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Governance

Corporate Governance Strucures

Corporate Governance Structures

Corporate Governance Structures

The Oji Group has adopted a "COMPANY system" under which Oji Holdings oversees the formulation of Group management strategies and Group governance and each COMPANY, made up of closely-related businesses, plays a central role in business operations. This structure accelerates decision making by each business unit and clarifies management responsibilities.
In addition, as a company with Audit & Supervisory Board, Oji Holdings reinforces Group-wide governance through audits of the execution of duties by Directors carried out by the Audit & Supervisory Board Members and the Audit & Supervisory Board. The Board of Directors consists of 12 Directors (including four Independent Outside Directors) and the Audit & Supervisory Board consists of five Audit & Supervisory Board Members (including three Independent Outside Audit & Supervisory Board Members), and Representative Director and Chairman of the Board chairs the Board of Directors.

Corporate Governance Structures
Corporate Governance Structures

Composition of the Board of Directors

Board of Directors and Audit & Supervisory Board

Purpose of the Board of Directors

Based on its fiduciary responsibility and accountability for shareholders, the Board of Directors performs the following roles to promote sustainable growth and increase medium- to long-term corporate value of the Oji Group, and to improve profitability and capital efficiency.

  • The Board of Directors shall make decisions on important items of business execution within the bounds stipulated in the Board of Directors Regulations. The important items of business execution include formulation of management philosophy and management strategies which lay out the direction for the Group as a whole, and execution of investments based on these philosophy and strategies.
  • The Board of Directors supports prompt and decisive decisions regarding the issues/matters not pertaining to the Board of Directors’ resolutions, by determining in the Group Regulations the issues/matters that pertain to deliberation by Management Meetings and execution authority of Executive Directors.
  • The Board of Directors performs highly effective supervision of Executive Directors and Corporate Officers from an independent and objective standpoint.
  • The Board of Directors engages in construction of internal control systems, development of risk management systems, and supervision of their operational status.

Composition of the Board of Directors

The maximum number of Directors is 15 in principle, and at least 2 of them are Independent Outside Directors. In addition, 19 Corporate Officers, 7 of whom serve concurrently as Directors, are selected to speed up decision-making, strengthen the business execution system, and clarify executive responsibilities.

The Board of Directors, in order to fulfill a role necessary for achieving sustainable growth of and improvement of corporate value of the Group over the medium to long term, has been organized while giving due consideration to the balance of diverse knowledge and expertise concerning the business of the Group.
There are currently 12 Directors, 4 of whom are Independent Outside Directors (including two female Directors).
The Nomination Committee, which is an advisory body to the Board of Directors, deliberates upon the selection of candidates for Directors and the appointment of Group Corporate Officers before submitting a report to the Board of Directors. Regarding candidates for Audit & Supervisory Board Members, a report is submitted to the Board of Directors after consulting the Nomination Committee and obtaining the consent of the Audit & Supervisory Board.
The Nomination Committee consists of 4 Independent Directors, the Chairman, and the President, and the Board of Directors receives the report from the Nomination Committee, deliberates, and makes decisions.

Purpose of the Audit & Supervisory Board

Audit & Supervisory Board Members and the Audit and Supervisory Board conduct operational audits and accounting audits from an independent and objective standpoint, based on their fiduciary responsibility for shareholders.
Audit & Supervisory Board Members and the Audit and Supervisory Board strive to actively exercise their authority through actively combining the advanced information gathering capabilities of Standing Audit & Supervisory Board Members and the strong independence of Independent Outside Audit & Supervisory Board Members while maintaining cooperation with Independent Outside Audit & Supervisory Members.
Audit & Supervisory Board Members regularly meet with the Accounting Auditor to receive explanations on plans and implementation status of audits as well as financial statement audit results, and exchange opinions.
Audit & Supervisory Board Members and the Companyʼs Internal Audit Department meet once every month to exchange information on audit plans and results, and ensure cooperation between them.

