Corporate Governance
Ushio recognizes that realizing the Vision set forth in its Management Philosophy, as well as promoting the sustainable growth of Ushio and increasing corporate value over the medium-to-long term, will bring satisfaction to all stakeholders. To achieve this goal, Ushio strives to ensure the transparency and efficiency of corporate management and to reinforce corporate governance to realize speedy and resolute decision-making.
Corporate Governance Report
Our latest Corporate Governance Report is available here.
Corporate Governance System（as of June 29, 2023）
Ushio uses an Audit & Supervisory Committee system, which fosters prompt decision-making by delegating decisions for certain important business matters from the Board of Directors to the executive directors. It has also strengthened the supervisory function of the Board of Directors by ensuring that the majority of its members are outside directors. The system has also been reinforcing audit and supervisory functions by having established an Audit & Supervisory Committee with the authority to assess the legality and validity of board members in performing their duties.
Furthermore, there is a Nomination and Remuneration Advisory Committee for the purpose of ensuring the fairness and appropriateness of the nominations and remuneration of directors.
The Board of Directors comprises 14 directors (as of June 29, 2023). Ten are not Audit & Supervisory Committee members (including five outside directors), and four are Audit & Supervisory Committee members (including three outside directors). The Board of Directors makes decisions on top priority issues, including basic management policies, and oversees business execution. Delegating decisions on the execution of certain important operations to directors who manage these operations has accelerated decision-making. At the same time, the executive officer system has led to more accurate and prompt business execution. In addition, Ushio established the Corporate Strategy Meeting and Group Coordination Council to discuss and report on business execution priorities.
The Audit & Supervisory Committee comprises four members (including three outside directors). The committee audits and oversees the directors’ performance of duties in line with its own audit and supervising standards. Ushio appointed a full-time Audit & Supervisory Committee member to enhance the efficacy of audits by collecting information from directors (excluding those who are also Audit & Supervisory Committee members) and employees and coordinating smoothly with the internal audit department and Accounting Auditor.
The Nomination and Remuneration Advisory Committee comprises six members (including five outside directors). The responsibilities of the Nomination and Remuneration Advisory Committee, as advisors to the Board of Directors and the representative directors, consist of advice and recommendations concerning the structure and level of remuneration for directors, evaluations of the contributions of individual directors to business performance, and nominations of director candidates.
Audits
Audits by the Audit & Supervisory Committee
The Audit & Supervisory Committee comprises four members, including one full-time Audit & Supervisory Committee member, and has been established to oversee the directors’ performance of duties. The full-time member Nobuyuki Kobayashi has experience working in the finance departments of the Company, and therefore possesses a high level of expertise regarding finance and accounting. The outside member Akemi Sunaga is a certified public accountant and certified public tax accountant and also possesses a high level of expertise pertaining to finance and accounting.
The Audit & Supervisory Committee meets once a month, in principle, to supervise the management of the Company and conduct audits on the appropriateness of business execution by the directors. In fiscal 2022, the committee met 13 times, and the attendance rate of each individual members is as listed in the table below.
| Name | Full-time/Part-time | Inside/Outside | Number of meetings held | Number of meetings attended |
|---|---|---|---|---|
| Nobuyuki Kobayashi | Full-time | Inside | 13 | 13（100％） |
| Rei Sugihara | Part-time | Outside | 13 | 13（100％） |
| Akemi Sunaga | Part-time | Outside | 13 | 13（100％） |
| Chiaki Ariizumi | Part-time | Outside | 9 | 9（100％） |
Ms. Chiaki Ariizumi has become a part-time Audit & Supervisory Committee Member at the Annual General Meeting of Shareholders held on June 29, 2022.
The main items for examination by the Audit & Supervisory Committee are formulation of annual audit plans, which include key audit matters and the division of roles between each member of the Audit & Supervisory Committee, the status of directors’ performance of duties through regular interviews with the representative directors; the status and appropriateness of the implementation of the Medium-Term Management Plan and related measures; the status and appropriateness of accounting audits and internal control audits in accordance with audit plans; the establishment and operational status of Group internal control systems; the monitoring of the management status of Group companies; the status of the Company’s compliance and risk management and audit activities of full-time Audit & Supervisory Board members; in addition to other key audit matters (KAM). The audit and supervision of these various factors are carried out from the perspectives of legality and validity. In particular, audit and supervision are carried out with emphasis placed on the validity of business execution and on the status of execution of internal control audits by the Accounting Auditor and internal audit department.
