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 2023)
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 2023
Management System and Business Execution System
・ 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
・ 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. The term of each director is one year, and they are elected at the annual General Meeting of Shareholders.
・ Audit & Supervisory Board members attend Board of Directors meetings and other important meetings, and state their opinions as necessary. They also conduct audits of business execution by directors, by inspecting important documents and holding interviews regarding the status of the execution of duties, among other matters, as necessary.
・ Audit & Supervisory Board members meet regularly with auditors to exchange opinions and information, and request reports from the auditors as necessary.
・ 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.
Committees
・Evaluation Committee：The committee works to improve the effectiveness of the Board of Directors by conducting self-evaluations of the operation of the Board of Directors, performance evaluations of directors and executive officers, and deliberations on issues such as the appropriate remuneration for directors and executive officers.
・Nomination Committee：In submitting candidates for the position of director to the annual General Meeting of Shareholders, the Board of Directors decides whether to appoint candidates following deliberations by the committee
Nomination of Candidates for Director and Audit & Supervisory Board Member Positions
Candidates for director are nominated with an emphasis on the following matters, in consultation with the Nomination Committee.
・ Candidates for internal director: Nominate from among those who are in positions at production, business, procurement, technology, and management departments, by comprehensively evaluating balance, experience, and ability
・ Candidates for outside director: Nominate from among 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 electing 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.
Main Areas of Expertise and Experience for Directors and Audit & Supervisory Board Members
The expertise we consider necessary to carry out the Company’s management and the specialization we expect from individual members of the Board of Directors and the Audit & Supervisory Board are as follows. The combination of skills required of directors is used to formulate the appointment policy, while optimizing and adding of items as well as appropriately verifying such skills in accordance with the business environment and business characteristics, etc.
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 FY2022, 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)
Officer Remuneration
We have adopted the following basic policy on the officer remuneration system to put the Kansai Paint Group Corporate Philosophy into practice.
• 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 medium to long term.
• Remuneration is set at the level of a truly global company, enabling us to secure excellent human resources, both in Japan and overseas for our management executives.
• The remuneration determination process is highly transparent and objective.
Composition of Executive Compensation
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.
