We are working to strengthen corporate governance in order to achieve sustainable growth and increase corporate value.
Basic Policy on Corporate Governance
In keeping with the Mission of the Taiheiyo Cement Group, we established the Basic Policy on Corporate Governance with the aim of fulfilling our management responsibility towards all our stakeholders, including shareholders, and helping to achieve sustainable growth while maximizing our corporate value over the medium to long term. We are working to build a sound, transparent, and efficient corporate governance system.
Corporate Governance System
We are building a system that accurately recognizes and addresses corporate governance issues, effectiveness and themes in order to deploy a sustainable business model on a global scale.
Our management structure is based upon the Board of Directors and Board of Auditors. We have also introduced an executive officer system and are endeavoring to separate management decision-making and monitoring/supervisory functions from business execution. Our Corporate Auditor’s Office provides comprehensive support for corporate auditors in the performance their duties. We have set up an internal control system in the Internal Auditing Department and, by means of internal audits, strive to ensure that operations are properly executed in the company and group companies.
We have also established a Sustainability Management Committee to promote sustainability. Under that we have established specialized committees on human rights and labor, environmental management, and quality control, and are working to enhance our corporate governance.
| Item | No. of people etc. |
| Organizational Structure | Company with a Board of Company Auditors |
| Chairman of the board | President |
| No. of directors (No. of female directors) | 9 (1) |
| No. of outside directors included in that figure | 3 (1) |
| No. of independent directors included in that figure | 3 (1) |
| Tenure of a director | 1 year |
| Executive officer system | Yes |
| No. of corporate auditors (No. of female corporate auditors) | 4 (1) |
| No. of outside directors included in that figure | 2 (1) |
| No. of independent directors included in that figure | 2 (1) |
| Committees | No. of times held | Presence of independent officers | Overview |
| Board of Directors | 15 | 100% | In principle, the Board of Directors meets once a month, and at other times when necessary, to make decisions on matters required by law and important matters related to the management of the company. The Board of Directors consists of nine directors, three of whom are independent directors. In addition, all of the corporate auditors attend the Board of Directors meetings. 15 meetings were held in FY2023, with 100% attendance by directors and corporate auditors. |
| Board of Auditors | 16 | 100% | The Board of Auditors, consisting of two standing corporate auditors and two independent corporate auditors, fulfills its supervisory and auditing function over management by attending the Board of Directors meetings and other important meetings, questioning the directors and others about the performance of their duties, and inspecting important approval documents. In addition, in order to enhance the audits, they visit branches, factories, and group companies, etc., to investigate the status of the business operations. Also, regular corporate auditor liaison meetings are held for the corporate auditors to exchange opinions among themselves (and including those in charge of related divisions when necessary) and share information to build a system that enables fair and appropriate auditing. |
| Executive Committee | 15 | ─ | The Executive Committee consists of all internal directors and managing executive officers and makes decisions on important matters other than those that are to be decided by the Board of Directors in accordance with the Companies Act. A standing corporate auditor attends the Executive Committee meetings. Although the independent directors and independent corporate auditors do not attend these meetings, the Corporate Planning Department reports regularly to the independent directors (weekly in principle), and a liaison meeting is held for independent corporate auditors (weekly in principle), where the standing corporate auditors report on the details of important meetings such as the Executive Committee and share information and assist them in the execution of their duties. |
Changes in Governance
Overview of Our Directors and Corporate Auditors
Nomination and Appointment of Prospective Directors
The president proposes prospective directors to the Board of Directors, from a diverse pool of talent both within and outside of the company, in accordance with the Basic Policy on Corporate Governance. The Board of Directors deliberates and nominates them as prospective directors, who are then appointed by resolution of the General Meeting of Shareholders. During the nomination of prospective directors, the Nomination and Compensation Advisory Committee deliberates and reports the results of its deliberations to the Board of Directors.