Furthermore, considering the possibility of outbreaks, such as COVID-19, the Company is creating audit mechanisms, such as the introduction of online meetings, and a system for financial analysis and management analysis for each Group company in Japan and overseas, that complement on-site audits. The Audit & Supervisory Committee receives reports from the Accounting Auditor regarding the status and results of audit plans, accounting audits, internal control audits, audit system, and quality management system. The Audit & Supervisory Committee and the Accounting Auditor exchange opinions and information on these issues more than eight times per year through online meetings and other forms of communication. Based on the reports and other activities, the Audit & Supervisory Committee examines the assessment of the Accounting Auditor and agrees on remuneration for the Accounting Auditor. The Audit & Supervisory Committee receives regular reports from the internal audit department at least once a month at the Audit & Supervisory Committee and other channels regarding the status of business audits and the establishment and operational status of internal control systems. They actively exchange information and opinions regarding these issues.
Additionally, full-time Audit & Supervisory Board members attend vital meetings, including the Executive Council, various strategy meetings, the Compliance Committee, examine important authorized documents, and carry out on-site audits of Ushio Inc. and the Group companies in accordance with the audit assignments to enhance the audit and supervisory functions of the Audit & Supervisory Committee. They also gather information regarding the status of business execution, such as receiving reports when necessary from the departments responsible for business execution through communication with the Board of Directors and other senior management of Ushio Inc. and the Group companies. In addition, members gather information on the status of amendments to laws through outside seminars and other methods, report to the Audit & Supervisory Committee, and audit and supervise the response status of various amendments to laws in executive departments.
Part-time committee members receive reports on the status of such audits at meetings of the Audit & Supervisory Committee. Additionally, these members meet with the Company’s management and the Accounting Auditor to exchange opinions and present their valued opinions based on their expertise and from a multifaceted and objective standpoint. Furthermore, one part-time committee member is also a member of the Nomination and Remuneration Advisory Committee.
Internal Audits
The business auditing department (one manager and six other members), which is under the direct control of the president, was established as the department responsible for internal audits. The business auditing department performs on-site and written audits to check the appropriateness and effectiveness of operational controls and procedures. The department reports as necessary to the committee on the results of internal audits to the representative directors, the Board of Directors, and the Audit & Supervisory Committee.
The Accounting Auditor submits an annual audit plan to the Audit & Supervisory Committee and explains its specific auditing policies and methods. It also prepares summary reports for the quarterly and year-end reviews and accounting audits.
The Audit & Supervisory Committee, internal audit department, and Accounting Auditor exchange information and opinions as necessary and cooperate with each other.
Nomination and Remuneration Advisory Committee
Ushio Inc. has established a Nomination and Remuneration Advisory Committee for the purpose of ensuring the fairness and appropriateness of the nominations and remuneration of directors. The committee gives reports in response to inquiries by the Board of Directors and the Representative Directors.
Regarding the nomination of directors, the number of new candidates for inside and outside directors is determined based on the number of directors who resign, according to years in service and other criteria, as well as consideration for the appropriate number of people necessary to fulfill the role of the Board of Directors. This is based on Board of Directors appointment standards, independent standards, and a skills matrix. The number of candidates for outside directors is narrowed down from a list of candidates recommended by committee members, considering the behavioral characteristics, capabilities, and experience necessary for each candidate to effectively fulfill their professional duties (including evaluations by existing directors regarding the degree of contribution to performance), as well as a balance of knowledge, experience, and capabilities across the entire Board of Directors. The Nomination and Remuneration Advisory Committee deliberates and makes a report to the Board of Directors to ensure a balanced Board structure, taking into account the diversity of members, including aspects of gender and nationality. The Board then makes a decision based on this report.
The Nomination and Remuneration Advisory Committee also makes recommendations regarding the business management system and the development of candidates for the next generation of management personnel.
Regarding the remuneration for directors, the Committee provides advice and recommendations concerning the structure and level of remuneration for directors and the Board of Directors makes appropriate decisions based on this report. Based on the authority delegated to it from the Board of Directors, the Nomination and Remuneration Advisory Committee determines the amount of fixed monetary compensation and performance-linked monetary compensation for individual directors after evaluating the performance of each director.
