HOME > Sustainability > Corporate Governance

Sustainability

  • Get to know our story! Nippon Shokubai
  • Corporate Profile Video
  • Contact Us
For your inquiry

Corporate Governance

We are working on continuously improving our systems and their operation to strengthen and enhance a viable corporate governance.

Our basic approach to corporate governance

Under the Nippon Shokubai Group's Mission of TechnoAmenity - "Providing prosperity and comfort to people and society, with our unique technology," - we will increase our corporate value and achieve sustainable growth.
We consider viable corporate governance to be essential and have adopted initiatives toward that end. We ensure the rights and equality of our shareholders and maintain an open dialogue, collaborate with various stakeholders as appropriate, disclose information as appropriate and ensure transparency, ensure that the roles of Board Meeting and management teams relate to the appropriate execution of duties, ensure appropriate supervision of the execution of these duties and strengthen and enhance our internal control systems.

Our corporate governance system (as of June 21, 2022)

Roles and Functions of Various Bodies and Committees

Board Meeting
Comprising nine Members of the Board, including three Outside Members of the Board, Board Meeting supervises the business operations of each Member of the Board through reports, deliberations, and resolutions regarding important matters. In general, meetings are convened monthly under the chairmanship of a Member of the Board selected from members who are not executive officers by a resolution of the Board Meeting. Four Statutory Corporate Auditors, including two External Statutory Corporate Auditors, also attend to give advice and state their opinions when necessary.
Corporate Managing Committee
Comprising the President and executive officers, this committee generally convenes monthly to deliberate on items related to the implementation of basic policies and important management issues. Among proposals discussed by the Corporate Managing Committee, important issues are forwarded to Board Meeting for consideration.
Auditors Meeting
Comprising four Statutory Corporate Auditors, including two External Statutory Corporate Auditors, the Auditors Meeting usually convenes monthly, submits reports and engages in discussions and deliberations on important matters related to audits.
Accounting Auditor
Nippon Shokubai is audited by Ernst & Young ShinNihon LLC.
Nominating and Compensation Committee
An advisory body to the Board Meeting, this is a voluntary organization comprising three or more Members of the Board (including a majority of Outside Members of the Board). It advises on the election/dismissal of the President and Representative Member of the Board, as well as draft nominations of candidates for Members of the Board and Statutory Corporate Auditor positions and on compensation and bonuses for Members of the Board.
Nominating and Compensation Committee members
NameStatusAttendance rate
Kazuhiro NodaMember of the Board, President-
Tetsuo SetoguchiOutside Member of the Board100%
Miyuki SakuraiOutside Member of the Board100%
Mr. Kazuhiro Noda took office on June 21, 2022.
TechnoAmenity Promotion Committee
We promote sustainability activities based on our belief that promoting sustainability means implementing the Nippon Shokubai Group Mission "TechnoAmenity- Providing prosperity and comfort to people and society, with our unique technology." We consider promotion of sustainability activities as a core theme of our corporate management. The Committee is responsible for deciding policies and strategies therefor, providing instructions to relevant departments, and evaluating the results of the activities.
Internal Audit Department
The Internal Audit Department (6 members) conducts audits on the effectiveness and efficiency of each operational process, compliance and other matters from a standpoint independent from other executive sections, with the aim of enhancing internal control of the Company. It also works in cooperation with Statutory Corporate Auditors and the Accounting Auditor through mutual exchange of information and opinions, thereby improving internal audit operations.

Outline of the executive remuneration system

1. Basic Policy
  • To have Members of the Board put the Company’s mission into practice and provide an incentive to sustainably enhance corporate value
  • To have Members of the Board share interests with shareholders according to the Company’s business results and commensurate with their responsibilities
  • To set at a reasonable level in light of the Company’s business results, the level of employee salaries, and that of other companies
  • To have the Nominating and Compensation Committee, consisting mainly of independent Outside Members of the Board, deliberate on the matter, thereby ensuring transparency and fairness
2. Components of the Remuneration
Components of the remuneration for Members of the Board (excluding Outside Members of the Board) are basic remuneration, which is fixed remuneration, and bonuses and stock compensation, which are performance linked remuneration. Each will be determined in accordance with the policies in (1) through (3) below. The ratio of basic remuneration, bonuses, and stock compensation is generally 60%, 30%, and 10%, but is subject to change according to the Company’s business results, stock market conditions, and the degrees of achievement of targets by each individual as assessed by the target management system. Outside Members of the Board receive only basic remuneration as fixed remuneration because they oversee business operations from an independent standpoint.

(1) Basic remuneration
  • The remuneration shall be a monthly cash remuneration based on the position and responsibilities.
  • The amount of remuneration for Outside Members of the Board is determined by comprehensively considering the level of remuneration for the Company’s officers and that of other companies.
(2) Bonuses
  • Bonuses shall be monetary compensation to be paid at a certain time after the Ordinary General Meeting of Shareholders each year in order to raise awareness of the need to improve business performance in each fiscal year.
  • Evaluation indicators shall be the degree of achievement of key performance indicators (KPIs) and the degrees of achievement of targets by each individual as assessed by the target management system.
  • KPIs consist of “profit before tax” and “ROA (return on assets before tax),” with achievement ratings ranging from 0 to 150%.
(3) Stock compensation
  • To improve incentives to achieve the goals of the mid-term management plan and to link this with the value of the Company’s shares, shares and money will be delivered to Members of the Board upon their retirement.
  • Utilizing the share benefit trust mechanism, in accordance with the share delivery rules, performance-linked points, which are linked to the achievement level of the mid-term management plan, and fixed points, which are for the purpose of holding shares to share stock value, will be granted at a ratio of 1:1.
  • Performance-linked points will vary depending on the degree of achievement of KPI results in the final year of the mid-term management plan against the targets of the mid-term management plan set as KPIs.
  • KPIs consist of “operating profit” and “ROE (return on equity attributable to owners of parent),” with evaluation weights of 50% for “operating profit” and 50% for “ROE.” In addition, each achievement rating shall be in the range of 0 to 150%.
3. Process for Determining Remuneration
  • the Nominating and Compensation Committee, a voluntary advisory organization consisting mainly of independent Outside Members of the Board, has been established. The Committee deliberates on policies, systems, and issues related to the determination of remuneration for Members of the Board, as well as the appropriateness of the level of remuneration, and reports back to the Board meeting.
  • Based on the Committee’s report, the Board meeting determines the policy for determining the details of remuneration, etc. for each individual Member of the Board and details of remuneration, etc. within the framework of the amount of remuneration approved by the General Meeting of Shareholders. The President and Representative Member of the Board is delegated by the decision of the Board meeting the authority to determine the details of remuneration, excluding stock compensation, for individual Members of the Board, and accordingly make decisions in light of the contents of the Committee’s report.

