Corporate Governance
Our Approach to Corporate Governance
At the Soken Group, our basic policy is to fulfill our social responsibilities as a company and to earn our stakeholders' trust by promoting and ensuring appropriate corporate governance. In the Soken Code of Ethics, we have set forth principles to "comply with laws and regulations, and act in accordance with social norms and common sense," ensuring its widespread understanding and thorough implementation. In addition, the Board of Directors has adopted a resolution on the "Basic Policy on the Establishment of an Internal Control System" and is working to develop and enhance a highly effective governance system.
Corporate Governance Structure
The Soken Group has adopted a corporate auditor system whereby the Board of Directors and the Audit & Supervisory Board supervise and audit the execution of duties by the directors.
Comprising eight members, including three non-executive directors, the Board of Directors is chaired by the President. Regular monthly meetings involve decision-making on legally mandated issues and important management matters, as well as reporting on the execution of business operations. To aid swift decision-making and agile execution, we also convene extraordinary board meetings as needed and allow for resolutions by written consent.
With respect to business execution, we have introduced an operating officer system to separate the decision-making and supervisory functions of the directors from the business execution functions of the operating officers, thereby enhancing transparency and fairness in management and ensuring speed and efficiency in business execution. Additionally, the Business Promotion Meeting, chaired by the President and comprising directors and operating officers, convenes regularly to deliberate important management issues in order to accelerate the decision-making process.
Moreover, we have established committees—including the Nomination Advisory Committee, Compensation Advisory Committee, and Compliance Committee—where independent non-executive directors constitute the majority and chair these committees. This structure allows us to receive objective advice and recommendations on matters such as director nominations and compensation.
The Audit & Supervisory Board, composed of four members, including two external audit and supervisory board members, attends important meetings like the Board of Directors, offering opinions as necessary and auditing the execution of duties by the directors through operational audits and other means. Collaboration with the internal audit team and financial auditors is facilitated through the exchange of information and opinions, thereby enhancing the effectiveness of the audits. The Audit & Supervisory Board is chaired by a full-time auditor.
Corporate Governance Structural Chart
Assessment of Board Effectiveness
To objectively analyze and assess the overall effectiveness of our Board of Directors, we conduct an annual survey of all directors and auditors through a specialized third party. The results of these surveys are then used by the Board of Directors for analyses and evaluations regarding effectiveness.
Officer Composition, Nomination, and Compensation
Officer Composition
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| Position | Name | Corporate Management | Sales and Marketing | Technical Research and Development | Production Quality Control | Finance and Accounting | Legal and Risk Management | Human Resources Development | Overseas Business Development |
|---|---|---|---|---|---|---|---|---|---|
| President | Koji Tomita | ● | ● | ● | ● | ||||
| Executive Directors | Kiyotaka Takizawa | ● | ● | ● | ● | ||||
| Executive Directors | Syuji Okamoto | ● | ● | ||||||
| Executive Directors | Takafumi Hasui | ● | ● | ||||||
| Non-executive Director* | Kenjiro Kamiyama | ● | ● | ||||||
| Non-executive Director* | Takayoshi Fusegi | ● | ● | ||||||
| Non-executive Director* | Hiroki Izumi | ● | ● | ● | |||||
| Full-time Auditor | Nobuyuki Izumiura | ● | ● | ||||||
| Full-time Auditor | Akira Nomura | ● | ● | ● | |||||
| External Auditor* | Megumi Yasuda | ● | |||||||
| External Auditor* | Shinsuke Matsumoto | ● |
- *Independent Officer
- Note:The above list is not exhaustive and does not represent the full breadth of knowledge, experience, or expertise of every employee
Nomination of Board of Director Candidates
Our Board of Directors nominates candidates with a focus on ensuring swift and accurate decision-making and an effective supervisory function, considering factors such as business content, scale, and changes in the management environment. The board comprises internal directors who are well-versed in our group's business activities and non-executive directors with extensive management experience and high-level expertise without regard to nationality, gender, or age. We nominate candidates considering what they bring to the entire board in terms of diversity, fit, and a balance of knowledge, experience, and capability.
The Audit & Supervisory Board shall consist of internal corporate auditors who are well-versed in internal affairs and external corporate auditors with advanced expertise in finance, accounting, and legal matters. Candidates are meant to audit the directors' execution of duties from a fair and objective standpoint and are nominated for knowledge and expertise that can contribute to ensuring sound and transparent management.
To ensure transparency and objectivity in the nomination process, the Nomination Advisory Committee, chaired by an independent non-executive director and composed of a majority of independent non-executive directors, deliberates on the appropriateness of the nomination policy and the eligibility of the candidates. The Board of Directors then deliberates and decides on the candidates based on the committee's reports.
Officer Compensation
The compensation for our directors is based on a basic policy that ensures we can recruit and retain competent professionals capable of fulfilling their roles and responsibilities as directors. It emphasizes incentive-linked rewards, motivating them to achieve short-term performance targets as well as build corporate value over the medium to long term.
Specifically, the compensation structure for directors (excluding non-executive directors) consists of base salary, bonuses linked to the performance of the relevant fiscal year, and stock-based compensation (restricted stock units). Non-executive directors receive only a base salary. Considering their role as an independent party, auditor compensation is also limited to a base salary. The proportion of each type of compensation is determined based on benchmarks from companies of similar business scale and in a similar industry.
- 1.Base Salary
A fixed monthly salary shall be determined in accordance with the responsibilities of each officer, taking into consideration economic and social conditions. We balance it with employee salaries and compensation levels in similar industries. - 2.Performance-linked Compensation
As performance-linked bonuses, we calculate amounts based on a certain percentage of consolidated ordinary income for the respective fiscal year, adjusted for goal attainment and distributed according to position and contribution. - 3.Stock Compensation
Non-monetary rewards such as stock compensation take the form of restricted stock units. The amount to be paid shall be determined in accordance with the duties of each director in an amount considered reasonable in light of the purpose of the compensation. Specifically, the method of payment involves granting monetary claims for the allocation of restricted stock to the directors within a certain period after the decision. These directors then contribute the entire amount of these claims as actual contributions in exchange for issuing or disposing of the company's common shares. A restricted stock allocation agreement is signed between the company and the director involved upon the issuance or disposal of such common stock.
The details of each officer's compensation are determined by the Board of Directors, based on the report from the Compensation Advisory Committee chaired by a non-executive director. Similarly, auditor compensation is decided by the Audit & Supervisory Board. This process, chaired by non-executive directors, ensures objectivity and transparency in the decision-making procedures.
Independence of External Officers
At Soken, we have established criteria for the appointment and independence of external directors and auditors.
Criteria for Independence of External Officers (in Japanese)
Internal Control System
Our Board of Directors, having adopted a "Basic Policy on Internal Control Systems," is now developing a framework to maintain operational integrity, making essential adjustments as progress and situations dictate.
Management of Group Companies
We have established regulations for managing affiliated companies and require prior approval for important management decisions. We receive reports on business from the responsible operating officers at monthly business promotion meetings, as well as regular direct reports on the progress of business plans from their representatives.
Additionally, our internal audit team carries out routine audits to maintain the proper business conduct in our group companies, concentrating on legal compliance, risk management, and the legitimacy of other business processes.