The Committee is chaired by and comprises a majority of independent outside directors. Members are appointed by resolution of the Board of Directors for a term of one year. In fiscal 2022, members comprise six directors (including five independent outside directors): Koji Naito (director), Yasufumi Kanemaru (independent outside director), Sakie Tachibana Fukushima (independent outside director), Toyonari Sasaki (independent outside director), Masatoshi Matsuzaki (independent outside director), and Rei Sugihara (independent outside director). The committee is chaired by Sakie Tachibana Fukushima (independent outside director). In fiscal 2022, the Nomination and Remuneration Advisory Committee met 9 times, and the attendance rate of each individual member is as listed in the table below.
| Name | Chairperson | Inside/Outside | Number of meetings held | Number of meetings attended |
|---|---|---|---|---|
| Koji Naito | － | Inside | 9 | 9（100％） |
| Yasufumi Kanemaru | － | Outside | 9 | 9（100％） |
| Sakie Tachibana Fukushima | ◯ | Outside | 9 | 9（100％） |
| Toyonari Sasaki | － | Outside | 8 | 8（100%） |
| Masatoshi Matsuzaki | － | Outside | 8 | 8（100%） |
| Rei Sugihara | － | Outside | 9 | 9（100％） |
Both Mr. Toyonari Sasaki (Independent Outside Director) and Mr. Masatoshi Matsuzaki (Independent Outside Director) have newly appointed and became Nomination and Remuneration Advisory Committee members at the Board of Directors Meeting held on June 29, 2022.
Additionally, specific items that the Nomination and Remuneration Advisory Committee reviewed during the previous fiscal year include reports on the directors' remuneration scheme and linked KPIs during the period of the Second Medium-Term Management Plan commencing in April 2023, reports on the governance system for the following fiscal year, reports on the monitoring of executive officers and the management system (internal directors and executive officers) for the following fiscal year, and redefinition of the selection process for candidates of the Audit & Supervisory Committee Members.
Compliance
Ushio has established “10 Action Guidelines” to define standards for behavior that require everyone at the Group to comply with laws, regulations, the Articles of Incorporation, and Management Philosophy. The Compliance Committee is responsible for ensuring that employees observe these guidelines. The Business Auditing Department and Compliance Committee jointly perform audits to monitor the status of compliance and submit audit reports as necessary to the Board of Directors and Audit & Supervisory Committee. Furthermore, information involving the performance of directors’ duties is recorded, stored, and managed, in documentary and electronic formats. This enables the directors and Audit & Supervisory Committee members to view the information at any time and take timely and appropriate action as required. To reinforce awareness of the importance of compliance, all Group companies use Ushio’s standards for behavior and other guidelines and the internal audit department performs audits of the Group companies.
Risk Management
Under its risk management regulations, Ushio has determined the divisions responsible for each type of risks, including risks related to compliance, the environment, quality, finance, legal affairs, natural disasters, information security, and export control. Each division formulates regulations and guidelines for managing the risks for which they are responsible. Based on these regulations and guidelines, these divisions implement training activities and create and distribute manuals. In the event a new type of risk occurs, the Company promptly places a director or executive officer in charge of responding to said risk. Additionally, in the event a risk materializes and significant damage is expected to occur as a result, the responsible director or executive officer swiftly makes a report to the Board of Directors.
Evaluation of the Effectiveness of the Board of Directors
Ushio conducts questionnaires and interviews regarding individual directors concerning the composition of the Board of Directors, the status of operations, matters discussed and more, and analyzes and evaluates the effectiveness of the Board of Directors more than once a year. As a result of the analysis and evaluations conducted in the fiscal year ended March 31, 2021, the Company judges that the effectiveness of the Board of Directors has been generally secured. Meanwhile, the Board of Directors has identified and shared the need to further enhance discussions on sustainable growth and appropriate risk management, as well as accurate business understanding and analysis, which is a prerequisite for discussions, as issues that need to continue being addressed going forward. The Company will continuously engage in improving these processes.
