Header logo01

Corporate Governance

Sustainability - Corporate Governance

Basic Approach

Policy

Basic Approach

Under our Corporate Mission of “illuminating a more affluent tomorrow” and our Corporate Philosophy of providing value“ for customer peace of mind and satisfaction,” our group has set forth our Ideal State of Being/Vision for 2030 as “Work to build a new society through integrity to the earth, society, and people, and through the power of co-creation – Sustainability Partner –.” Our group takes the basic stance that we maintain fair and steady business activities with respect for people and the global environment, operate businesses focusing on profit while constantly pursuing new technology and high quality, and endeavor to give back to society.

In order to implement this basic stance, we formulated the “Basic Policy to Improve the Governance to Secure Fair Business Practices” at the regular Board of Directors meeting held in May 2006. In addition, we revised this basic policy at the regular Board of Directors meeting held in July 2022, as a result of a revision of the officer system to further clarify the division of roles between executive functions (executive officers) and so-called supervisory functions (directors and the Board of Directors).

We will work to further improve the fairness, efficiency, and transparency of management by promoting initiatives to enhance corporate governance in accordance with the Corporate Governance Code.

Basic Policy on the Corporate Governance Code

Meidensha will work to further improve the fairness, efficiency, and transparency of management by promoting initiatives to enhance corporate governance in accordance with the Corporate Governance Code.

i. Ensuring shareholder rights and equality

We will work to establish an environment where shareholders can exercise their rights appropriately and we will actively disclose information to this end, thereby ensuring shareholder rights and equality.

ii. Appropriate cooperation with stakeholders other than shareholders

In order to achieve our Group’s sustainable growth and enhance its corporate value over the medium to long term, we will disclose appropriate information and engage in dialogue with our various stakeholders, including customers, suppliers, and members of the local community.

iii. Disclosing information appropriately and ensuring its transparency

We will make timely disclosures of information in accordance with laws and regulations and will also disclose information on the status of our company, including non-financial information, in a timely and appropriate manner through media that are widely accessible to stakeholders (our websites, integrated reports, and other publications).

iv. Obligations of the Board of Directors

Based on the Meidensha Group Corporate Philosophy, the Board of Directors will formulate medium- to long-term management plans and strive to enhance the medium- to long-term corporate value of our Group by making decisions and supervising business execution in the implementation of these plans.

As a company with an Audit & Supervisory Committee, we strive to improve the supervisory function of the Board of Directors. In addition, we will further promote separation of supervisory and executive functions by utilizing the executive officer system, which was introduced in June 2003 and revised to enhance its legitimacy in June 2022 to state that the Board of Directors makes appointments grounded in the Articles of Incorporation.

v. Dialogue with shareholders

Our policy is to ensure that senior management respond within reason, when engaging in dialogue with shareholders who wish to create that dialogue to help enhance our corporate value over the medium to long term.

In addition, as a prerequisite for this dialogue, we will endeavor to provide more opportunities for various briefings and IR/SR interviews and offer enhanced information disclosure through our websites, integrated reports, and other publications.

Public Relations Section

Corporate Governance Structure and Initiatives

Organization and Initiatives

Corporate Governance Structure and Initiatives

We are a company with an Audit & Supervisory Committee, and we aim to further strengthen corporate governance in the following areas.

  1. (a) We further enhance the supervisory functions of the Board of Directors through use of legal authority, such as directors that are Audit & Supervisory Committee Members holding voting rights at meetings of the Board of Directors and having the right to present a position statement relating to nomination and compensation of directors at General Shareholder’s Meetings.
  2. (b) We further enhance discussions on management strategies, etc. by transferring the Board of Directors’ meeting to a monitoring type, since a portion of the Board of Directors' authority to make decision on business execution has been transferred to the Director & President and Executive Officer (Executive Officers’ Meeting).
  3. (c)We aim to further promote separation of supervisory and executive functions by making changes to increase legitimacy in June 2022, and combining it with the transfer of authority mentioned in (b) through the introduction of an executive officer system in June 2003, and a system for election of executive officers who are responsible for a flexible and agile business execution system by the Board of Directors, based on the Articles of Incorporation.

