Profile

Corporate Governance

StrategyFoundation

TM

Based on the Company mission, “Establish a better society through our corporate activities,” the Sanyo Chemical Groupwill realize sustainable growth toward the future by enhancing both economic and social values in close cooperation with all
stakeholders. To this end, we consider the establishment of corporate governance that is trusted by stakeholders to be oneof the highest priority management issues.

Corporate governance system

Audit & Supervisory Board Members and the Audit &Supervisory Board

We are a company with an Audit & Supervisory Board.

Of four Audit & Supervisory Board Members, three are

The Company has also introduced the executive officer

Outside Audit & Supervisory Board Members. The Audit

system, under which Executive Officers execute busi-& Supervisory Board Members not only attend Board

ness in accordance with the management policy, etc.,

of Directors’ meetings, Management Council meetings,

determined at meetings of the Board of Directors. In thisand other important meetings, but also inspect importantmanner, the Company clearly separates the manage-

approval documents. They thus audit the status of Direc-

ment decision-making and supervisory function from thetors’ business execution, capitalizing on the knowledge

business execution function.

of inside members who are well versed in the wide rangeof businesses of the Company, as well as the expertise

Directors and the Board of Directorsof outside members with experience relating to financial

The term of office of Directors is one year. With theand accounting affairs or with business management

objective of strengthening the management superviso-

experience. In addition, as an organization under the

ry functions, three out of nine Company’s Directors are

direct control of the Audit & Supervisory Board, theindependent Outside Directors; moreover, the Chairman

Company has established the Auditors Staff Division. Theof the Board is appointed from among Directors who are

Division staff who assist the Audit & Supervisory Board

not involved in the execution of business. The Board ofMembers in their duties are independent of the Directors.

Directors holds a meeting, in principle, once a month.

By establishing this structure, we strive to secure theIt makes decisions on important matters, such as man-effectiveness of audits.

agement policy, and supervises the status of businessexecution by Directors and Executive Officers. In fiscal

Management Council

2022, 15 meetings of the Board of Directors were held.

The Management Council meets once a month, in principle, to make decisions on important matters regarding
business execution by Executive Officers, based on the
management policy, etc., determined at meetings of theBoard of Directors.

Corporate governance structure
General meeting of shareholders
Nomination / Dismissal
Advise(Voluntary)

ReportChairperson:
Member selected byresolution of the Board of
Directors
Inside Directors: 2 members
Outside Directors: 3 members

Board of Directors
Chairperson:
Director selected by resolution of
the Board of Directors
Inside Directors: 6 members
Outside Directors: 3 members

Audit

Audit & Supervisory
Board

Cooperation

ReportAuditors Staff
Division

Nomination / Dismissal /Supervision

Auditing Division

President
Sustainable Management
Committee
Compliance Committee
Internal Control Committee

Nomination / Dismissal

Management Council

Accounting audit

Chairperson: President and CEO

Department executing business

Cooperation

Coordination evaluation

Nomination andCompensation Committee

Nomination / Dismissal

Accounting auditor

Audit

Management

Group companies

Audit

Sanyo Chemical Group Integrated Report 2023

44

Profile

Corporate GovernanceCommittees

Standards for selection of Directors

Nomination and Compensation Committee
Chairperson: Chairman of the Company
Frequency of meetings: Five times (FY2022)
Role: An advisory body to the Board of Directors. The majority ofits members are Outside Directors. The Committee reports
to the Board of Directors the results of its deliberation onmatters regarding the nomination of Directors and compensation for them.

Sustainable Management Committee
Chairperson: President and CEO
Frequency of meetings: Twice (FY2022)
Role: As a body under the direct control of the Board of Direc-

tors, the Committee deliberates and makes decisions
on the policy for responding to important matters to beaddressed with high priority, regarding the process for sustainable growth, the environment, society, and governance.