Status of Outside Directors (as of June 29, 2023)
| Name | Audit & Supervisory Committee | Independent Director | Reasons for electing as a Director | Attendance of the fiscal year ended March 31, 2023 | |
|---|---|---|---|---|---|
| Board of Directors | Audit & Supervisory Committee | ||||
| Yasufumi Kanemaru | ◯ | Mr. Yasufumi Kanemaru has extensive experience and profound knowledge from his career as the founder and manager of a telecommunications and IT consulting company. With these strengths, he provides advice and supervision for management from a fair and neutral position that is independent from the members of the Company’s management in charge of business execution.There is no business relationship between the firm for which Mr. Yasufumi Kanemaru serves as the representative and the Company. Excluding the 9,800 shares he owns in Ushio Inc., there are no special interests between Mr. Yasufumi Kanemaru and the Company. In addition, he satisfies the Independence Criteria for Outside Directors prescribed by the Company. Based on the above, the Company judged that Mr. Yasufumi Kanemaru is an Independent Outside Director who has no conflicts of interest with ordinary shareholders. | 100% (11/11) |
--- | |
| Sakie Tachibana Fukushima | ◯ | Ms. Sakie Tachibana Fukushima has acquired great insight into matters relating to human resources from a global perspective, and also has a wealth of knowledge and experience regarding international corporate management. With these strengths, she provides advice and supervision for management from a fair and neutral position that is independent from the members of the Company’s management in charge of business execution. There is no business relationship between the firm Ms. Sakie Tachibana Fukushima represents and the Company. Excluding the 900 shares she owns in Ushio Inc., there are also no special interests between Ms. Sakie Tachibana Fukushima and the Company. In addition, she satisfies the Independence Criteria for Outside Directors prescribed by the Company. Based on the above, the Company judged that Ms. Sakie Tachibana Fukushima is an Independent Outside Director who has no conflicts of interest with ordinary shareholders. | 100% (11/11) |
--- | |
| Toyonari Sasaki | ◯ | Mr. Toyonari Sasaki has abundant experience and a deep knowledge of developments in global business such as the promotion of free trade. With these strengths, he provides advice and supervision for management from a fair and neutral position that is independent from the members of the Company’s management in charge of business execution. Excluding the 1,000 shares he owns in Ushio Inc., there are no special interests between Mr. Toyonari Sasaki and the Company. In addition, he satisfies the Independence Criteria for Outside Directors prescribed by the Company. Based on the above, the Company judged that Mr. Toyonari Sasaki is an Independent Outside Director who has no conflicts of interest with ordinary shareholder. | 100% (11/11) |
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| Masatoshi Matsuzaki | ◯ | Mr. Masatoshi Matsuzaki possesses a wealth of experience as a manager in a manufacturing company with global operations, and a deep knowledge of corporate governance. With these strengths, he provides advice and supervision for management from a fair and neutral position that is independent from the members of the Company’s management in charge of business execution. There are no special interests between Mr. Masatoshi Matsuzaki and the Company. In addition, he satisfies the Independence Criteria for Outside Directors prescribed by the Company. Based on the above, the Company judged that Mr. Masatoshi Matsuzaki is an Independent Outside Director who has no conflicts of interest with ordinary shareholder. Although Mr. Masatoshi Matsuzaki is the former Representative Executive Officer of Konica Minolta, Inc. with which the Company has business transactions, the percentage of such transactions against consolidated net sales of either Konica Minolta Group and Ushio Group is not more than 1% in each of the past 5 fiscal years. Further, more than 8 years have passed since Mr. Masatoshi Matsuzaki resigned the executive officer of Konica Minolta Group. Based on the aforementioned background, Mr. Masatoshi Matsuzaki satisfies the Independence Criteria for Outside Directors prescribed by the Company. |
100% (8/8) |
--- | |
| Naoaki Mashita | ◯ | As the founder and manager of an information and telecommunications and DX business company, Mr. Naoaki Mashita has been engaged in global corporate management with offices in Asia and North America, and possesses global values along with a wealth of experience and in-depth knowledge. With these strengths, we understand that he can provide advice and supervision for management in general from a fair and neutral position that is independent from the members of the Company's management in charge of business execution. There are no special interests between Mr. Naoaki Mashita and the Company. In addition, he satisfies the Independence Criteria for Outside Directors prescribed by the Company. Based on the above, we judged that Mr. Naoaki Mashita is an Independent Outside Director who has no conflicts of interest with ordinary shareholder. Although Mr. Naoaki Mashita is Representative Director, Chairman and Group CEO of V-cube, Inc. with which the Company has business transactions, the percentage of such transactions against consolidated net sales of either V-cube Group and Ushio Group is less than one percent (1%) in each of the past five (5) fiscal years. Based on the aforementioned background, Mr. Naoaki Mashita satisfies the Independence Criteria for Outside Directors prescribed by the Company. | --- | --- | |