Corporate Governance Structure

Corporate Governance Structure

Outline of Corporate Governance Structure

Form of Organization Company with an Audit & Supervisory Committee
Directors Number of directors (outside directors): 7 (3)
Directors (Audit & Supervisory Committee Members) Number of directors (outside directors): 4 (3)
Number of Independent Officers 6 (3 outside directors and 3 outside directors (Audit & Supervisory Committee members))

(1) The Company’s Board of Directors

In principle, the Board of Directors convenes on a regular monthly basis and holds ad-hoc meetings as necessary, to discuss major executive matters, business issues, and management issues related to the our business execution. In FY2022, the Board of Directors held 13 meetings, and the attendance rate was 100% for all directors.

The specific composition of the Board of Directors and meeting attendance in FY2022 are described below in “Composition of the Board of Directors, Nomination & Compensation Committee, and Audit & Supervisory Committee and Attendance in FY2022” below.

① Composition of Board of Directors

Our Board of Directors consists of 11 directors, including 4 who are Audit & Supervisory Committee members. The 11 directors also include 6 outside directors (of which 3 are members of the Audit & Supervisory Committee). The 6 all satisfy the requirements for independent directors as defined by the Tokyo Stock Exchange and our Criteria for Determining the Independence of Outside Directors. This means that independent outside directors make up a majority of the Board of Directors, ensures the effectiveness of the supervisory function of the Board of Directors, and ensures that objective and independent opinions are fully incorporated into the company’s management.

It is the basic policy to ensure the diversity of the Board of Directors as a whole based on the abilities, insight, and experience of individual directors and to assign appropriate human resources that contribute to the enhancement of our corporate value. It is also our policy to ensure the diversity and balance of the Audit & Supervisory Committee as a whole based on the knowledge and experience of accounting, financial, and legal matters etc., of directors who are members of the Audit & Supervisory Committee. The balance of expertise, knowledge, experience, etc., is as described in the Board of Directors’ Skill Matrix below.

Composition of the Board of Directors, Nomination & Compensation Committee, and Audit & Supervisory Committee and Attendance in FY2022
(period: April 1, 2022–March 31, 2023)

Name Position (as of March 31, 2023) Board of Directors Nomination & Compensation Committee Audit & Supervisory Committee
Yuji Hamasaki Director & Chairman & Senior Officer
Chairperson of the Board of Directors,
Member of Nomination & Compensation Committee
13/13 12/12
Takeshi Miida Representative Director & President & Executive Officer
Member of Nomination & Compensation Committee
13/13 12/12
Norio Takekawa Representative Director & Executive Vice President & Executive Officer 13/13
Masayuki Iwao Director & Senior Managing Executive Officer 13/13
Hiroyuki Takenaka Outside Director
Chairman of the Nomination & Compensation Committee
13/13 12/12
Yoshiaki Shin Outside Director
Member of Nomination & Compensation Committee
13/13 12/12
Hiroji Adachi Outside Director 10/10
Michihiko Kato Director (Standing Audit & Supervisory Committee Member)
Chairman of the Audit & Supervisory Committee
13/13 16/16
Keiko Hayashi Outside Director (Audit & Supervisory Committee Member)
Member of Nomination & Compensation Committee
13/13 10/10 16/16
Takashi Kuroda Outside Director (Audit & Supervisory Committee Member) 10/10 13/13
Hideki Hiraki Outside Director (Audit & Supervisory Committee Member) 10/10 13/13

scrollable

  • Note: Attendance at meetings of each body is shown as “Attended/held”

② Activities of the Board of Directors

The Board of Directors considers “matters for discussion” in addition to matters to be resolved and reported. ”Matters for discussion” includes following the progress of and tracing matters related to basic management policies such as the Medium-term Management Plan and important management themes. At their meetings, directors actively exchange opinions on our management issues and strategies and on corporate governance, while drawing on the knowledge of the outside directors. The Board of Directors use the meeting as a forum to reach consensus on the direction of us in the conceptual and planning stages prior to making a board resolution.