Nomination and Appointment of Prospective Corporate Auditors
After gaining the approval of the Board of Auditors, the president proposes to the Board of Directors prospective corporate auditors endowed with the ability to fairly audit the overall duties of the directors, suitable experience and skills, and with adequate expertise in financial affairs, accounting and legal affairs. After deliberation by the Board of Directors, nominated candidates are appointed by resolution of the General Meeting of Shareholders.
Nomination and Appointment of Prospective Independent Officers
Prospective independent officers must satisfy the company’s Independence Criteria for Independent Officers and be capable of supervising our directors and management from an independent, external standpoint, and of providing proper and appropriate advice based on their experience and insights from careers in professions such as lawyer, corporate manager, certified public accountant and government official.
Activities of independent directors
The Nomination and Compensation Advisory Committee met a total of four times in FY2023, with members consisting of three independent directors and one inside director. In addition, two meetings were held exclusively for a total of five independent directors, including independent auditors, to frankly exchange opinions on current issues and the deliberations of the Board of Directors.
Operation of the Board of Directors
In FY2023, the Board of Directors met 15 times to discuss and decide on important matters stipulated by law and the Articles of Incorporation, as well as to supervise the execution of duties by directors. In order to ensure the efficiency of directors' duties, directors and executive officers who have been assigned duties report on the status of execution of their duties. With respect to management execution, a certain level of authority is delegated to executive officers, who execute operations through a policy deployment system in accordance with the medium-term management plan and annual management policy (President's Policy), and the Board of Directors reviews the progress of these operations.
| Cement sales price policy | Reports on details and status of sales price revisions |
| Strengthening plant and mining facilities | Upgrade of manufacturing facilities and limestone quarry development |
| Carbon neutrality | Confirmation of progress on initiatives |
| Other forms of harassment |
・Promotion of sustainability management
・Acquisition of cement sales business from other companies
・Suspension of cement production and sales business in China
・Alternative sourcing for Russian coal and coal market trends
・Dialogue with institutional investors and shareholders
・Promotion of diversity management
|
(Number of meetings attended/number of meetings held)
| Full Name | Board of Directors |
| Masafumi Fushihara | 15／15 (100％) |
| Yuuichi Kitabayashi | 15／15 (100％) |
| Kunihiro Ando | 15／15 (100％) |
| Tetsuya Ohashi | 15／15 (100％) |
| Hideaki Asakura | 11／11 (100％) |
| Yukimasa Nakano | 11／11 (100％) |
| Yoshiko Koizumi | 15／15 (100％) |
| Shinhachiro Emori | 15／15 (100％) |
| Hideyuki Furikado | 15／15 (100％) |
| Katsuhide Fukuhara | 15／15 (100％) |
| Masahiro Karino | 11／11 (100％) |
| Wakako Mitani | 15／15 (100％) |
| Yoshio Fujima | 15／15 (100％) |
Number of Board of Directors meetings held during the term of office: 15, except for Mr. Hideaki Asakura and Mr. Yukimasa Nakano, where 11 meetings were held after they became directors, and Mr. Masahiro Karino, where 11 meetings were held after he became a corporate auditor.
Skill matrix
In order to ensure appropriate decision-making and a high level of oversight of our business activities, we review the knowledge, expertise, and experience expected of our directors and officers in conjunction with materiality updates. This year, it is represented as a six-skill matrix covering corporate management, production technologies and R&D, sales marketing, accounting and finance, legal and risk management, and global business.