| Rei Sugihara | ◯ | ◯ | Ms. Rei Sugihara, as a lawyer specializing in corporate legal affairs, has in-depth specialized knowledge of laws, considerable insights into corporate management, and supervisory capabilities. With these strengths, she conducts audits and supervises management from a fair and neutral position that is independent from the members of the Company’s management in charge of business execution. Excluding the 600 shares she holds in Ushio Inc., there are no special interests between Ms. Rei Sugihara and the Company. In addition, she satisfies the Independence Criteria for Outside Directors prescribed by the Company. Based on the above, the Company judged that Ms. Rei Sugihara is an Independent Outside Director who has no conflicts of interest with ordinary shareholder. | 100% (11/11) |
100% (13/13) |
| Akemi Sunaga | ◯ | ◯ | Ms. Akemi Sunaga, as certified public accountant and certified public tax accountant, has in-depth specialized knowledge of financial affairs, accounting, and taxes, as well as considerable insights into corporate management and supervisory capabilities. With these strengths, she conducts audits and supervises management from a fair and neutral position that is independent from the members of the Company’s management in charge of business execution. There is no business relationship between the firm Ms. Akemi Sunaga represents and the Company. Excluding the 600 shares she owns in Ushio Inc., there are no special interests between Ms. Akemi Sunaga and the Company. In addition, she satisfies the Independence Criteria for Outside Directors prescribed by the Company. Based on the above, the Company judged that Ms. Akemi Sunaga is an Independent Outside Director who has no conflicts of interest with ordinary shareholders. | 100% (11/11) |
100% (13/13) |
| Chiaki Ariizumi | ◯ | ◯ | Ms. Chiaki Ariizumi possesses a wealth of knowledge and experience regarding analysis of the economic climate and financial markets, and a considerable degree of expertise regarding finance and accounting gained from years of experience working at a public financial institution. With these strengths, she conducts audits and supervises management from a fair and neutral position that is independent from the members of the Company’s management in charge of business execution. There are no special interests between Ms. Chiaki Ariizumi and the Company. In addition, she satisfies the Independence Criteria for Outside Directors prescribed by the Company. Based on the above, the Company judged that Ms. Chiaki Ariizumi is an Independent Outside Director who has no conflicts of interest with ordinary shareholder. | 100% (8/8) |
100% (9/9) |
Board of Directors
Audit & Supervisory Committee
Skill-Matrix
| Years of Experience | Corporate Management | Global Business | Finance/ Accounting/ M&A |
Manufacturing/ Technical/ R&D/ New Business |
IT/ DX |
Sales/ Marketing |
Legal/ Risk Management |
Sustainability/ Diversity |
|||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Director | Inside | Koji Naito | 4 | ||||||||
| Naoki Kawamura | 4 | ||||||||||
| Kazuhisa Kamiyama | 4 | ||||||||||
| Takabumi Asahi | 2 | ||||||||||
| Tetsuo Nakano | |||||||||||
| Outside | Yasufumi Kanemaru | 8 | |||||||||
| Sakie Tachibana Fukushima | 7 | ||||||||||
| Toyonari Sasaki | 4 | ||||||||||
| Masatoshi Matsuzaki | 1 | ||||||||||
| Naoaki Mashita | |||||||||||
| Director and Audit & Supervisory Committee Member | Inside | Nobuyuki Kobayashi | 10 | ||||||||
| Outside | Rei Sugihara | 3 | |||||||||
| Akemi Sunaga | 3 | ||||||||||
| Chiaki Ariizumi | 1 | ||||||||||
Criteria for Independence of Outside Directors
We augmented our director selection criteria and skills matrix by establishing independence standards based on those of the Tokyo Stock Exchange. The Nomination and Remuneration Advisory Committee selects outside director candidates by comprehensively considering such factors as selection criteria, the skills matrix, and independence standards. The Board of Directors determines candidates based on the committee’s report. An overview of our independence criteria is in the link below for the Notice of the 60th Annual General Meeting of Shareholders: https://www.ushio.co.jp/en/ir/stocks_info/meeting.html
Directors’ Remuneration
Total Remuneration for Director Categories, Total Amount by Type of Remuneration, and Number of Eligible Directors
| Director category | Total amount of remuneration (millions of yen) |
Total amount by type of remuneration (millions of yen) | Number of eligible directors |
||
|---|---|---|---|---|---|
| Fixed compensation (monetary compensation) | Performance-linked compensation (monetary compensation) | Performance-linked compensation (stock) | |||
| Directors (excluding directors who are Audit & Supervisory Committee members or outside directors) |
248 | 123 | 86 | 37 | 4 |
| Directors who are Audit & Supervisory Committee members (excluding outside directors) |
24 | 24 | --- | --- | 1 |
| Outside directors | 67 | 67 | --- | --- | 8 |
- Performance-linked compensation (stock) is the amount recorded as expenses in the fiscal year ended March 2022 according to Japanese GAAP.