Major topics discussed by the Board of Directors in FY2022 included the following.

■Strengthening the supervisory function of the Board of Directors

The Board of Directors discussed this issue with the aim of further strengthening its supervisory function, as found in the FY2021 board effectiveness evaluation. In addition, an outside attorney gave a training on the role of the Board of Directors and outside directors and the exercise of their functions. Directors also met several times outside of formal Board of Directors’ Meetings to trade opinions.

The following measures have been taken as a result of the Board’s discussions and deliberations.

  • Improved advance explanation of agenda items of the Board of Directors
    The Executive Vice President & Executive Officer attends the explanatory meeting for outside directors to share information on overall business execution as it relates to agenda items of the Board of Directors and executive officers in charge provide explanations to resolve questions on individual operations related to agenda items in advance, we make an improvement that helps stimulate and enhance discussions and debates at Board of Directors’ Meetings.
  • Participation in discussions at the conceptual and planning stages
    The FY2023 profit plan was discussed at a Board of Directors’ Meeting at the stage where policy was forming. Directors discussed setting optimal profit targets and investment plans to enhance corporate value. The profit plan is decided at a meeting of the Board of Directors after it is reviewed by the business execution organization based on discussions.
  • Improved agenda setting
    It was suggested that to strengthen the supervisory function of the Board of Directors, it is important to strengthen Board of Directors agenda setting based on each director’s understanding of management issues. Previously, the annual schedule of Board of Directors meetings was prepared based on the opinions of the directors and confirmed at each Board of Directors’ Meeting. Starting in FY2023, the agenda of board meetings will be discussed and deliberated on a regular basis as a new agenda item itself. The aim is to strengthen agenda setting and further reinforce the supervisory function of the Board of Directors.
■Progress of Medium-term Management Plan 2024 in each business and strategies to achieve its objectives

The Board of Directors discussed several topics intended to monitor the progress of Medium-term Management Plan 2024 and supervise strategies to achieve its objectives. The Board of Directors discussed the situation and strategies in each business, especially measures to cope with rising component prices, collaboration between businesses (especially between the product sales and maintenance service businesses), and growth strategies beyond Medium-term Management Plan 2024.

■Promoting sustainability management

The Board of Directors’ Meeting discusses the progress of the meeting of the Sustainability Management Strategy Committee (chaired by the President & Executive Officer) as part of supervision of sustainability management, which is a basic policy of Medium-term Management Plan 2024. It also discusses the status of human capital initiatives.

③ Participation of Outside Directors in Board of Directors’ Meetings

■Participation in the agenda

Our outside directors have diverse management experience and areas of specialization, understand the content of the proposals put before the Board of Director’s Meeting from a variety of perspectives when said matters are explained in advance, and attend Board of Directors’ Meetings having checked any unclear points in advance.

At Board of Directors’ Meetings, multifaceted discussion occurs, based on the broad perspective of managers, the knowledge of technicians, and the high-level specialization of experts, etc. The outside directors participate in deliberations by actively making statements, etc., in particular concerning policies and measures to deal with risks, and cautions when monitoring, etc.

■Training for New Outside Directors

We create opportunities to explain our business and structures, primarily to aid the understanding of newly appointed outside directors. The responsible officers or managers in charge of the business group explain their business, group-wide themes, and our governance system to the outside directors, answer their questions, and exchange opinions with them.

(2) Effectiveness Evaluation of the Board of Directors

Meidensha has a mechanism in place to conduct an analysis and evaluation of the effectiveness of the Board of Directors in order to strengthen the supervisory function of the Board of Directors.

With regard to the activities of the Board of Directors in FY2022, all members of the Board of Directors, including outside directors, conducted self-evaluations of the effectiveness of the Board of Directors, and the following discussions took place at the meeting of the Board of Directors, in order to revitalize deliberations by the Board of Directors.

An overview of the analysis, evaluation, and discussions is as follows.

