Corporate Governance [Our Basic Stance]
Corporations are required to engage in effective governance that embraces transparency and compliance. Shindengen’s basic policy is to maintain and continually improve its management system to enable prompt and precise responses to the rapidly changing operating environment.
In addition, by separating management and execution, we allow for the coexistence of rapid decision-making and improved oversight of business execution while enhancing the effectiveness of the internal control system through which the Audit & Supervisory Board conducts independent audits. The management organization of our corporate governance system consists of a group of bodies serving different functions and includes the Board of Directors, the Management Committee, the Audit & Supervisory Board. These bodies pursue organic Group management through rapid decision-making and efficient business activities.
Regarding information disclosure, we continually strive to strengthen IR activities to enhance the fairness and transparency of management.
Corporate Governance System (April 2025)
Steps toward Corporate Governance Enhancement
Shindengen conducts business in line with its management philosophy of “Together with society,our customers, and our employees” and in a manner that values all of its stakeholders. Our management team is highly motivated, ethical, and committed to improving corporate value and ensuring compliance through efficient and transparent management.
Progress in Strengthening Governance
| 2006 | Introduced an executive officer system |
| 2013 | Established a CSR Committee |
| 2014 | Introduced an outside director system |
| 2017 | Established a Compliance Committee |
| 2019 |
Abolished stock option system |
| 2021 |
Established Nomination and Compensation Committee |
| 2022 | Moved to Prime Market following revision of Tokyo Stock Exchange market classification |
| 2023 | Renamed CSR Committee to Sustainability Committee |
Compliance with the Corporate Governance Code
Shindengen seeks to meet the expectations of and build trusting relationships with diverse stakeholders including customers, shareholders, investors, suppliers, employees, government and administrative agencies, and local communities. We are committed to engaging in appropriate dialogue with stakeholders and providing information disclosures and explanations in accordance with the Corporate Governance Code.
In November 2021, we established a Nomination and Compensation Committee as an advisory body to the Board of Directors. It consists of two outside directors and the Representative Director. The committee considers and debates topics, such as director nominations and appropriate compensation, and reports to the Board of Directors as required.
We are working even harder to strengthen our governance structure in light of that.
Status of compliance with each principle of the Corporate Governance Code
Please refer to the Corporate Governance Report.
Authority and Role of the Nomination and Compensation Committee
To improve the supervisory functions of the Board of Directors and enhance our corporate governance system by further establishing the objectivity and transparency of the procedures concerning the nomination and compensation of directors, Shindengen established a Nomination and Compensation Committee as a voluntary advisory body to the Board of Directors.
The majority of the Committee is made up of independent outside directors, one of whom
also serves as the chairperson.
Officer Compensation
The basic policy behind Shindengen’s director compensation is that the compensation system should be linked to shareholder profit so that it can function sufficiently as an incentive to work towards sustained growth in corporate value, and that compensation for each director should be set at an appropriate level that reflects their individual responsibilities. Specifically, compensation for directors (including outside directors) is composed of monetary and non-monetary compensation.
Monetary compensation is made up of basic compensation (fixed compensation) and variable compensation (performance-based compensation) that depends on the fiscal year’s performance and medium- to long-term performance. Performance-based compensation is based on a combination of short-, medium-, and long-term indicators and ESG-oriented indicators, and the amount of compensation reflects factors such as position. Non-monetary compensation is defined as compensation in the form of restricted stock, and a portion of compensation is granted as restricted stock in accordance with internal regulations stipulating monthly sum criteria based on position and other factors, within the maximum amount (i.e., within 60 million yen per year) approved at the General Meeting of Shareholders.
Regarding the performance-linked portion of compensation for each individual, the Nomination and Compensation Committee reports the results of its deliberations to the Board of Directors, and after the Board of Directors has deliberated on them, the specific details are delegated to the President and CEO based on the resolution of the Board of Directors.
Assessment of the Effectiveness of the Board of Directors: FY2024
To improve the functions of the Board of Directors, Shindengen evaluates the Board’s effectiveness once a year. A summary of the results for FY2024 is as follows.
1.Analysis and Assessment Process
A survey on the effectiveness of the Board of Directors was administered to six directors (two of whom were outside directors) and three auditors (two of whom were outside auditors).
Discussions were held on the results and an assessment was compiled, incorporating the opinions of an outside organization as well.
2. Summary of the Assessment Results
The survey identified matters the Board of Directors considers important for effectively performing its roles and responsibilities (the constitution and management of the Board of Directors, management strategy and business strategy, etc.), as well as corporate ethics, risk and crisis management, performance monitoring, and management evaluation. The results of the survey have confirmed the Company’s Board of Directors is fulfilling its duties and functioning effectively in the following areas.
・The members of the Board of Directors are aware of their individual responsibilities, engage in
constructive discussion and opinion exchange, and operate effectively.
・Among the strengths of the Board of Directors are the effectiveness of its whistleblowing
system, reporting and appropriate handling of significant risks, and reporting on deliberations
from the Nomination and Compensation Committee.
・Improvements were seen in terms of the issues leading up to the previous assessment,
including provision of information to outside officers, more vigorous debate cognizant of
capital cost and efficiency, the monitoring of indicators to improve business execution
reports, and role-based assessments of officer performance.
However we also confirmed issues that needed further improvement, such as provision of
information to outside officers, more vigorous debate based on an awareness of capital costs
and capital efficiency, improvements in business execution reports based on monitoring
indicators, and officer performance assessments according to their role.
3. Future Measures
Based on these results, the Company’s Board of Directors will make continuous improvements
and endeavor to improve its effectiveness even further.