Composition of the Audit & Supervisory Board

Audit & Supervisory Board is consisting of 5 Audit & Supervisory Members (including 3 Independent Outside Audit & Supervisory Board Members). Audit & Supervisory Board Members ensures transparency and monitors and verifies management. Audit & Supervisory Board Members attend the Board of Directors and other important meetings based on the audit plan established by the Audit & Supervisory Board to audit Directorsʼ execution of duties.
Teruo Yamazaki, an Audit & Supervisory Board Member, has experience in taxation, accounting and internal audit at Oji Group, and has considerable financial and accounting knowledge.
In addition, Noriko Sekiguchi, an Outside Audit & Supervisory Board Member, is a certified public accountant with a wealth of experience, advanced expertise, and broad insight into corporate accounting, as well as extensive practical experience in the corporate sector, and has considerable knowledge of finance and accounting.

Status of Activities by and Reason for Appointment of Independent Outside Officers

Independent Outside Directors and Independent Outside Audit & Supervisory Board Members

Status of Activities by and Reason for Appointment of Independent Outside Officers

Oji Holdings has appointed four Outside Directors and three Outside Audit & Supervisory Board Members, each of whom is designated as an Independent Officer. The Independent Officers attend Board of Directors meetings and the briefings (held basically twice a month) conducted by the officer responsible for the Corporate Governance Division regarding matters submitted to the Management Meetings and matters planned to be submitted to the Board of Directors meetings. The Independent Outside Directors make up the Nomination Committee and the Compensation Committee.
Persons with highly specialized and wide-ranging knowledge who are able to express opinions that are independent from management and from the perspectives of various stakeholders are selected as Independent Outside Director candidates, and persons with excellent character and insight, a high level of specialization, and extensive experience are selected as Independent Outside Audit & Supervisory Board Member candidates.
In FY2022, the attendance of the total of seven Independent Outside Directors and Independent Outside Audit & Supervisory Board Members at the Board of Directors meetings (15 meetings held) averaged 97.9%, and the attendance of Independent Outside Audit & Supervisory Board Members at the Audit & Supervisory Board meetings (13 meetings held) was 100%.

Main Activities of Independent Outside Officers in FY2020

Main Activities of Independent Outside Officers in FY2022

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Category Name Attendance at Board of Directors meetings Summary of statements made and duties performed with respect to expected role
Independent Outside Director Michihiro Nara Attended 15 of 15 meetings (100%) Fulfilled the role expected of him by making comments concerning the Companyʼs management from an independent standpoint, from a legal perspective as an attorney-at-law, and based on his extensive experience, high level of expertise, and wide-ranging insight
Independent Outside Director Sachiko Ai Attended 15 of 15 meetings (100%) Fulfilled the role expected of her by making comments concerning the Companyʼs management from an independent standpoint, from a multifaceted perspective from the business world, including the financial area, and based on her high level of expertise and wide range of insight
Independent Outside Director Seiko Nagai Attended 15 of 15 meetings (100%) Fulfilled the role expected of her by making comments concerning the Companyʼs management from an independent standpoint, from a multifaceted perspective, including professional viewpoints developed through customer service and university teaching activities, and based on her extensive experience, high level of expertise, and wide range of insight
Independent Outside Director Hiromichi Ogawa Attended 11 of 11 meetings (100%) Fulfilled the role expected of her by making comments concerning the Companyʼs management from an independent standpoint, from a multifaceted perspective, including professional viewpoints developed through management at retailers and food manufacturers, and based on her extensive experience, high level of expertise, and wide range of insight
  • *Concerning Mr. Hiromichi Ogawaʼs attendance at meetings of the Board of Directors, the scope of the total number of meetings includes only those meetings of the Board of Directors held after his appointment on June 29, 2022.