Basic philosophy

consisting of inside directors who have objective judge-

by comprehensively considering each member’s personali-

ment, foresight, and insight into management issues

ty and other aptitudes, in order to form a Board of Directors

based on the expertise, knowledge, and experience they

with a good overall balance of knowledge, experience,

have accumulated in sales or research, or production or

and ability to effectively perform its roles and responsibili-

general affairs departments, and Outside Directors whoties. It should also ensure it maintains an appropriate size

can proactively provide advice and suggestions based

and diversity, including in terms of gender, internationality,

on their rich experience from an objective perspective.

professional experience, and age. To enhance our corpo-

The current Board of Directors consists of nine directors

In line with this policy, the Company selects candidates

rate value in the medium to long term in keeping with thewith knowledge in line with these skill items (including

while taking into account the balance and diversity of thebasic philosophy described below, the Nomination andthree independent Outside Directors, two of whom are

Board of Directors, and other elements.

Compensation Committee held discussions on the skill

female) and four Audit & Supervisory Board Members

items required for the Company’s Board of Directors, and(one of whom is an independent Outside Audit & Super-

decided on the following eight items: corporate manage-

visory Board Member). Independent Outside Directors

ment; compliance and risk management; understanding

include members who have management experience atof diversity and sustainability; international business; R&D,

other companies.

Standards for selection of Audit & Supervisory
Board Members
The Company’s policy is to form an Audit & Supervisory

production, and new business development; sales andFrequency of meetings: Once (FY2022)

Board consisting of outside members who have legal

marketing; human resources development and training;

independence in addition to high levels of expertise andand finance and accounting. These skill items will be

discernment based on their experience in serving as areviewed and revised, if necessary, in the light of the busi-

manager or person in charge of accounting in a listed

ness environment and social circumstances.

tors, the Committee deliberates and makes decisions on
basic policies and measures to ensure full compliance withlaws and regulations.

Internal Control Committee
Chairperson: President and CEO

opinions regarding objective auditing based on theirknowledge and experience of finance and accounting

Role: As a body under the direct control of the Board of Direc-

or other specialized fields and who are sufficiently qualibusiness execution. In line with this policy, the Company

Aya
Shirai

Hideaki
Obata

Yumi
Sano

〇

〇

〇

Supplementary explanation of
applicable items

Reason for selection

No applicable items

We have designated Ms. Aya Shirai as an independent Director since she meets theCompany’s independence standards and is therefore deemed to have no conflict ofinterest with our general shareholders. She has a wealth of experience gained throughadministrative activities from her many years of involvement in municipal administration. In addition, she has experience and achievements from having been involved incorporate management as an outside director of other listed companies. She was selected as an Outside Director because she is expected to contribute to the continuous
enhancement of our corporate value by offering useful findings and opinions from an
independent standpoint based on her extensive experience and knowledge.

No applicable items

She is a business executive (Kansai Office
General Manager) of the Japan Institute for
Women’s Empowerment & Diversity Management, which is an outsourced contractor of
the Company. Since the annual amount of
actual transactions in the latest fiscal year isless than 2% of the ordinary profit of the said
institute, it is not considered to be an organization whose main client is the Company.

Sanyo Chemical Group Integrated Report 2023

SkillsR&D, production, andnew businessdevelopment

Sales andmarketingHuman
resourcesdevelopment
and training

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Director(newly appointed)

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Kenichi
Nishimura

Director

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Aya
Shirai

Director

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Hideaki
Obata

Director

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Yumi
Sano

Director

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Hirokazu
KuromeAudit & Supervisory
Board Member

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Takafumi
HoriieAudit & Supervisory
Board Member

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Jun
KarubeAudit & Supervisory
Board Member

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YusukeNakanoAudit & Supervisory
Board Member

