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Corporate Governance

Sekisui Chemical Group Has Put in Place Its Own Corporate Governance System that Reflects Its Division Company Structure

Basic PhilosophyImprove corporate value by enhancing transparency and fairness in management

To maximize corporate value, Sekisui Chemical Group has built its management structure based on a system of three division companies. Believing that increasing the transparency and fairness of management and pursuing swift decision-making are important to continually increasing corporate value amid a changing business environment, we implement a variety of efforts related to corporate governance.

Corporate Governance System

Corporate Governance System

* Note:See Open with New Windowthe Corporate Governance for details.See Open with New Window 「the Corporate Governance」 for details.

 

Strengthening the Business Execution FunctionExecutive Committee Established to Serve as the Top Decision-Making Body in Each Division Company

Together with assigning to each division company operating officers specializing in business execution, an Executive Committee has been established to serve as the top decision-making body in each division company. As such, a broad range of authority has been transferred from the Board of Directors to the Executive Committee.
The Board of Directors strives to achieve continual improvements in corporate value as an organization responsible for decisions on basic policies of the Sekisui Chemical Group’s management as well as high-level management decision-making and supervision of business execution.


Nomination of Outside Directors

To ensure the independence of its outside directors, Sekisui Chemical's rules regarding outside directors stipulate that persons affiliated with major shareholders and major suppliers cannot be nominated as candidates for outside director.Toru Nagashima and Kunio Ishizuka have both been designated independent board members based on the definition set by the Tokyo Stock Exchange. In fiscal 2015, Mr. Nagashima and Mr. Ishizuka attended 17 out of 17 meetings of the Board of Directors, contributing to stronger corporate governance by making their opinions known, based on their extensive experience as managers.


Operating officer system (term: one year)

Early issue of notices of annual general meetings of shareholders

Exercise of voting rights electronically in annual general meetings of shareholders

Formulation of rules on corporate information disclosure

 

Policies Concerning the Internal Control SystemSekisui Chemical Group working in unison to develop an internal control system

The company's directors, operating officers, and employees observe high standards of business ethics. At the same time, Sekisui Chemical places the upmost emphasis on complying with all pertinent statutory and regulatory requirements in Japan and overseas as well as international and in-house rules. Priority is also placed on transparent and fair transactions, and strictly adhering to commonly held principles and corporate ethics.

 

In addition to reaffirming the importance of an internal control and risk management system, the Company is working in unison to advance a variety of measures aimed at bolstering corporate governance and compliance. Among a host of initiatives, Sekisui Chemical is promoting a project that is designed to develop an internal control system, upgrading and expanding internal audits, and setting up a department to carry out risk management measures. While putting in place the necessary in-house rules to mitigate a wide variety of risks, the company is also undertaking education and training activities.

 

Status of the Internal Control SystemImplementation of system updates and measures to establish the Internal Control System

  • Introduced Division Company system and Executive Officer system , established Executive Committee to serve as the top decision-making body in each division company
  • Instituted Corporate Activity Guidelines based on the Group Philosophy
  • Established CSR Committee, headed by the President
  • Established Compliance Subcommittee under CSR Committee
  • Continued operation of the S.C.A.N. (Sekisui Compliance Assist Network) Whistle-blowing Program
  • Created a reporting system for Group companies to get approval from Sekisui Chemical based on rules for handling affiliated companies and guidelines for final decisions at affiliated companies
  • Formulated crisis management guidelines for Sekisui Chemical Group
  • Stored and managed information concerning the execution of duties by directors and executive officers in accordance with document management rules
  • Each department of Sekisui Chemical Group conducted self-audits in accordance with a checklist made by the Corporate Audit Department

 

Compliance with the Corporate Governance CodePutting in place 「the SEKISUI Corporate Governance Principles」

The Tokyo Stock Exchange set out and incorporated its version of a corporate governance code into its Securities Listing Regulations from June 2015. In response, the Sekisui Chemical Group put in place the SEKISUI Corporate Governance Principles in an effort to lay out its stance and provide details of the Group’s corporate governance activities in a systematic manner. Guided by these principles, the Sekisui Chemical Group will work to raise the level of its management foundation while promoting increasingly transparent and fair business operations.

 

* Corporate Governance Code:
A set of codified principles that layout specific policies toward corporate governance and a code of conduct that publicly listed companies should be expected to observe. Major nations outside Japan began adopting a corporate governance code from the 1990s. A corporate governance code was first introduced in Japan by the Financial Services Agency and the Tokyo Stock Exchange in March 2015 and took effect from June 2015.

 

 

Director CompensationCompensation determined based on performance-linked compensation system

Sekisui Chemical has introduced a performance-linked compensation system as an incentive to expand earnings, increase corporate value and sharpen management's awareness of shareholder concerns. Director compensation consists of monthly remuneration, bonuses, and stock options. Monthly remuneration is an amount set in accordance with the role and responsibilities of each director. Bonuses are decided based on consolidated performance and a standard amount associated with dividend policy. Stock options are granted in an amount based on the duties of the director.


Director Compensation in Fiscal 2015
Classification Basic remuneration
(millions of yen)
Bonus
(millions of yen)
Stock options
(millions of yen)
Total Number of people
Directors
(excluding external directors)
314 142 10 466 8
Corporate Auditors
(excluding external corporate auditors)
49 14 - 63 2
Outside directors 52 - 2 54 7

 

Respect for International Norms Declaration of Support for the United Nations Global Compact

The Sekisui Chemical Group respects international norms and standards regarding CSR, including the Universal Declaration of Human Rights, ISO 26000, the OECD’s Guidelines for Multinational Enterprises, the ILO’s International Labor Standards, and the United Nations’ Guiding Principles on Business and Human Rights (Ruggie Framework). In March 2009, Sekisui Chemical signed the United Nations Global Compact*. In compiling and issuing its CSR Report, Sekisui Chemical has also referred to the Global Reporting Initiative’s (GRI’s) internationally recognized Sustainability Reporting Guidelines. The online CSR Report 2016 is in fact presented in accordance with the “Core” standards of the latest GRI Sustainability Reporting Guidelines ver. 4.




* United Nations Global Compact: A voluntary program in which top management of firms around the world pledge to comply with 10 principles on subjects such as human rights, labor standards, the environment, and anti-corruption efforts within the scopes of influence of their firms and participate in building a global framework for realizing sustainable growth.

 

Major OrganizationsOrganizations in which the Sekisui Chemical Group Participates

●The Japanese Society for Quality Control

 Business details: Promoting the research and development of new technologies and methods
   and the dissemination of results

 The Company's role: Served as chairperson (November 29, 2014 to November 14, 2015)