① Major issues and status of efforts to increase effectiveness as discussed in previous fiscal year

Major issues in FY2021 Status of efforts in FY2022
(1) Ensure greater diversity and skills balance among directors Starting with the Notice of Convocation of the 159th Ordinary General Meeting of Shareholders, disclosing “Skills Required to the Board of Directors and the Reasons”
(2) Explore monitoring-type Board operations, including the use of Board of Directors meeting agenda items Participating in discussions at the conceptual and planning stages
(3) Further strengthen information sharing with outside directors Improving advance explanation of agenda items of the Board of Directors and improving agenda setting

scrollable

② FY2022 analysis and evaluation

1 Formulation of questionnaire The Chairman and Secretariat of the Board of Directors formulate a questionnaire (11 questions, all descriptive) on the status of the Board of Directors’ initiatives and their effectiveness, based on the issues identified in the discussions of the effectiveness evaluation of the previous year, the status of the response to them and evaluation, and new issues found by the Board of Directors in FY2022.
2 Conducting of questionnaire survey All 11 directors are asked to fill out the above questionnaire in April 2023.
3 Discussions at Board of Directors meeting At the May 2023 Board of Directors meeting, all directors discuss the results of the evaluation of the effectiveness of the Board of Directors (Matters for Discussion by the Board of Directors), based on the results of the responses to the questionnaire received from each director. The FY2023 analysis and evaluation results are compiled to determine whether the Board of Directors is effective.
4 Analysis and evaluation results

Results of questionnaire evaluation from each director are summarized and discussed by the members of the Board of Directors, and the opinions are summarized as follows.

  • The composition of the Board of Directors and its deliberation time and operating methods are appropriate.
  • The quality of the content of deliberations (agenda setting and discussion by directors) has been enhanced.
  • Opinions and advice from outside directors have been adequately received, and follow-up on these has improved since last year.
  • Based on the above, we have judged that our Board of Directors is effective.

[Effectiveness evaluation items (questionnaire items)]
  1. Composition, deliberations, and operations of the Board of Directors (size, independence, diversity, content of deliberations, deliberation time, and operating methods)
  2. Ensuring the effectiveness of the Board of Directors (is the monitoring-type Board of Directors functioning?)
  3. Self-evaluation (securing time required for duties, demonstration of expertise, inside: awareness of management and supervisory perspectives, outside: supervision from an independent standpoint)
  4. Reorganization of Board of Director’s mMeeting agenda items and supervisory function (how execution and supervision should be further separated)
  5. Other (free description)

Issues and Future Initiatives

Major issues in FY2022 Initiatives in FY2023
(1) Improve board meeting agenda setting to further the Board of Directors’ supervisory function Enhance information sharing with outside directors, link agenda setting with the Executive Officers’ Meeting, and hold discussions within the Board of Directors with an awareness of the active involvement of outside directors.
(2) Organize delegation of decisions of important business execution To organize what is being delegated, we will first organize the monitoring function of the Board of Directors and seek a common understanding of the supervisory function of directors that should exist in a company with an Audit & Supervisory Committee.
(3) Establish a system on the execution side The content of deliberations and operating methods of the Executive Officers’ Meeting will be organized and linked to efforts to improve Board of Directors operations to enhance effectiveness.

scrollable

Based on the above, we will continue working to increase the effectiveness of the Board of Directors.

(3) Nomination & Compensation Committee

Meidensha has established a voluntary Nomination & Compensation Committee as an advisory body to the Board of Directors. Its purpose is to ensure management transparency and strengthen accountability regarding nominations (appointments and dismissals) and compensation of directors.

The specific composition of the Nomination & Compensation Committee and meeting attendance in FY2022 are described in “Composition of the Board of Directors, Nomination & Compensation Committee, and Audit & Supervisory Committee and Attendance in FY2022” above.