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OutsideIndependent

We have designated Mr. Hideaki Obata as an independent Director since he meets theCompany’s independence standards and is therefore deemed to have no conflict of interest with our general shareholders. In addition to extensive practical experience in administrative departments mainly in HR and general affairs, he has many years of experienceand a track record in management of companies with broad business domains. He wasselected as an Outside Director because he is expected to contribute to the continuous
enhancement of our corporate value by offering useful findings and opinions from an
independent standpoint based on his extensive knowledge and experience.
We have designated Ms. Yumi Sano as an independent Director since she meets theCompany’s independence standards and is therefore deemed to have no conflict ofinterest with our general shareholders. She has a wealth of practical experience in promoting diversity and developing human resources in a listed company and a public interest corporation. In addition, she has experience and achievements from having been
involved in corporate management as an outside director of another listed company.
She was selected as an Outside Director because she is expected to contribute to thecontinuous enhancement of our corporate value by offering useful findings and opinionsfrom an independent standpoint based on her extensive experience and knowledge.

Compliance Understanding
Corporate
Internationaland risk man- of diversity andmanagementbusinessagement
sustainability

Name

Position

Takao
Ando

Chairman of
the Company

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Akinori
Higuchi

Representative Director,
President and CEO

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Kohei
Maeda

Representative Director●●

Masahiro
HaradaDirector

Hiroyuki
Susakiselects candidates for the Audit & Supervisory Board

Reason for selection as Outside Director
Independent
Director

Skills matrix

fied to ensure their independence from those involved inwith its agreement.

Namemission: “Establish a better society through our corporate activities”● Steadfastly maintain a stable management base andproactively develop new businesses while leveraging
the strength of our existing businesses● Realize a WakuWaku company that respects diversity
and where all employees enjoy high job satisfaction

company, and inside members who can express theirFrequency of meetings: Twice (FY2022)

tors, the Committee makes decisions on the entire internal
control system, and provides instructions and supervision
for the internal control system’s development, operation,
evaluation, and improvement activities.

● Contribute to society through fulfillment of the Company

The Company selects candidates for its Board of Directors

Chairperson: President and CEO
Role: As a body under the direct control of the Board of Direc-

Foundation

The Company’s policy is to form a Board of Directors

Compliance Committee

45

Diversity of the Board of Directors

Strategy●

Finance andaccounting

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Sanyo Chemical Group Integrated Report 2023

46

Profile

Corporate GovernanceCompensation for Directors
Classification of Directors

Total amount of compensation, etc.
(million yen)

Total amount by type of compensation, etc. (million yen)
Basic compen- Bonuses (Performance-linked Stock-based compensation
sationcompensation)(Non-monetary compensation)

Number of applicable
Directors (number of
persons)● Efforts to improve economic value

ratings on a five-point scale and comments in the free● Methods of disclosure of non-financial information

description fields of the questionnaire survey, to evaluate● Formulation of a human capital policy and a humanthe effectiveness of the Board of Directors. The previous

151

58

49

8

Audit & Supervisory Board Members (excluding Audit & Supervisory Board Members)

32

25

7

—

1

Outside Directors

26

26

—

—

3

Outside Audit & Supervisory Board
Members

50

43

7

—

3

Compliance Committee

Total

369

246

74

49

15

● Implementation and planning of corporate ethics study

Compensation and incentives for Directors

lations, and other internal regulations. For Outside Directors
and full-time Outside Audit & Supervisory Board Members,

rights policy● Initiatives to address climate change

meetings● Results of the use of whistleblowing contact points for

consultation or reporting

nesses by conducting inspection tours of our factories and● Results of the evaluation of internal control activities

improving corporate performance, as well as to ensure

other operation sites. We also offer opportunities to acquirethat the compensation level and system reflect theirnecessary knowledge and information by such means as

duties. The compensation level and system are based

participation in external seminars on corporate governance.

majority of members are Outside Directors. The policy for
determining compensation for Directors is deliberated on● Formulation of the Medium-Term Management Plan

and determined at the Board Meeting.
The compensation for Directors consists of basic
compensation, bonuses, and stock-based compensation.
Overview of types of compensation, etc.,
Compensation
type

Overview

Basic compensation

The basic compensation is based on the roles and responsibilities of each Director, and is determined by taking
into account the status of financial results over the medium
to long term and for the relevant fiscal year, as well as
levels at other companies. It is paid on a monthly basis.