Main Activities of Independent Outside Audit & Supervisory Board Members in FY2022

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Category Name Attendance at Board of Directors meetings Attendance at Board of Audit & Supervisory Board meetings Statement at Meetings
Independent Outside Audit & Supervisory Board Member Hidero Chimori Attended 15 of 15 meetings (100%) Attended 13 of 13 meetings (100%) Made statements based on his extensive experience, high- level expertise and wide-ranging knowledge, in particular, in the corporate legal affairs and corporate governance field, as an attorney-at-law
Independent Outside Audit & Supervisory Board Member Noriko Sekiguchi Attended 14 of 15 meetings (93.3%) Attended 13 of 13 meetings (100%) Made statements based on her abundant practical experience at companies in addition to her extensive experience, high- level expertise and wide-ranging knowledge on financial accounting as a certified public accountant
Independent Outside Audit & Supervisory Board Member Takashi Nonoue Attended 10 of 11 meetings (90.9%) Attended 9 of 9 meetings (100%) Made statements based on her extensive experience, high- level expertise and wide-ranging knowledge as a public prosecutor and attorney at law.
  • *Concerning Mr. Takashi Nonoueʼs attendance at meetings of the Board of Directors and the Audit & Supervisory Board, the scope of the total number of meetings includes only those meetings of the Board of Directors and the Audit & Supervisory Board held after his appointment on June 29, 2022.

Nomination Committee and Compensation Committee

Purpose of Nomination Committee

The Nomination Committee deliberates and reports to the Board of Directors on the following issues/matters in order to strengthen the independence, objectivity, and accountability of functions of Directors concerning the nomination of Officers and Corporate Officers by obtaining appropriate involvement and advices from Independent Outside Directors.

  • Nomination policies for candidates for Directors and Audit & Supervisory Board Members
  • Appointment policies for Corporate Officers
  • Nomination of Directors and Audit & Supervisory Board Members, appointment of Corporate Officers
  • Dismissal of Directors, Audit & Supervisory Board Members, and Corporate Officers in cases where they do not satisfy the nomination and appointment policies
  • Succession planning for the Director of the Board, President
  • Appointment and dismissal of Advisors

Purpose of Compensation Committee

The Compensation Committee deliberates and reports to the Board of Directors on the following issues/matters in order to strengthen the independence, objectivity, and accountability of functions of Directors concerning the compensation of Directors and Corporate Officers by obtaining appropriate involvement and advices from Independent Outside Directors.

  • Compensation structure and levels for Directors and Corporate Officers
  • Evaluation of Directors and Corporate Officers
  • Analysis and evaluation of the effectiveness of the Board of Directors
  • Compensation structure and levels for Advisors

Structures of the Nomination Committee and the Compensation Committee and their meetings held in FY2022

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Position Name Nomination
Committee
Attendance Compensation
Committee
Attendance
Director, Chairman of the Board Masatoshi Kaku   1/1   2/2
Director of the Board, President Hiroyuki Isono Committee Chair 1/1 Committee Chair 2/2
Independent Outside Director Michihiro Nara   1/1   2/2
Independent Outside Director Sachiko Ai   1/1   2/2
Independent Outside Director Seiko Nagai   1/1   2/2
Independent Outside Director Hiromichi Ogawa   1/1   1/1
  • *Concerning Independent Outside Director Hiromichi Ogawaʼs attendance at meetings of each Committee, the scope of the total number of meetings includes only those meetings held after his appointment on June 29, 2022.

Policy on Determination of Director Compensation and Total Compensation Amount

Policy on Determination of Director Compensation and Total Compensation Amount

Policy on Determination of Director Compensation

Oji Holdings has designed its compensation programs with an emphasis on the roles performed by the Director compensation program such that the Board of Directors promotes sustainable growth and increasing medium- to long-term corporate value of the Company and pursues enhanced profitability and capital efficiency. The compensation program and determination policies are set forth in the Fundamental Policies on Corporate Governance. Director compensation comprises base compensation that is fixed compensation, bonuses that reflect short-term performance, and stock-based compensation that reflects medium- to long-term improvement in corporate value. Determinations are made by the Board of Directors based on recommendations submitted by the Compensation Committee. Evaluation for bonuses takes into consideration the overall status of achievement of evaluation items concerning ESG.
Please refer to the Annual Securities Report for details concerning performance-linked compensation including bonuses and stock-based compensation.