■Activities of the Nomination & Compensation Committee in FY2022

Month & year Activity
April 2022
  • Consideration of directors’ composition in organization of the Nomination & Compensation Committee, etc.
    (Including revisions to Articles of Incorporation and related rules)
  • FY2021 officer compensation report
May 2022
  • Report on estimated director’s compensation in FY2022
  • Consideration of interviews between candidates for the next management personnel (executive side) and Nomination & Compensation Committee members
June 2022
  • Confirmation of agenda and dates of Nomination & Compensation Committee meetings for FY2022
  • Consideration of interviews between candidates for the next management personnel (executive side) and Nomination & Compensation Committee members
July 2022
  • Consideration of reviewing director’s compensation system, such as performance-linked (incentive) ratios
  • Consideration of composition of Board of Directors and requirements for outside directors, etc.
August 2022
  • Consideration of composition of Board of Directors
September 2022
  • Consideration of reviewing director compensation framework for FY2023 and beyond
  • Consideration of reviewing director’s compensation system, such as performance-linked (incentive) ratios
October 2022
  • Consideration of director appointments for FY2023
November 2022
  • Consideration of director appointments for FY2023
  • Consideration of executive-side nominations taking account of FY2023 organizational system
December 2022
  • Consideration of director appointments for FY2023
  • Consideration of executive-side nominations taking account of FY2023 organizational system
  • Consideration of reviewing director’s compensation system, such as performance-linked (incentive) ratios
January 2023
  • Consideration of executive-side nominations taking account of FY2023 organizational system
February 2023
  • Consideration of reviewing the Board of Directors’ skills matrix
March 2023
  • Consideration of reviewing director compensation framework for FY2023 and beyond
  • Consideration of reviewing director’s compensation system, such as performance-linked (incentive) ratios
  • Consideration of reviewing Board of Directors’ skills matrix

scrollable

(4) Board of Directors Selection Policy and Appointment and Dismissal Process

The number of directors is set at no more than 15 to allow sufficient discussion of management issues.

(10 Directors who are not Audit & Supervisory Committee members and five who are)

Based on the basic policy for ensuring a balance between the diversity of the Board of Directors as a whole and its expertise and experience, as described in (1) ① Composition of Board of Directors above, we select individuals who will help strengthen the decision-making and supervisory functions of the Board of Directors. The Board of Directors consults with the Nomination & Compensation Committee (a voluntary committee), with independent outside directors as the main members and chair, then the Board of Directors nominates candidates by resolution. Finally, nominations are submitted to the General Meeting of Shareholders.

In the event that a director is found to be in violation of laws and regulations or the Articles of Incorporation, or to have significantly deviated from the policy for the appointment of directors, the Board of Directors will take the necessary procedures for dismissal after consulting with the Nomination & Compensation Committee.

•Board of Directors’ Skills Matrix

[Skills Required to the Board of Directors and the Reasons]

Meidensha believes that members of the Board of Directors should have such skills and experiences by the reasons below.

Skills Reasons why such skill is required
Business management With the diversification of values as social conditions change dramatically, to promote sustainability management and to strengthen the corporate governance structure by clarifying management direction by rapidly and flexibly making management decisions in order to continuously grow with the challenge to build a new society.
DX/Business transformation It is essential to work on innovation through co-creation, operational reforms through Digital Transformation (DX), and business transformation in response to changes in society for illuminating a more affluent tomorrow.
Sales/Marketing To formulate and execute sales strategies aimed at rapid progress in growth businesses and strengthening the competitiveness of the earnings base by realizing high quality growth in order to provide customer peace of mind and satisfaction.
Research and Development/“Monozukuri” To enhance product competitiveness which is necessary for high quality “Monozukuri” (design, manufacture, construction, and maintenance) to maintain a safe and secure social infrastructure and for provision of value, along with creating new technologies and new products.
Global To promote initiatives aimed at building a strong business base for overseas business and further enhancing the earning power necessary to meet the world’s new infrastructure demands.
Finance/Accounting To manage capital efficiently, invest in growth businesses, and deliver shareholder returns, together with making accurate financial reports.
Legal affairs/Internal control To strengthen internal control and compliance / risk management structure, the base for honest and responsible business operations.
HR development To enhance wellbeing and employee engagement and to promote initiatives such as DEI (Diversity, Equity & Inclusion), in order for diverse human resources, who are the source of corporate value, to be able to grow and play an active role in a lively way, where each person can derive fulfillment from their work.
Environment To expand businesses that contribute to the environment and to promote green strategies focused on internal decarbonization which are necessary to realize carbon neutrality.

scrollable

(5) Successor Planning

Meidensha selects several candidates to succeed the top executive from among those appointed as directors or executive officers with titles who have undergone education and training and who meet certain requirements and contribute to enhancing our corporate value.

