Our Basic Stance
Corporations are required to engage in effective governance that embraces transparency and compliance. Shindengen’s fundamental principles are 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 organizational structure of our corporate governance system is an internally connected group of bodies working closely together and includes the Board of Directors, the Management Committee, the Audit & Supervisory Board,the Technology- and Quality- Policy Meeting, the General Managers’ Meeting, and the Divisional Directors’ Meeting. Regarding information disclosure, we continually strive to strengthen IR activities to enhance the fairness and transparency of management.
Corporate Governance System (April 2023)
Compliance with the Corporate Governance Code
Effective governance structures ensure honesty and further the confidence of shareholders and other stakeholders. At Shindengen,we are continually striving to improve the effectiveness, efficiency, and transparency with which we operate. Facilitating appropriate dialogue with all stakeholders (customers, shareholders, investors, suppliers, employees, government, administrative agencies, and local communities) is essential.
In November 2021, we established a Nomination and Compensation Committee as an advisory body to the Board of Directors. It consists of all outside directors and three representative directors. The committee considers and debates topics such as director nominations and appropriate compensation and reports to the Board of Directors as required. Furthermore, as a result of a revision in the Tokyo Stock Exchange categories in April 2022, our company moved to the Prime Market. We are working even harder to strengthen our governance structure in light of that.
Authority and Role of the Nomination Committee/Compensation Committee
To improve the supervisory functions of the Board of Directors and enhance our corporate governance structure by further establishing the objectivity and transparency of the procedures concerning the nomination and compensation of directors, we established a Nomination and Compensation Committee as a voluntary advisory body to the Board of the Directors. The majority of the Committee is made up of independent outside officers, and an independent outside officer serves as the chairman as well.
The basic policy behind Shindengen’s director compensation is that it should be a compensation system that is linked to shareholder profit so that it can function sufficiently as an incentive to work towards sustained growth in corporate value, and the 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 a 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. Regarding the performance-linked part of compensation amounts 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: FY 2023
To improve the functions of the Board of Directors, Shindengen Electric Manufacturing Co., Ltd. analyzes and assesses the board’s effectiveness once a year and discloses a summary of the results. In FY 2022, the Board of Director’s effectiveness assessment (self-assessment) was carried out using the following analysis and assessment method. A summary of the results is given below.
Analysis and Assessment Process
A survey about the effectiveness of the Board of Directors was administered to six directors (two of whom were outside directors) and four auditors (three of whom were outside auditors). Discussions were held on the results and the assessment was compiled, incorporating the opinions of an outside organization as well.
Summary of the Assessment Results
The survey checked the matters the Board of Directors considers important for effectively performing its roles and responsibilities (the constitution and management of the Board of Directors, deliberations about strategy, etc.), and also checked the involvement of the Board of Directors in issues such as the governance structure the market expects, and issues about sustainability. As a result of the survey, we confirmed from the points below that the company’s Board of Directors is fulfilling its duties and functioning effectively.
・The Board of Directors is effectively operated. The members are aware of their individual responsibilities and hold constructive debates and exchanges of opinion.
・When the Board of Directors deliberates important matters, they set aside enough time for deliberations, management issues and problematic matters are appropriately discussed and reported, and both business execution and supervision are functioning effectively.
However we also confirmed issues that needed improvement, such as better officer training and provision of information to outside officers, more vigorous debate based on an awareness of capital costs and capital efficiency, the appropriate sharing of risk information by management, the stabilization of the operations of the Nomination and Compensation Committee, and timely and apt feedback to the Board of Directors.
Based on these results, the company’s Board of Directors will make continuous improvements and endeavor to improve its effectiveness even further.