Ratios of Performance-linked Compensation and Non-performance-linked Compensation

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Position Fixed
compensation
Performance-linked compensation Total
Bonuses Stock-based compensation Total
Representative Director, Chairman of the Board 50% 25% 25% 50% 100%
Representative Director of the Board, President 50% 25% 25% 50% 100%
Representative Director of the Board, Executive Vice President 50% 25% 25% 50% 100%
Director of the Board, SeniorExecutive Officer 50% 25% 25% 50% 100%
Director of the Board, Executive Officer 50% 25% 25% 50% 100%
Independent Outside Director 100% 100%
  • *The payment ratios will fluctuate due to changes in performance-linked compensation such as bonuses and stock-based compensation.

Total Amount of Compensation for Each Officer Category, Total Amount of Compensation, Etc. by Type, and Number of Eligible Officers (FY2022)

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Officer category Total amount of compensation (million yen) Total amount of compensation, etc. by type (million yen) Number of eligible officers (persons)
Fixed compensation Performance-linked compensation
Bonuses Stock-based compensation
Directors (excluding Independent Outside Directors) 459 206 136 117 11
Audit & Supervisory Board Members
(excluding Independent Outside Audit & Supervisory Board Members)
55 55 2
Independent Outside Directors and Independent
Outside Audit & Supervisory Board Members
99 99 9

Policy and Process for Nomination of Directors and Audit & Supervisory Board Members

Policy and Process for Nomination of Directors and Audit & Supervisory Board Members

Policy

The Fundamental Policies on Corporate Governance of the Oji Holdings stipulate as a Director nomination policy that the Board of Directors shall comprise Directors with diverse knowledge and expertise concerning the business operated by the Group in a well-balanced manner. The Fundamental Policies also stipulate that candidates be nominated for Directors who possess excellent character and insight and who may contribute to the sustainable growth as well as the increase of medium- to long-term corporate value of the Group, and that candidates be appointed for Audit & Supervisory Board Members who are capable of executing the duties of Audit & Supervisory Board Members, and who possess excellent character and insight as well as high level of specialization and extensive experience.

Process

When nominating candidates for Directors, the Nomination Committee, an advisory body to the Board of Directors, deliberates and recommends to the Board of Directors. As for nomination of candidates for Audit & Supervisory Board Members, the Nomination Committee recommends to the Board of Directors with the consent of the Audit & Supervisory Board, following deliberation among the Nomination Committee. The Board of Directors receives reporting from the Committee, deliberates, and makes decisions.

Directors’ Skill Map

Oji Holdings has identified the skills that members of the Board of Directors should possess as described below, to ensure that the Board of Directors makes appropriate management decisions and is highly effective in the supervision of business execution to realize the Group's management strategies.

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Category Expected skills Relevance to Long-term Vision
Environmental issues Profitability improvement Product development
Corporate management Essential management skills necessary for the achievement of a sustainable business corporation and management strategies
Finance and accounting Skills necessary for contributing to the sustainability and growth of a corporation through finance as well as for oversight of management
Sales and marketing Skills necessary to achieve the sustainable growth of a corporation through understanding the needs of society and earning appropriate income
Manufacturing and technologies Skills essential for building an organizational structure for sustainable product supply, achieving higher productivity, addressing environmental issues, and making innovation out of the core technologies that have been built up
Research and development
Personnel and labor management Skills concerning the development and utilization of diverse human resources essential for the sustainable growth and evolution of a corporation and achievement of management strategies
Purchase and procurement Skills concerning stable procurement of raw materials as the foundation of production activities and the management of forests as sustainable sources of wood raw materials
Internationality Skills for managing international business activities essential for the Oji Group’s global business activities
ESG Skills concerning environmental, social, and governance aspects of corporate activities that are the foundation of corporate management and essential for sustainability
  • *Items marked with “●” have particularly high relevance.