Bonuses

Stock-based
compensation

The consolidated ordinary profit, which is a benchmark
for a corporation’s profitability, is used as an index toraise awareness to improve the financial results. The
total amount to be paid is calculated based on thestatus of financial results for the relevant fiscal year andover the medium to long term. Allocation is determinedbased on the roles and responsibilities of each Director.
Bonuses are paid at certain timings each year.
Points are granted depending on the position, etc.
based on the Share Delivery Regulations. In principle,
the shares of the Company are delivered depending on
the number of points when Directors retire.

For inside and full-time Directors and Audit & Supervisory
Board Members, when they assume office, we provide
explanations on relevant laws and regulations, the Company’s Articles of Incorporation, the Board of Directors Regu-

Sanyo Chemical Group Integrated Report 2023

tus of the Internal Control System in the Business Report

and the Comprehensive Plan

tors. This year’s results showed certain improvement inthese matters. Based on the answers to the questions in

Notably, regarding the operation of the Board of Directors, a Director who does not execute business serves
as the Chairman of the Board of Directors to proceedwith a meeting. We thereby endeavor to ensure operationfrom a fair viewpoint. Meanwhile, to further enhance theeffectiveness of the Board of Directors into the future,
we recognize the need for continuous improvement interms of “reinforcing the governance system,” “improving
discussions on management strategies from a mediumto long-term perspective,” and “enhancing support to

Effectiveness evaluation of
the Board of Directors

Outside Directors,” for which we previously found that
there was room for improvement. We will be committed tomaking improvements to address these issues.

The Company conducts an anonymous questionnaire● Confirmation of the results of the effectiveness evalua-survey on the effectiveness of the Board of Directors tar-

● Matters on which to seek advice from the Nomination

further improve the effectiveness of the Board of Direc-

other than those included in financial reports● Matters regarding investment, financing, and donations

tion of the Board of Directors“enhancing support to Outside Directors,” in order tothe Internal Control System regarding significant risks● Policy on operating major businesses

Succession plan (plan to foster successors)

geting all the Directors (nine persons), including Outside
Directors, and all the Audit & Supervisory Board Mem-In FY2022, the Nomination and Compensation Committee

bers (four persons), including Outside Audit & Supervi-

discussed the establishment of “the ideal image of the● Approval of closed financial statements

sory Board Members and evaluates the effectiveness of

President and CEO” in conformity with the corporate man-

● Matters regarding procedures for the general meeting

the Board of Directors based on the results. In FY2022,

agement principles and management strategies as wellthe questionnaire survey on the Board of Directors wasas the process to select a candidate for Representative

conducted based on the main items below.

Director, President and CEO and the systematic fosteringand Compensation Committeeof shareholders● Resolutions on conflict-of-interest transactions, Direc-

tors’ liability insurance, etc., appointment and dismissalof important employees, and matters related to compensation for Directors based on the Companies Act

Nomination and Compensation Committee● Rearrangement of the structure (skills matrix) of theBoard of Directors, including Audit & Supervisory
Board Members

Training for Directors and Audit & Supervisory
Board Members

related to financial reports● Regarding proposals for disclosing the operational sta-

● Results of the evaluation of the operational status ofBoard of Directors

egies from a medium- to long-term perspective,” andtiveness of the Board of Directors was generally ensured.

designed to secure excellent human resources toward

Nomination and Compensation Committee, of which asystem,” “improving discussions on management strat-

the above questionnaire, it was evaluated that the effec-

Internal Control Committee

Major discussion topics and themes

for improvement in terms of “reinforcing the governance● Policy of risk management activities

we facilitate their understanding of the Company’s busi-

factors, and the appropriateness thereof is verified by the

year’s evaluation results indicated that there was room

● Revision of the Whistleblowing Regulations

Compensation, etc., for the Company’s Directors is

on financial results, external objective data, and other47

was conducted based on the aggregate results of the

260

3. No
 Directors or Audit & Supervisory Board Members received compensation, etc., of 100
million yen or more in total.
4. There is no salary for employees who concurrently serve as Directors.
5. In addition to the above, the total amount of compensation, etc., received by Outside
Directors from subsidiaries as Directors during the fiscal year is 1 million yen.