In replacing the top executive, it is identified which of the candidates should be the successor after consulting with the Nomination & Compensation Committee. The Executive Officers’ Meeting and the Board of Directors scrutinize the requirements and eligibility, identify a candidate, and finally decide who will be the top executive.

(6) Executive Officer System and Executive Structure

Meidensha introduced an executive officer system in June 2003 in order to streamline the Board of Directors, as well as to accelerate management decision-making and to enhance supervisory functions. At the same time, we sought to reinforce the functions of the Board of Directors by promoting the separation of the decision-making authority and supervisory function from the business performance function held by the Board of Directors.

Based on the Articles of Incorporation, executive officers selected by the Board of Director’s Meeting assume responsibility for the execution of specified tasks within the scope of authority transferred by the Executive Officers’ Meeting and the President and Executive Officer, and nimbly perform executive functions under the supervision of the Board of Directors, in accordance with the Meidensha Group’s management policies determined by the Board of Directors.

The Executive Officers’ Meeting, which comprises Executive Officers with Titles, is created for executive decision-making, and decides matters based on the rules of internal approval, as well as matters for which consultation from a full-company perspective is required.

Furthermore, apart from the meeting body to make decisions, we established advisory and internal bodies such as review and strategy meetings, and with regard to important management matters, we created a system wherein thorough discussion and deliberation are conducted prior to decision-making, and follow-up strategy and planning and improvement initiatives are conducted following decision-making.

Summaries and key points of proceedings at the Executive Officers’ Meeting and other internal bodies are reported at the regular meeting of the Board of Directors for the month as a report on business execution. This helps to ensure and improve the effectiveness and supervisory functions of the Board of Directors.

In executing business, resolutions and decisions are made by executive officers who have authority over business execution and strive to execute operations proactively and flexibly.

In addition, when the Board of Directors delegates part of its business execution authority to executive officers via the directors, the executive officers are required to submit a report on the status of business execution to the Board of Directors at least once every three months. This helps ensure that the Board of Directors can supervise effectively.

(7) Auditing System

Meidensha transitioned from the prior institutional structure of a company having an Audit & Supervisory Board to a company having an Audit & Supervisory Committee at the General Meeting of Shareholders held on June 26, 2020.

Our Audit & Supervisory Committee consists of four directors who are Audit & Supervisory Committee members (three outside directors and one standing inside director).

In principle, the Audit & Supervisory Committee is held once a month before the Board of Director’s Meeting. The purpose is to enable the Audit & Supervisory Committee to form its own intentions on matters to be discussed at Board of Director’s Meetings prior to the Audit & Supervisory Committee. In case there is a quarterly audit report from the accounting auditor, Audit & Supervisory Committee is held on the same day as the Board of Director’s Meeting. In that case, the Audit & Supervisory Committee is held twice in a month. Each Audit & Supervisory Committee lasts about two hours.

In addition, we established the Support and Advisory Division for Audit & Supervisory Committee exclusively to aid the Audit & Supervisory Committee. It has four members with legal, financial, accounting, sales, factory, quality control, R&D, overseas business, and internal auditing experience.

(8) Internal Auditing System

i Organization

Meidensha has established the Internal Auditing Division (16members as of March 31, 2023).

As an organization under the direct control of the President and Executive Officer, the Internal Auditing Division is independent from other executive lines. It conducts internal audits to check the effectiveness and efficiency of business operations, the reliability of financial reporting, the status of compliance with laws and regulations, and the maintenance of assets, covering Meidensha and all of Meidensha Group companies including in abroad.

With regard to internal control, the Internal Control Promotion Division is the specialized division that establishes risk management systems that integrate the entire Meidensha Group, promotes enhancement of internal control systems, and ensures complete internal control functions through joint monitoring of internal control systems by the Audit & Supervisory Committee and the Internal Auditing Division.

ii Method of audits

In FY2022, the internal audits were mainly conducted by two methods.

