the audit policy, the segregation of duties, etc., and conducts an audit for the adequate management of the Company by attending the Board of Directors and other important meetings such as Management Meeting, inspecting documents including those circulated internally to obtain approval and the minutes of a meeting and receiving reports and comments about the business status from Directors, employees, etc.
In addition, Company Auditors endeavour to strengthen the cooperation with an Accounting Auditor by exchanging opinions and sharing information as required. For example, they receive a periodic report on the matters such as audit plan, the results of quarterly review and the implementation status of annual audit from an Accounting Auditor, understand the status of audit implementation through the attendance at an accounting audit, etc., and receive a report on the audit quality control activities of the audit corporation.
Moreover, Company Auditors confirm the audit plan and theme proposed by the Audit Division and a report on business audit made by the Division.
To assist the duties of Company Auditors, the Company established the Secretariat of Audit & Supervisory Board, a department of dedicated staff members, which is independent of the chain of command and Directors.
The structure of the Audit Division, an independent internal audit organisation, which reports directly to the President, was reinforced to have about 60 members this June.
Experts of each area of corporate business are assigned to the Audit Division to conduct a business audit of each department and the domestic and foreign affiliated companies of the Company based on audit plan. The business audit confirms arrangement and operation status of internal control such as the adequacy and efficiency of overall company business, the compliance with laws, regulations and internal rules and the management and maintenance status of assets through onsite audits and written survey. Based on the result, the Division provides advice and guidance until the improvement is made. The results of a business audit are periodically reported in conjunction with the proposed improvement plan for the findings to the Board of Directors and the Board of Auditors for the swift correction of the issues.
Moreover, as for the subsidiaries with internal audit department, the activity status of the department is confirmed. In addition, the audit plan and results are reported to obtain advice and guidance from the Company as required.
[Mutual cooperation of Supervision or Auditing by Outside Director or Outside Auditor for Internal Auditing, Auditor’s Audit and Financial Audit, and relationship with departments of internal control]
The Outside Director receives the results of the Internal Auditing by the Audit Division, Company Auditor’s Audit and Financial Audit, and the results of evaluation on internal control in terms of financial report at the Board of Directors. The Outside Company Auditor also receives the same results, and as stated later, strengthens cooperation with Independent Auditor and Audit Division.
Departments responsible for internal control report on plans and proposals, and operation on establishment of internal control to Outside Director and Outside Company Auditor at the Board of Directors as needed.
The outside Director and Outside Company Auditor periodically hold an opportunity to exchange opinions or information.
[Independence of Outside Directors and Outside Company Auditors]
As for independency when Suzuki elects the Outside Director and Outside Company Auditor, we follow “Standard for Independence of Outside Directors and Outside Company Auditors” established based on the criteria related to independency determined by Tokyo Stock Exchange. Suzuki reports all the elected Outside Directors and Outside Auditors to the Tokyo Stock Exchange as independent officers.
<The Standard for Independence of Outside Directors and Outside Company Auditors>
The Company will not elect any person who falls under any of the followings as a candidate Outside Director or Outside Company Auditor in order to ensure the independence:
- Persons concerned with the Company and its subsidiaries (“the Group”)
- (1)With regard to Outside Directors, any person who is or was a person executing business (Note 1) of the Group at present or in the past,
- (2)With regard to Outside Company Auditors, any person who is or was a Director, Managing Officer or employee of the Group at present or in the past, or
- (3)A spouse or a relative within the second degree of kinship of the present Director or Managing Officer of the Group.
- Persons concerned such as business partners or major shareholders, etc.