Foundation

Sustainable Management Committee

Directors (excluding Outside Directors)(Notes) 1. The number of applicable Directors and the total amount of compensation, etc., include
those of two Directors who retired during the period.
2. The amount indicated in the field of stock-based compensation is the amount transferred
for the period regarding the provisions for the stock-based compensation during the fiscal
year related to the stock-based compensation system.

Strategy● Establishment of the ideal image of the President and① Composition and operation of the Board of Directors② Discussions at Board of Directors meetings③ Monitoring function of the Board of Directors④ Performance of Directors⑤ Support system and training for Directors andAudit & Supervisory Board Members⑥ Dialogue with shareholders⑦ Efforts made by each Director

method to achieve sustainable growth of the Company
and improve the medium- and long-term corporate value,
and made a report to the Board of Directors. In particular,
regarding the “ideal image of the President and CEO,” thecommittee identified the requirements that should be metby the next Representative Director, President and CEO
to realize the vision of the Group by FY2030, which was
specified in the management policy announced last year
under the Company mission, “Establish a better society

CEO; study of a plan for the successor of the Repre-

Respondents were asked to rate each item on a five-through our corporate activities.” The Nomination andsentative Director, President and CEO, including thepoint scale or give a comment based on free description

Compensation Committee also discussed the next-gen-evaluation criteria and fostering method

for each question. The survey was conducted in Marcheration candidate in anticipation of the Representative

2023 using a third-party system to ensure objectivity. The

Director, President and CEO in about 10 years’ time andresults were reported to the Board of Directors meetingthe method of fostering female candidates for Executive

held in May 2023. Discussions were held and analysis

Officers, and made a report to the Board of Directors.

● Study of evaluation indices for performance-linked

compensation● Study of the payment ratio by the compensation type

Sanyo Chemical Group Integrated Report 2023

48

Corporate Governance

Stakeholder communication

on trust and collaboration. In the medium to long term,such information disclosure leads to the enhancement ofInformation disclosure with high transparency to all

corporate value and sustainable growth. We will disclose

stakeholders, including shareholders, investors, andinformation in a timely and appropriate manner.

employees, is important to build a relationship based

Stakeholder

Policy / attitude

Main communication opportunities

Customers

We aim to improve customer satisfaction byoffering safe and secure products that meet theneeds of customers, and by responding promptly, appropriately, and wholeheartedly to theiropinions and requests.

● Direct communication through sales activities

We work on sustainable procurement with cooperation from suppliers, and maintain long-term
trust based on fair and impartial transactions.

● Direct communication through procurement activities

We disclose information about the Group ina timely, appropriate, and fair manner to help
shareholders and investors correctly understandand recognize the corporate value of the Group.

● General meetings of shareholders

Suppliers

Shareholders
and investors● Inquiries by phone or via the website● Social media● CSR questionnaires● Meetings to exchange opinions with suppliers● Seminars for institutional investors and analysts andresponse to interviews● Seminars for individual investors● Research laboratory tours● Business reports●W ebsite● Shareholder questionnaires

Localcommunities

Employees

We deepen communication with local communities to help people understand the activities of
the Sanyo Chemical Group and ensure harmony
with such communities.

● Social contribution activities, such as sponsoring events

We aim to create a workplace where every
employee feels pride and satisfaction in his/herwork.

● Various education and training programs

and supporting schools● Cooperation for disaster prevention and traffic safety● Talks with the management● Personnel systems, such as workstyles and health man-agement● In-house newsletters and Intranet● Whistleblowing contact point (hotline)

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Sanyo Chemical Group Integrated Report 2023