We conducted risk-based audits in 10 divisions based on the major Company-wide risks identified by the Risk Management Committee. We covered those risks comprehensively while prioritizing high-risk areas. In FY2023, we will reevaluate the major Company-wide risks from the perspective of the Internal Auditing Division and will audit units selected in consideration of risk factors of particular importance to management and other risks.

To improve the coverage of risks in audits of subsidiaries, we conduct standardized audits with audit standardization tools. We plan to conduct standardized audits of all subsidiaries between FY2021 and FY2024. In FY2022, we audited 4 domestic subsidiaries and 12 overseas subsidiaries.

The Internal Audit Regulations stipulate that internal audit results are to be reported to the President & Executive Officer, the Board of Directors, the Executive Officers’ Meeting, and the Audit & Supervisory Committee.

In FY2022, reports were presented monthly to the President & Executive Officer, semiannually to the Board of Directors and the Executive Officers’ Meeting, and 10 times to the Audit & Supervisory Committee. Internal audit reports are also sent to the members of the Executive Officers’ Meeting and standing Audit & Supervisory Committee members each time one is issued.

(9) Strengthening Group Governance

The Meidensha Group is working to continuously strengthen group governance by developing basic policies based on the “Basic Policy regarding Establishment of a System to Ensure the Appropriateness of Business Activities” at each Meidensha Group company, establishing a regulatory framework, and implementing the PDCA cycle.

1. Major Initiatives in FY2022

  1. (1)The Group Company Internal Control Committee met twice in the year to share information on important top risks for the Group as discussed by the Risk Management Committee and the progress of risk management at each company. It also introduced CSA (control self-assessment) to overseas subsidiaries and provided internal control training and CSA training for local staff at 13 companies, mainly at presiding companies.
  2. (2)In order to strengthen the internal controls of the entire Group, the Internal Auditing Division conducted standardized audits of four domestic subsidiaries and two overseas subsidiaries to check the status of their preparation and operation of internal controls.

(10) Basic Policy and Current Status of Cross-Shareholdings

Our purpose to hold cross-shareholdings is to maintain and expand transactions for the medium -to long-term and secure and strengthen medium- to long-term cooperative relationships with partners and allies, taking account of market conditions and other factors. Based on the purpose, our basic policy is to hold cross-shareholdings that help enhance corporate value and to consider selling cross-shareholdings that no longer seem significant or rational.

Under this policy, we decide to keep or reduce its current holdings of listed stocks based on a comprehensive assessment of whether the ratio of each stock’s return (dividends, related trading profits, etc.) to market value meets the target cost of capital, policy factors, and so on.

we sold 10 listed and unlisted stocks for ¥1,03 billion out of its 102 listed and unlisted stocks (balance sheet amount: ¥16.406 billion) as of March 31, 2022, reducing the number of stocks to 96 (balance sheet amount: ¥16,418 billion) as of March 31, 2023. This represents 14.8% of consolidated net assets as of March 31, 2023.

Public Relations Section

Officers’ Remuneration

Directors’ Compensation

Directors compensation policy

i Level and System of Compensation

The level of compensation of Meidensha’s directors is determined based on external objective compensation market data, economic conditions, industry trends, and Meidensha’s business circumstances, etc. Giving consideration to this level, the content of the director’s compensation system is determined in the form of internal regulations on director’s compensation after consultation and confirmation by the aforementioned voluntary Nomination & Compensation Committee, chaired by an outside director.

ii Composition of Compensation

(a) Directors (excluding Audit & Supervisory Committee members and outside directors)

Compensation of directors (excluding Audit & Supervisory Committee members and outside directors) is based on an annual salary system with performance-linked compensation and comprises basic compensation (a) and incentive compensation according to position. Of these, incentive compensation comprises performance-linked compensation (b) as a short-term incentive and compensation for stock acquisition (c) and TSR (total shareholder return)-linked compensation (d) as medium- to long-term incentives.

