Corporate Governance
Policy and Basic Approach
Based on the Kansai Paint Group’s Mission Statement within our Corporate Philosophy, “we leverage superior technology to contribute to our customers and society in a sustainable manner, with innovative products and services, through a competent workforce, built on a culture of customer focus, integrity, and respect for our stakeholders,” we are working to enhance our medium- to long-term corporate value. To this end, with the recognition that enhancing corporate governance is an important management task, we are striving to establish a corporate governance organization as described below, in order to establish a highly sound, transparent, and efficient management system, including fulfilling management’s responsibility and accountability toward the shareholders and other stakeholders.
For details: Policies and initiatives concerning the corporate governance code (Japanese only)
Structure & System
Corporate Governance Chart (As of July 2024)
To ensure effective managerial oversight, we appoint outside directors and conduct internal audits by an internal audit section under the direct supervision of the President, as well as audits by Audit and Supervisory Board Members, including independent Outside Audit and Supervisory Board Members.
※As of July 2024
Management System and Business Execution System
Purpose：The Board of Directors monitors the business performance, status of execution, and progress of the medium-term management plan on a quarterly basis, and also deliberates on management policies and important matters stipulated in laws and regulations, the articles of association, and the Articles of incorporation and Board of Directors regulations
Criteria for number of meetings：In principle, at least once a month
Composition：5 internal directors and 3 external directors, 1 full-time audit committee member, 2 external audit committee members, (Chairman: President and Representative Director)
Choose board members：The composition of the Board of Directors is well-balanced in terms of diversity, including gender and international perspectives, and its members possess the knowledge and abilities necessary to effectively fulfill their responsibilities.
Purpose：
・ In addition to participating in deliberations and exercising voting rights in the Board of Directors, Audit and Supervisory Committee members audit the Board’s execution of duties and prepare audit reports.
・ The Audit and Supervisory Committee formulates opinions on the appointment, dismissal, and decisions not to reappoint Directors (excluding those who are Audit and Supervisory Committee members) and on matters such as compensation for Directors.
・The Audit and Supervisory Committee determines the specifics of regulations concerning the appointment, dismissal, and nonreappointment of the accounting auditor.
Criteria for number of meetings: In principle, at least once a month
Composition：1 Audit and Supervisory,Committee Member and 2 Outside Audit and Supervisory Committee Member
・ In order to further ensure the separation of supervisory and executive functions, issues related to management strategies and decisions on important executive matters and policies are made by the Board of Directors after deliberation by the Exco Meeting, which is led by the Representative Director and President, and other executive officers.
・ We have entered into an audit contract with KPMG AZSA LLC for audits related to the Companies Act and the Financial Instruments and Exchange Act, including internal control audits based on the Financial Instruments and Exchange Act.
・Nomination and Remuneration Committee
The Nomination and Remuneration Committee strives to make the Board more effective by deliberating on matters such as self-evaluations of the operations of the Board, evaluations of the performance of Directors and Executive Officers, and approach to Director compensation. Candidate Directors submitted for consideration by the annual General Meeting of Shareholders are selected by the Board following deliberation by this committee.
Nomination of Directors and Audit and Supervisory Committee Members
Candidates for Director are nominated in consultation with the Nomination and Remuneration Committee, with an emphasis on the following matter
・Candidates for internal Director: Nominated to achieve a well-balanced Board of Directors with due consideration of gender and international diversity and the insights and capabilities needed to fulfill the duties of the Board of Directors
・Candidates for Outside Director: Nominated from among those with management experience, attorneys, accountants, and others who possess high levels of insight and expertise, in addition to a wealth of experience, in accordance with our standards for Director independence
・Candidates for Audit and Supervisory Committee Members: Nominated with an emphasis on experience in financial accounting and administrative sections; candidates for Outside Audit and Supervisory Committee Members, in particular, are nominated with an emphasis on knowledge, expertise, and experience, in the same way as with Outside Directors, in accordance with our standards for Director independence and with the consent of the Audit and Supervisory Committee.
Composition of the Board of Directors and Directors’ experience and skills
The expertise we deem necessary in company management and expect from individual Directors are shown below.
The combinations of skills expected of Directors are used to formulate the appointment policy while optimizing and adding items and properly verifying them in accordance with the business environment, business characteristics, and other factors.
Initiatives
Improve the Effectiveness of the Board of Directors’ Meeting
In order to verify whether the Board of Directors is functioning effectively to “achieve sustainable growth and enhance our corporate value over the medium to long term,” and to work to improve that function, the Evaluation Committee evaluates the effectiveness of the Board of Directors every year. The extracted issues and proposals for improvement are shared at Board of Directors’ meetings, materialized for improvement and reform, and implemented. The results are then further evaluated and checked continuously by the Evaluation Committee, chaired by an outside director through a plan-do-check-act (PDCA) cycle aimed at improving the Board’s function.
Evaluation Method
In the evaluation for FY2023, a self-evaluation questionnaire* with detailed questions based on the following major items was conducted for all directors and Audit & Supervisory Board members, excluding representative directors.
※ Self-evaluation questionnaire: Comprising 27 items, quantitative evaluation on a five-point scale for each question, plus comments in free-text format
Summary of Evaluation Results (Status of the PDCA Cycle)
Executive compensation
To put the Group’s Corporate Philosophy into practice, we have adopted the following basic policy for the executive compensation system:
・ The system is intended to create motivation to achieve Good to Great, the long-term growth strategy and to realize continuing growth in corporate value.
・ Decisions regarding compensation are made to secure outstanding human resources for the management team from Japan and around the world, as befits a truly global company.
・ The remuneration decision-making process is highly transparent and objective.
Executive compensation structure
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 Board and 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 and 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 in seriously fraudulent or illegal acts under this system.