The capabilities of each Director are as follows:

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Name Position Corporate management Finance and accounting Manufacturing and technologies Research and development Sales and marketing Personnel and labor management Purchase and procurement Internationality ESG
Masatoshi Kaku Representative Director and Chairman of the Board
Hiroyuki Isono Representative Director of the Board, President
Group CEO
Fumio Shindo Representative Director of the Board Executive Vice President
Kazuhiko Kamada Director of the Board
Senior Executive Officer
Shigeki Aoki Director of the Board
Executive Officer
Akio Hasebe Director of the Board
Executive Officer
Takayuki Moridaira Director of the Board
Executive Officer
Yuji Onuki Director of the Board
Executive Officer
Michihiro Nara Director of the Board
(Independent Outside)
Sachiko Ai Director of the Board
(Independent Outside)
Seiko Nagai Director of the Board
(Independent Outside)
Hiromichi Ogawa Director of the Board
(Independent Outside)
  • *● marks indicate the abilities that each Director possesses, but the abilities in which each Director can demonstrate greater strength and expertise are listed according to his or her position in the Company below. The list above is based on their positions, and does not represent all of the abilities possessed by each Director.

    Representative Director of the Board: Up to four (4)
    Director of the Board and Senior Executive Officer: Up to four (4)
    Director of the Board and Executive Officer: Up to three (3)
    Director of the Board (Independent Outside): Up to two (2)

Effectiveness Evaluation of the Board of Directors

The Fundamental Policies on Corporate Governance stipulates that the Board of Directors shall conduct analysis and evaluation of the effectiveness of the Board of Directors every year, and take required measures to ensure the effectiveness of the Board of Directors as a whole as well as disclose an overview of the findings. In order to evaluate the effectiveness of the Board of Directors, we conduct a survey on the role, structure, and operation of the Board of Directors from April to May every year with all Directors and Audit & Supervisory Board Members. The evaluation findings are analyzed by the Compensation Committee, in which Independent Outside Directors participate, and then deliberated by the Board of Directors based on the analysis results.
As a result of the analysis and evaluation of the Board of Directors of FY2022, it was confirmed our Board of Directors and its subordinate meetings have continued to function well. To a survey question on the roles of the Board of Directors in "formulating the Group management strategies and presenting the directions," many stated that fervent discussions by the Board of Directors including Independent Outside Directors on the issue from the stage of drawing up the FY2022 Medium-term Management Plan led to a clear presentation of the directions. Regarding the operation of the Board of Directors, to a question on "supervision of the management team," many respondents highly evaluated the Company's efforts to enhance the supervisory function of the Board including the enhancement of provision of information to Outside Officers. It was also noted that the agendas should be set with better considerations to allocate more time for discussions related to overall Group management. In response to this suggestion, the criteria for selecting the matters to be discussed at the Board of Directors meetings were reconsidered to allow the Board to focus on deliberating more important matters. Regarding the "composition and discussion of the Board of Directors," some commented that, while the current composition is well-balanced, discussion on future possibilities is needed of having Outside Directors as the majority of the Board or appointing an Outside Director to Chairman of the Board. In light of the evaluation findings, we will continue to consider and take measures necessary for the Board of Directors to function better.

Policy for Strategic Shareholding

The Company strategically holds shares that are expected to contribute to the sustainable growth of its business and the improvement of corporate value over the medium to long term as part of its management strategies for the purpose of business alliances and strengthening and maintenance of long-term and stable relationships with business partners. The Board of Directors examines for each individual stock every year whether the purpose of strategic shareholding is appropriate and whether the benefits and risks associated with strategic shareholding are commensurate with the capital cost to verify the appropriateness of the holding. In order to reduce strategic shareholding, we sell shares properly and appropriately if the rationality for holding them has diminished.