Target Proportion of Each Type of Compensation (if 100% of targets were achieved)
Target Proportion of Each Type of Compensation  (if 100% of targets were achieved)
(b) Directors and Outside Directors Who Are Audit & Supervisory Committee Members

Directors and outside directors who are Audit & Supervisory Committee members only receive basic compensation on annual salary system basis.

iii Incentive Compensation System

The performance indicator for calculating performance-linked compensation as a short-term incentive is decided after the annual general meeting of shareholders for the relevant fiscal year. It is decided based on the operating income of the previous fiscal year to raise awareness of the need to improve performance, especially profitability, each fiscal year. The performance-linked compensation indicator varies from 0 to 140 depending on the degree to which targets were achieved, with perfect achievement counting as 100.

Operating income for FY2021 was ¥9.468 billion, compared to a target of ¥10 billion, which represents an achievement rate of 94.6%.

Calculation Formula
Calculation Formula

Meidensha provides compensation for stock acquisition and TSR-linked compensation as medium- to long-term incentives to sustainably increase corporate value and ensure that directors (excluding Audit & Supervisory Committee members and outside directors) have some shared value with shareholders.

  1. (1) The amount of compensation for stock acquisition is determined for each position based on internal rules on officers’ compensation. The amount is contributed to the Officers’ Shareholding Association to acquire shares.
  2. (2) The TSR-linked compensation indicator varies generally between 80 and 120 depending on the ratio of the Company’s TSR at the end of the latest fiscal year to the TSR of the TOPIX benchmark including dividends corresponding to the Company’s TSR calculation period (relative TSR*).
Calculation Formula
Calculation Formula
  • *Relative TSR: Meidensha’s TSR at the end of the latest fiscal year divided by the TSR of the TOPIX benchmark including dividends corresponding to the Company’s TSR calculation period

iv Compensation Determination Procedures

Details of the compensation system and the amount of compensation (including the rules that it is calculated in accordance with the standards of the compensation system and is within the compensation limits decided at the General Meeting of Shareholders) are confirmed and deliberated from an objective point of view by the voluntary Nomination & Compensation Committee.

Specific details of the amount of compensation for each individual director (excluding members of the Audit & Supervisory Committee) are delegated to the President & Executive Officer (“President”), who is a director, based on a resolution of the Board of Directors. To ensure that the President exercises this authority properly, the Board of Directors establishes procedures for the President to consult and obtain confirmation of the draft in advance from the voluntary Nomination & Compensation Committee. Moreover, the President’s decision must consider the details of such confirmation or report. In FY2022, the Board of Directors resolved at its June 23, 2022, meeting to delegate President Takeshi Miida to determine the specific details of the amount of compensation for directors. The reason for delegating this authority is that the President, as the chief officer of the Company, is best suited to evaluate each director while looking at Meidensha’s overall performance.

Compensation for directors who are members of the Audit & Supervisory Committee is determined by the same committee within the compensation limit decided at the General Meeting of Shareholders. An appropriate amount is set to reward the services of committee members, taking into consideration whether they are standing or non-standing and the nature of their respective auditing duties.

FY2022 Results
Classification Total Amount of Compensation, etc.
(millions of yen)
Total Amount of Each Type of Compensation, etc.
(millions of yen)
Number of People
Basic compensation Incentive compensation
Directors (excluding Audit & Supervisory Committee members and Outside Directors) 246 175 70 6
Outside directors (excluding Audit & Supervisory Committee members) 26 26 - 4
Directors who are Audit and Supervisory Committee members (excluding Outside Directors) 34 34 - 2
Outside directors who are Audit & Supervisory Committee members 26 26 - 5
Total 333 262 70 17

scrollable

  • Notes
    1. Amounts are rounded down to the nearest ¥1 million.
    2. The above includes three directors (excluding Audit & Supervisory Committee members) and two directors who are Audit & Supervisory Committee members who retired at the conclusion of the 158th Ordinary General Meeting of Shareholders held on June 23, 2022.
    3. The amount of compensation for directors (excluding Audit & Supervisory Committee members) does not include employee salaries for directors who also serve as employees.
Public Relations Section

Board of Directors & Executive Officers as of July, 2020

Board of Directors & Executive Officers as of July, 2023

Public Relations Section