We make the most of such advanced knowledge, expertise, and diverse experience to manage our business in order to realize our mission, which is based on sustainable growth and sustainability.
| Full Name | Position | Independent officer | Years in office | Nomination and Compensation Advisory Committee |
Knowledge, expertise and experience | |||||
| Corporate management | Production technologies R&D | Sales Marketing | Accounting Finance | Legal Risk management | Global business | |||||
| Masafumi Fushihara | President and Representative Director | 8 years | ● | ● | ● | ● | ● | |||
| Yuuichi Kitabayashi | Vice President and Representative Director | 10 years | ● | ● | ● | ● | ||||
| Kunihiro Ando | Vice President and Director | 7 years | ○ | ● | ● | ● | ● | |||
| Tetsuya Ohashi | Director and Senior Executive Officer | 2 years | ● | ● | ● | ● | ||||
| Hideaki Asakura | Director and Senior Executive Officer | 1 years | ● | ● | ● | ● | ● | |||
| Yoshifumi Taura | Director and Senior Executive Officer | ─ | ● | ● | ● | ● | ||||
| Yoshiko Koizumi | Director | ○ | 8 years | ○ (Chairperson) |
● | ● | ||||
| Shinhachiro Emori | Director | ○ | 3 years | ○ | ● | ● | ● | ● | ||
| Hideyuki Furikado | Director | ○ | 2 years | ○ | ● | ● | ● | |||
| Katsuhide Fukuhara | Corporate Auditor (Standing) | 2 years | ● | ● | ● | ● | ● | |||
| Masahiro Karino | Corporate Auditor (Standing) | 1 years | ● | ● | ● | |||||
| Wakako Mitani | Corporate Auditor | ○ | 5 years | ● | ● | |||||
| Toshihito Aoki | Corporate Auditor | ○ | ─ | ● | ● | |||||
Evaluating the Effectiveness of the Board of Directors
We strive to share information among the internal and external officers in order for the Board of Directors to supervise the execution of the business and make appropriate decisions. Efforts are made to enhance the effectiveness of the Board of Directors by providing timely and appropriate information to independent directors and providing them with opportunities to inspect business sites, including overseas and affiliate companies. Furthermore, all directors and corporate auditors fill out a questionnaire to analyze and evaluate the effectiveness of the Board of Directors as a whole, including its composition, operation, agenda and deliberation status. The Board of Directors will review the contents of the report and we make improvements to the structure and operations of the Board of Directors on the basis of the results, ensuring the overall effectiveness of our Board of Directors.
| Challenges for FY2022 | Enhancement of monitoring and other reporting on the status of execution of business |
| Assessment Results for FY2023 | Increasing the amount of time for discussion at Board of Directors meetings regarding reports on the status of execution of business, etc. |
| Challenges for FY2024 |
・Enhancement of discussion on medium-term management plan
・Further enhancement of English-language disclosure
|
Activities of the committee
Activities of the Nomination and Compensation Advisory Committee
We established the Nomination and Compensation Advisory Committee in March 2021 with the aim of further enhancing corporate governance by improving the fairness, transparency, and objectivity of the procedures for nominating directors and managing executive officers and determining their compensation. The Committee consists of four directors appointed by resolution of the Board of Directors, three of whom are independent directors. The Committee is chaired by an independent director appointed by resolution of the Board of Directors.
The Committee deliberates and reports to the Board of Directors on policies regarding the nomination of directors, the appointment and removal of directors, policies for determining the compensation of individual directors, and the details of the compensation of directors.
The System to Promote Sustainability Management
To promote our sustainability management we have created a cross-departmental Sustainability Management Committee, chaired by the president with all board directors and all managing executive officers as committee members, under the direct oversight of the Board of Directors. Reporting to the Sustainability Management Committee are seven specialized committees for individual subjects, each chaired by the director responsible for that area. The department most closely associated with any given issue acts as the secretariat for the related committee. The Sustainability Management Committee’s role is to screen important matters concerning sustainability and the status of activities of specialized committees, and review their progress.
