Governance

Policy and Procedure for Executive Remuneration

Policy

In order to realize the Group’s Corporate Philosophy, the following basic policy was newly formulated for our executive remuneration system.

  • ・ The system motivates executives to achieve our long-term growth strategy, Good to Great, and realizes the continual enhancement of our corporate value over the mid- to long-term
  • ・ Remuneration is set at the level of a truly global company, enabling us to secure excellent human resources, both inJapan and overseas for our management executives.
    The remuneration determination process is highly transparent and objective

In revising the executive compensation system, the basic policy on executive compensation and other general matters concerning the systems such as compensation level, compensation composition, evaluation indicators, and executive compensation regulations are determined by a resolution of the Board of Directors, based on deliberations by the Evaluation Committee, a discretionary advisory committee, of which the majority of members are outside officers.

Composition of Executive Compensation (FY2022)

Process and Decision-Making Authority for Executive Remuneration, Etc.

Individual executive remuneration is determined by the Board of Directors following deliberations on performance-linked remuneration and performance-linked, stock-based remuneration by the Evaluation Committee.
(The establishment of target values at the beginning of the fiscal year and evaluation of the level of achievement at the end of the fiscal year for individual officers for each fiscal year are determined based on interviews conducted by the Representative Director of the Board, President with the directors of the Board and executive officers themselves. The Evaluation Committee checks the rationality and appropriateness thereof. The Board of Directors determines the executive remuneration for each officer, after receiving the Evaluation Committee’s report.)

System Related to Remuneration Governance

We provide the following system, in order to strengthen the objectivity and transparency of the executive remuneration system and to ensure an executive remuneration scheme that is satisfying for stakeholders.

  • ・ Evaluation Committee
  • ・ Establishment of malus and clawback:
    We have regulations that enable us to confiscate the points awarded to directors of the Board who are eligible for the performance-linked, stock-based remuneration system, or to seek indemnification equivalent to the amount of stock paid in the event that such directors of the Board are found to have engaged inseriously fraudulent or illegal acts under this system.

Nomination of Candidates for Director and Audit & Supervisory Board Members

Candidates for director are nominated with an emphasis on the following matters, in consultation with the Nomination Committee.

  • ・ Candidates for internal director ：Nominate from amongst those who are in positions at production, business, rocurement, technology, and management departments, by comprehensively evaluating balance, experience, and ability
  • ・ Candidates for outside director ：Nominate from amongst those with management experience, lawyers, accountants, and others who possess a high level of insight and expertise as well as abundant experience, in light of our independence standards

* With respect to candidates for Audit & Supervisory Board members, the company places emphasis on experience in financial accounting and administrative divisions. In particular, candidates for outside Audit & Supervisory Board members are nominated with the consent of the Audit & Supervisory Board in light of the independence standards, with the same emphasis on a high degree of insight, expertise and experience as candidates for outside directors.

Standards to Ensure the Independence of Outside Directors and Outside Audit & Supervisory Board Members

When appointing outside directors and outside Audit & Supervisory Board members, we have established criteria for maintaining their independence and work to confirm that there are no circumstances that would cause conflicts of interest in accordance with the regulations. In addition, we stipulate that outside directors and outside Audit & Supervisory Board members should strive to maintain their independence and promptly report any case in which they may not be able to maintain their independence.

For details: Our policy and initiatives regarding the Corporate Governance Code (Japanese only)

https://www.kansai.co.jp/ir/governance/policy/pdf/gover20220630.pdf

Training for Directors and Audit & Supervisory Board Members

The Board of Directors implements the following measures to fulfill its roles and responsibilities:

  • ・ Hold lectures and discussions on themes related to management strategies by inviting external experts, according to the schedule of the officers meetings
  • ・ Have training for internal directors and Audit & Supervisory Board members, to ensure acquisition of the necessary knowledge and skills
  • ・ Conduct business site inspections and provide explanations for outside officers, with the aim of deepening their understanding of our business operations

Examples of Implementation in FY2021

  • ・ Held a briefing on our business status at the R&D Center at the Hiratsuka Plant, upon the appointment of Audit & Supervisory Board member YAMAMOTO.
  • ・ Invited an outside lecturer, and held a workshop on cyber risks.

Policy and Status of Cross-Shareholdings

As to whether or not we acquire and hold cross-shareholdings, we examine the economic rationality of such shareholdings on an annual basis, taking into account both quantitative and qualitative perspectives, including whether or not such shareholdings will contribute to improving corporate value not only in the short term but also in the mid- to long-term. As a result, we are working to reduce cross-shareholdings based on appropriate decisions from the perspective of capital efficiency.

We determine the approval/disapproval of the standards for exercising voting rights comprehensively, by carefully examining each proposal from the standpoint of improving the corporate value of investee companies, and maintaining relationships with them.

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