- The remuneration for directors (excluding directors who are outside directors or Audit & Supervisory Committee members) comprises fixed monetary compensation, performance-linked monetary compensation, and performance-linked stock compensation. The remuneration for outside directors and directors who are Audit & Supervisory Committee members is solely fixed monetary compensation.
- At the Annual General Meeting of Shareholders held on June 29, 2016, shareholders approved a resolution to limit the remunerations for directors (excluding directors who are Audit & Supervisory Committee members) to ¥540 million per year (of which the portion for outside directors is up to ¥84 million). In addition, the Articles of Incorporation limit the number of directors (excluding directors who are Audit & Supervisory Committee members) to 12.
- At the Annual General Meeting of Shareholders held on June 29, 2016, shareholders approved a resolution to limit the remunerations for directors who are Audit & Supervisory Committee members to ¥84 million per year. In addition, the Articles of Incorporation limit the number of directors who are Audit & Supervisory Committee members to 5.
- The stock compensation system for executives was established by resolutions passed at the Annual General Meeting of Shareholders held on June 26, 2015 and the Annual General Meeting of Shareholders held on June 29, 2016. Directors (excluding directors who are Audit & Supervisory Committee members and outside directors) and executive officers who have entered into an engagement agreement with the Company (excluding non-residents of Japan) are eligible to receive this compensation. During the three consecutive years (initially, the three fiscal years starting from the fiscal year that ends on March 31, 2016, up to the end of March 31, 2018), a maximum of ¥620 million is contributed to the stock compensation trust and the trust acquires up to 330,000 shares of the Company’s stock. Eligible individuals can receive up to 110,000 points per year (one point is equivalent to one share of the Company’s shares). On June 28, 2018, and June 29, 2021, the Board of Directors passed a resolution to extend the applicable period of this compensation to the fiscal year ending March 31, 2024.
- With the aim of better clarifying the connection between director compensation and business performance and of enhancing directors’ motivation toward improving business performance and enhancing corporate value, performance-linked monetary compensation is determined based on the director’s position and performance evaluation (consolidated performance evaluation and performance evaluation of the division that each director oversees) in the previous consolidated fiscal year. ROE and consolidated operating margin are used as the evaluation indicators for consolidated performance, and the ratio of achievement of business targets (operating margin of the respective division) is used as the evaluation indicator for division-specific performance. The ROE and consolidated operating margin for fiscal 2020 was used as the evaluation indicator for the performance-linked monetary compensation paid in fiscal 2021, as this compensation is paid as a fixed monthly amount together with fixed monetary compensation. These indicators targeted ROE of 5.0% and consolidated operating margin of 8.3%, and the Company’s actual results were ROE of -0.3% and consolidated operating margin of 0.6%. In addition, with the aim of better clarifying the connection between director compensation and business performance and of enhancing directors’ motivation toward improving business performance and enhancing corporate value over the medium-to-long term, performance-linked stock compensation is determined based on the director’s position and level of performance in the previous consolidated fiscal year. Evaluation indicators for level of performance were set as ROE of 5.0% and consolidated operating income of ¥5.0 billion. The actual results for these evaluation indicators in fiscal 2021 were ROE of 5.7% and business plan achievement rate of the business plan of 261.4% (consolidated operating income of ¥13.1 billion).
- The specific amount of monetary compensation paid to individual directors (excluding directors who are Audit & Supervisory Committee members) in fiscal 2021 was determined by the chairperson and the Nomination and Remuneration Advisory Committee, which comprises a majority of outside directors, based on the authority delegated to them by the Board of Directors, with the purpose of ensuring the fairness and validity of this decision. Decisions made based on the delegated authority are made following discussions by the Nomination and Remuneration Advisory Committee regarding compensation systems, compensation levels, and the process for evaluating each director’s level of contribution, and are deemed to be in line with the Policy on Determining Officer Remuneration Amounts and Remuneration Calculation Method. Furthermore, the Nomination and Remuneration Advisory Committee comprises the following members.