| Date | Main Content |
| First: May 12, 2022 |
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| Second: Sep. 27, 2022 |
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| Third: December 20, 2022 |
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| Fourth: March 28, 2023 |
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* Sustainability Management Committee since FY2024
Activities of independent directors
(Number of meetings attended/number of meetings held)
| Full Name | Board Meeting Attendance | Details of Contribution |
| Yoshiko Koizumi | 15／15 | Providing appropriate comments mainly based on her extensive experience as an attorney and broad insight into corporate legal affairs. |
| Shinhachiro Emori | 15／15 | Providing appropriate comments mainly based on his extensive experience and broad insight as the manager of a business corporation. |
| Hideyuki Furikado | 15／15 | Providing appropriate comments mainly based on his extensive experience and broad insight as a national public servant. |
Cross-shareholdings
From the perspective of maintaining and strengthening stable and long-term business relationships with our business partners, we acquire and hold shares in such business partners as cross-shareholdings when it is determined that it will contribute to the enhancement of our medium- to long-term corporate value.
Furthermore, the Board of Directors confirms the necessity of such holdings each year by examining the medium- to long-term economic reasonableness and future prospects of each individual cross-shareholding, based on whether the purpose of holding the shares is appropriate and whether the benefits and risks associated with holding the shares are commensurate with the capital costs.
We do not hold any investment securities where the purpose is purely investment.
| Number of Issues (stocks) | Total amount reported on balance sheet (million yen) | |
| Non-listed stocks | 179 | 5,806 |
| Shares other than unlisted stocks | 33 | 18,910 |
Board Member Remuneration
Determining Board Member Remuneration
In the process for determining the compensation for directors, the Nomination and Compensation Advisory Committee, the majority of which consists of independent directors and is chaired by an independent director, deliberates and reports its findings to the Board of Directors, which respects those findings. The decision is then entrusted to the representative directors, within the scope decided at the General Meeting of Shareholders and determined by our company regulations.
The compensation system for directors (excluding independent directors) consists of fixed compensation, share-based compensation and performance-based compensation, while the compensation system for the independent directors consists solely of fixed compensation. The compensation system for auditors also consists solely of fixed compensation.
- Fixed compensation is set according to position.
- Performance-based compensation is calculated by multiplying profit attributable to owners of parent company shares for the fiscal year under review by 1% (up to 400 million yen) and a coefficient according to position.
- Share-based compensation is calculated according to position and issued yearly in the form of share options with restrictions on transfer. In principle, the restrictions on transfer are rescinded on the day the director retires.
- The reason for the introduction of the share-based compensation system and the adoption of profit attributable to owners of parent as an indicator for performance-based compensation is to promote further value sharing with our shareholders.
Composition of Compensation
Annual Remuneration of Board Members
Remuneration for directors was decided at the General Meeting of Shareholders on June 29, 2021, and after said meeting, there are nine directors (of whom three are independent directors), for whose annual compensation there is a maximum of 1.2 billion yen (of which 100 million yen is for independent directors). Included in that is a maximum annual sum of 200 million yen (200 thousand shares) as transfer-restricted share-based compensation.
Remuneration for corporate auditors was decided at the General Meeting of Shareholders on June 29, 2000. Since the said meeting, there are four corporate auditors, for whose monthly compensation there is a maximum of 13 million yen.
| Category | Total amount of compensation, etc. (million yen) | Total amount of compensation by type (million yen) | Number of officers covered | ||
| Fixed compensation | Performance-based compensation | Non-monetary compensation, etc. | |||
| Directors | 510 | 315 | 149 | 45 | 11 |
| Corporate Auditors | 72 | 72 | ─ | ─ | 5 |
| (independent directors) | (67) | (67) | (─) | (─) | (5) |
* The above count of directors and corporate auditors who received compensation includes two directors and one corporate auditor who retired or stepped down at the conclusion of the 24th Ordinary General Meeting of Shareholders held on June 29, 2022.
Internal Control System
We follow the Basic Policy for Building an Internal Control System to ensure suitable and efficient operations at the company and group companies. Our basic approach is to improve and strengthen systems that are currently in operation, and to review and reappraise essential matters.
In FY2023, we audited five of our offices, 11 domestic group companies, and one overseas group company, identifying areas for improvement and providing advice and recommendations.