- (1)Any person who is a person executing business of any of the followings:
- ①A company of which major business partner is the Group (Note 2)
- ②A major business partner of the Group (Note 3)
- ③A major shareholder having 10% or more of total voting rights of the Company
- ④A company for which the Group has 10% or more of total voting rights
- (2)A person who is or was a representative partner or a partner of the Group’s Accounting Auditor at present or in the past five years
- (3)A person who receives a large amount of remuneration from the Group other than remuneration for Director/Company Auditor (Note 4)
- (4)A person who receives a large amount of donation from the Group (Note 5)
- (5)A spouse or a relative within the second degree of kinship of the person who falls under category from (1) through (4) above
- (1)Any person who is a person executing business of any of the followings:
- (Note 1) A person executing business : A director executing business, a managing officer, an executive officer or an employee
- (Note 2) A company of which major business partner is the Group : A company which belongs to the group of the business partner who receives 2% or more of its consolidated net sales in the latest business year ended of the group from the Group in any of the business year in past three years
- (Note 3) A major business partner of the Group : A company which belongs to the group of the business partner who makes payment 2% or more of the Group’s consolidated net sales or provides the Group with 2% or more of loans of its consolidated total assets in the latest business year ended of the Group in any of the business year in past three years
- (Note 4) A person who receives a large amount of remuneration : A consultant or legal or accounting expert who receives annual compensation 10 million yen or more (for the organisation, 2% or more of its annual total revenues) in any of the business year in past three years
- (Note 5) A person who receives a large amount of donation : A person who receives annual donation 10 million yen or more (for the organisation, a person directly involved in activities which is the purpose of the donation) in any of the business year in past three years
Policy on Determining the Amounts of Remuneration
[Remuneration of Directors]
The remuneration of Directors (excluding Outside Directors) shall function as the incentive for the sustainable growth of the Company, and consists of the basic remuneration for the applicable job title (fixed compensation), bonus which is linked to the business performance of each fiscal year and restricted share-based compensation which correlates to the mid- and long-term share prices. The compensation for Outside Directors is limited to the basic remuneration (fixed compensation).
The Board of Directors held on 29 June 2017 resolved that the basic remuneration (fixed compensation) and bonus should be 750 million yen or less (including the amount for Outside Directors, which shall be 36 million yen or less) per year.
The basic remuneration (fixed compensation) for each Director shall be determined and paid based on the consideration of the duties and responsibilities of each Director. The bonus is paid based on the calculation method which is linked to an index determined by the Company, such as consolidated business performance.
To use it as an incentive to continuously improve the corporate value by sharing the same value between Directors and shareholders, the Company offers the restricted share-based compensation. The Board of Directors held on 29 June 2017 resolved that the annual upper limit shall be 300 million yen and 100,000 shares.
When the General Meeting of Shareholders passed the resolution of the above, according to the Article of the Association, the number of Directors shall be 15 or less. As of the end of the General Meeting of Shareholders, the number of Directors is eight (including 2 Outside Directors).
The Company has selected consolidated operating profit as the index to calculate a bonus from the viewpoint of the profitability of the Company.
As for the restricted share-based compensation, the entitlement requirements include the service as a Director of the Company for a certain period or longer. The amount is calculated based on the standards for applicable job title.
The standard breakdown of the remuneration of Directors (excluding Outside Directors) is 40% of the basic remuneration (fixed compensation), 30% of the bonus and 30% of the restricted share-based compensation.
The remuneration of Directors is determined at the Board of Directors based on the policy and standards on how to determine the remuneration of Directors by the Advisory Committee on Personnel and Remuneration, etc. of which majority of members is Outside Directors, as well as the results of the deliberation on the validation of the remuneration system and levels.
[Remuneration of Company Auditors]
The remuneration of Company Auditors shall be only the basic remuneration (fixed compensation), and the Ordinary General Meeting of Shareholders held on 29 June 2017 resolved that it should be 120 million yen or less per year. The amount to be paid should be fixed by the discussion by Company Auditors, within the extent.
When the General Meeting of Shareholders passed the resolution of the above, according to the Article of the Association, the number of Company Auditors shall be five or less. After the General Meeting of Shareholders, the number of Company Auditors is five.