・Sakie Tachibana Fukushima, Outside Director (Chairperson)
・Yoshinari Hara, Outside Director
・Yasufumi Kanemaru, Outside Director
・Rei Sugihara, Outside Directo
・Koji Naito, President and Representative Director - Remuneration for directors who are Audit & Supervisory Committee members for fiscal 2021 was determined through discussions among such members.
Policy on Determining Remuneration Amounts or the Calculation Methods after fiscal period from March 2024
With the aim of realizing Vision 2030, the Company has decided to change the evaluation and remuneration system to be more closely linked with the Medium-Term Management Plan as we launched the Second Medium-Term Management Plan (fiscal period from March 2024 to March 2026) (hereinafter referred to as the "Medium-Term Management Plan") in April 2023, which focuses on the "Building a System to Provide Light Solutions," "Transforming Business Portfolio," and "Expanding (strengthening) Strategic Investment" as its pillars. Furthermore, details of the policy for determining individual remuneration etc. of Directors (excluding those who are Audit & Supervisory Committee Members; the same shall apply hereinafter) and Executive Officers (the Directors and Executive Officers are collectively referred to as "Directors etc." hereinafter) who have entered into a delegation agreement with the Company, of the following consolidated fiscal year onward has been revised as follows. When making this decision, the Nomination and Remuneration Advisory Committee was consulted in advance, and the Board of Directors received the report before making resolution at the meeting held on May 11, 2023.
Also, remuneration for Directors who are Audit & Supervisory Committee Members has been determined through discussions among the Directors.
1. Basic Policy on Remuneration
- The remuneration should increase motivation to realize Vision 2030 and the targets of the Medium-Term Management Plan that commenced in FY2023.
- Remuneration should lead to continuous improvement of business performance and corporate value over the medium to long term.
- Remuneration should be closely linked with the Company's performance/Company values, and also be highly transparent and objective.
- Remuneration should be at a level that enables recruitment and retention of diverse and talented personnel, considering the level of companies listed on TSE Prime and companies of the same size in the same industry.
- Remuneration should be determined through a transparent process to ensure the trust and support of the stakeholders.
2. Policies on the Composition and Composition Ratio of Remuneration
Remuneration for Directors etc. of the Company consists of fixed monetary remuneration, short-term performance-linked monetary remuneration, and medium- to long-term performance-linked stock remuneration.
The remuneration level and the ratio of remuneration of the Company's Directors are determined based on the basic policy, objective comparison with officers' remuneration data of external research organizations before, and subsequent deliberation by the Nomination and Remuneration Advisory Committee. The percentage of fixed monetary remuneration, the short-term performance-linked monetary remuneration, and medium- to long-term performance-linked stock remuneration, which are configured according to the positions for Directors excluding Outside Directors, are roughly set as follows when standard targets are achieved.
| Plst | Fixed monetary remuneration | Short-term performance-linked monetary remuneration | Medium- to long-term performance-linked stock remuneration |
|---|---|---|---|
| Representative Director | 50% | 25% | 25% |
| Directors | 55% | 25% | 20% |
3. Policy on Short-Term Performance-Linked Monetary Remuneration
The short-term performance-linked monetary remuneration will be determined, based on the Basic Policy, according to the position and the degree of achievement of performance targets (consolidated performance evaluation and performance evaluation of the division in charge) of the fiscal year in order to further increase the motivation of Directors etc. to contribute to the enhancement of corporate value and to drive the steady implementation of this Medium-Term Management Plan. Evaluation indicators are linked to the important indicators of the Medium-Term Management Plan. The indicators, ratios, and target values are set as follows.
The remunerations are paid in a lump sum at the end of the fiscal year, and the amount is calculated by multiplying the standard amount set for each position by a coefficient set according to the degree of achievement of each evaluation indicator. Short-term performance-linked monetary remuneration varies from 0 to 200%.
| Directors portion | Executive Orricer portion | ||
|---|---|---|---|
| Indicator | ROE※ | Consolidated EBITDA | Target achieement rate for the unit the Director is incharge of |
| Percentage | 100% | 50% | 50% |
| Target | Linked to fiscal year consolidated performance targets | Linked to fiscal year consolidated performance targets of the unit the Director is in incharge of | |
The target value of ROE will be calculated excluding the depreciation of the new goodwill.