*1 The above total amount of remuneration, etc., is based on the executive remuneration system prior to the introduction of Performance-linked Stock Compensation Plan, etc., which was resolved at the 110th Ordinary General Meeting of Shareholders.
*2 The number of persons and the amounts of remuneration above include one Member of the Board who stepped down during the fiscal year 2021.
*3 The total amount of remuneration, etc., includes bonuses of 150 million yen for Members of the Board which was resolved at the 110th Ordinary General Meeting of Shareholders.

Policy and procedure for election/dismissal of Members of the Board and
Statutory Corporate Auditors

The Board Meeting, including three independent Outside Members, decides on election/dismissal of management executives and nomination of candidates for Members of the Board and Statutory Corporate Auditors, taking thoroughly into account their expertise, experience, achievements, qualities, abilities, personalities and the like. Also, the Nominating and Compensation Committee, a voluntary organization consisting mainly of independent Outside Members of the Board, has been established to receive advice on election/dismissal of the President and Representative Member of the Board and nomination of candidates for Members of the Board and Statutory Corporate Auditors, thereby ensuring transparency and fairness in election/dismissal of the President and Representative Member of the Board, and nomination of candidates for Members of the Board and Statutory Corporate Auditors.

Evaluation of the effectiveness of the Board Meeting

Based on the results of analysis and evaluation of responses to a questionnaire, which was distributed to all Members of the Board and Statutory Corporate Auditors, an opinion exchange meeting was held between all independent Outside Members of the Board and the President and Representative Member of the Board. Based on these, the evaluation of the effectiveness of the Board Meeting was summarized at a Board Meeting.

 Points that required improvementEvaluation of the efforts made during the year and
the points that require further improvement
FY2020
  • Report to the Board Meeting on important medium-term plan strategies and issues for the year of Group companies
  • Continuous and detailed explanations and discussions on business strategies and issues in existing and new fields
  • Explanations and discussions of the status of cooperation with our stakeholders, including not only shareholders and investors but also customers and employees
The evaluation confirmed that the measures formulated in response to the points that required improvement identified in the evaluation of fiscal 2019 have been well implemented.
At the same time, with a view to further increasing the effectiveness of the Board Meeting, the evaluation identified points that require improvement: explanations and discussions to aid understanding of the entire business on "issues, risks and outlook" and "business environment and strategies including review of decision making in the past" of Group companies and in existing and new fields, which have been continuously conducted; improvement in preparation of materials and documents; holding opinion-exchange meetings for outside officers; and enhancement of training programs.
FY2021
  • Explanations and discussions, and improvement in preparation of materials and documents, to aid understanding of the entire business on “issues, risks and outlook” and “business environment and strategies including review of decision making in the past” of Group companies and in existing and new fields, which have been continuously conducted
  • Holding opinion-exchange meetings for outside officers
  • Enhancement of training programs
The evaluation confirmed that the measures formulated in response to the points that required improvement identified in the evaluation of fiscal 2020 have been well implemented.
At the same time, taking into consideration that the evaluation identified points that require improvement relating to the further strengthening corporate governance with a view to further increasing the effectiveness of the Board Meeting, we are going to implement enhancing the discussion as to management policies and strategies at the Board Meeting and the monitoring and advisory functions to the execution of operation, making and disclosing the skills matrix of the Board Meeting, cultivating the candidates of the officers assuming our sustainable growth, for the purpose of “strengthening corporate governance” aiming to achieve our sustainable growth and enhance the corporate value in the mid and long term which is indicated in our New Mid-term Management Plan starting from this fiscal year.

Cross shareholding

Under the Nippon Shokubai Group's Mission of TechnoAmenity - "Providing prosperity and comfort to people and society, with our unique technology" - we are willing to further advance our contributions to industry and society. To this end, Nippon Shokubai, as a chemical manufacturer, with a view to continuously improving its corporate value, believes that long and stable relationships of trust with business partners are important in development, production, sales and other activities. Based on this belief, we own shares of our partners for the purpose of crossshareholding when deemed necessary.
Each year, the Board Meeting, including three independent Outside Members of the Board, comprehensively examines all the listed shares we own by issue in light of the above purpose, taking into consideration the capital costs, and confirms the importance of the shareholding. We sell shares if it is judged no longer important to hold such shares. In the fiscal year 2021, we sold all shares of seven issues and a part of the shares of four issues. As a result, the number of issues of crossheld shares as of March 31, 2022 decreased from 70 as of the end of the fiscal year before introduction of the Corporate Governance Code (March 31, 2015) to 38.