4. Policies on medium- to long-term Performance-Linked Stock Remuneration
Medium- to long-term performance-linked stock remuneration will be determined, based on the basic policy, according to the position, degree of achievement of the performance targets, and ESG targets in the relevant fiscal year, with the aim of further enhancing the motivation of Directors etc. (excluding non-domestic residents) to contribute to the improvement of corporate value and driving the steady implementation of this Medium-Term Management Plan. Evaluation indicators are linked to the important indicators of the Medium-Term Management Plan. The indicators, ratios, and target values are set as follows.
The share points ※1 for medium- to long-term performance-linked stock remuneration granted to Directors etc. (excluding non-domestic residents) at a fixed time each year are calculated by multiplying the standard share points ※2 set for each position by a coefficient set according to the degree of achievement of each evaluation index, which varies from 0 to 200%. At the time of retirement, the Company will deliver the number of Company shares obtained by multiplying the cumulative number of share points granted during the term of office by one share per share point.
| Dirctor portion | Executive Officer portion | |||
|---|---|---|---|---|
| Indicator | ROE※3 | Consolidated EBITDA | Engagement Score※4 | ESG Evaluation Score※5 |
| Percentage | 100% | 70% | 18% | 12% |
| Target | Linked to fiscal year consolidated performance targets | Linked to ESG targets | ||
- In order to drive the steady implementation of the Medium-Term Management Plan, the number of standard share points set for each position is focused on the final fiscal year of the Medium-Term Management Plan. Therefore, the maximum of the total number of share points per year that Directors etc. (excluding non-domestic residents) can receive is 165,000 share points in the last fiscal year of the evaluation period and 127,500 share points in other fiscal years subject to the evaluation.
- The standard share points for medium- to long-term performance-linked stock remuneration are calculated by dividing the amount of medium- to long-term performance-linked remuneration for each position set in advance by the average closing price of the Company's shares between January 4, 2023, and March 31, 2023.
- The target value of ROE will be calculated excluding the depreciation of the new goodwill.
- The Company defines engagement as a "state of feeling that relationships with the company or colleagues at the workplace are valuable and feeling motivated to make an active contribution" and defines the ratio of employees who respond positively to the question indicating he/she is in that state as the engagement score.
- FTSE Russell ESG Ratings are used as the indicator.
5. Policies on the Period and Conditions for Granting Remuneration
Fixed monetary remuneration is paid as a fixed monthly amount. Short-term performance-linked monetary remuneration is paid in a lump sum after the end of the fiscal year. The medium- to long-term performance-linked stock remuneration is provided and delivered based on the Share Delivery Regulations determined by the Board of Directors, in principle, with shares of the Company and an amount of cash equivalent to proceeds from converting the Company's shares according to the cumulative number of share points granted to the individual after retirement if the Directors etc. meet the requirements for a beneficiary.
6. Items Pertaining to Delegating Authority for Decision-Making on Remuneration
To ensure fairness and appropriateness, the concrete amount of remuneration paid to individual Directors shall be determined by the Nomination and Remuneration Advisory Committee, which comprises the committee chair and committee members where no less than half of its members are Outside Directors, on the grounds of delegation by the Board of Directors, according to the system and level of remuneration for the Directors etc., as well as deliberations on an evaluation of the degree of contribution to the performance of each Director etc.
Policy Shareholdings
Ushio holds strategic shareholdings in important business partners to maintain and strengthen relationships with them and enhance the Group’s corporate value over the medium and long terms. The Board of Directors regularly and comprehensively reviews each of these stakes. Considerations include whether the resulting dividends and transaction values make financial sense over the medium through long terms and whether these investments help boost corporate value across those periods.
If the rationales for these shareholdings weaken significantly, we divest them in light of such factors as circumstances at the companies in which it has stakes. We decide whether to vote for or against the proposals of companies in which we hold shares after fully scrutinizing whether they improve the corporate value of the Group and those companies over the medium through long terms. We oppose proposals where reorganizations or other moves could significantly undermine shareholder value or scandals or other undesirable developments at the relevant companies pose grave corporate governance concerns. If companies strategically holding our shares state that they intend to sell them, we do nothing to interfere in such decisions.
