Corporate Governance
Basic Policy Regarding Corporate Governance
The Basic Management Policy of the Company is that we shall continuously strive to enhance both our economic value and our value to society while making ongoing, active contributions to the development of a sustainable society, with Our Philosophy serving as the basis for our every decision and as the impetus for our every action. In keeping with this policy, the Company considers the enhancement of overall corporate governance to be a key management objective.
Corporate Governance Structure
(as of March 29, 2024)
Evaluation of the Effectiveness of the Board of Directors
The Company’s Board of Directors has been conducting analysis and evaluation of the Board of Directors’ performance as we have done in the past. As a result of various measures to improve effectiveness that were again taken in 2023, the number of items placed on the agenda of the Board of Directors, the suitability of their content, and the support system provided by the administrative office, among other issues, received high evaluation. However, challenges were also identified, such as the need to secure diversity in the Board of Directors’ team, insufficient discussions for some themes, among other challenges. The results were shared with the Board of Directors, and opinions were exchanged to further improve the effectiveness of the system. We will continue to improve the effectiveness of the Board of Directors so as to further enhance our corporate value.
Remuneration of Directors and Audit & Supervisory Board Members
◆Remuneration Amount and the Company’s Policies for Determining Its Calculation Method
With regard to the remuneration of officers (Directors and Executive Officers), the Company’s basic policy is to adopt a remuneration system that is linked to the interests of shareholders, so that it effectively functions as an incentive package rewarding members for their efforts to sustainably enhance corporate value. The Company also ensures that the remuneration of individual recipients is set at an appropriate level in light of their respective responsibilities.
Specifically, remuneration for Directors (excluding Outside Directors) and Executive Officers consists of a basic salary constituting a fixed portion and bonuses constituting a performance-based portion. Except for Outside Directors, Directors are also granted stock-based remuneration as medium- to long-term incentives. For Outside Directors who assume management supervisory functions, the Company furnishes only a basic salary with a view to ensuring their professional independence.
The Company determines the amount of remuneration for directors and executive officers based on a resolution of the Board of Directors after examining proposals submitted by the Nomination and Compensation Committee, which discusses the matter from objective and unbiased viewpoints, with independent outside directors comprising the majority of members.
The amount of remuneration for Audit & Supervisory Board members is determined in discussions among Audit & Supervisory Board members and paid within the limits approved at the Company’s General Meeting of Shareholders.
◆Remuneration for Directors and Audit & Supervisory Board Members
| Type | Number of Persons paid | Amount paid |
|---|---|---|
| Director | 14 | ¥402 million |
| Audit & Supervisory Board Member | 6 | ¥88 million |
Notes.
1. In accordance with a resolution at the 123rd Ordinary General Meeting of Shareholders held on March 26, 2015, the maximum total amount of remuneration for Directors and Audit & Supervisory Board Members was set at ¥800 million per year (of which ¥70 million per year is for Outside Directors) and ¥100 million per year, respectively. In addition, at the time of the above resolution, the Board of Directors consisted of 11 Directors (including two Outside Directors), while the Audit & Supervisory Board consisted of five Members (including three Outside Audit & Supervisory Board Members). Subsequently, the limit on the total amount of stock-based remuneration to be granted to Directors (excluding Outside Directors) separately from the above-mentioned remuneration, has been set based on a resolution by the 130th Ordinary General Meeting of Shareholders held on March 24, 2022, to furnish incentives to the recipients in the form of the Company’s shares with transfer restrictions. Based on this resolution, the limits on such remuneration have been set at ¥40 million and 20,000 shares, respectively, in terms of the value and number of shares that can be granted annually. At the time of said resolution, the Board of Directors consisted of seven Directors (excluding Outside Directors).
2. The number of persons paid above includes four Director and one Audit & Supervisory Board Member who resigned as of March 28, 2023.
Skill Matrix for Directors and Audit & Supervisory Board Members
To realize “Our Philosophy,” the Group’s corporate philosophy structure, resolve materiality issues over the medium to long term through promotion of ESG management, and execute the Mid-Term Plan, the Company has established, as a skills matrix, the expertise that Directors and Audit & Supervisory Board Members should possess in order for the Board of Directors to properly carry out its decision-making and management supervisory functions.
The content of each item is determined by the Board of Directors after discussion by the Nomination and Remuneration Committee, taking into consideration the business environment and the Company’s management plan and business characteristics, and includes up to four items of expertise that are expected primarily from each person.
Reasons for Adoption of Items in the Skill Matrix
| Name | Position | Skill Matrix for Directors and Audit & Supervisory Board Members | ||||||
|---|---|---|---|---|---|---|---|---|
| Corporate Management and Business Strategy | Production and Technology | International Business | Sales and Marketing | Legal and Governance | Financial Strategy and Accounting | DX and IT | ||
| Satoru Yamamoto | Representative Director,President and CEO (President) | ● | ● | ● | ||||
| Hidekazu Nishiguchi | Representative Director (Managing Executive Officer) | ● | ● | ● | ● | |||
| Kiyoshige Muraoka | Director (Senior Executive Officer) | ● | ● | |||||
| Masatsugu Nishino | Director (Senior Executive Officer) | ● | ● | ● | ● | |||
| Naoki Okawa | Director (Senior Executive Officer) | ● | ● | |||||
| Yasuaki Kuniyasu | Director (Senior Executive Officer) | ● | ● | ● | ||||
| Hideaki Kawamatsu | Director (Senior Executive Officer) | ● | ● | ● | ● | |||
| Keizo Kosaka | Outside Director | ● | ● | |||||
| Mari Sonoda | Outside Director | ● | ● | ● | ||||
| Takashi Tanisho | Outside Director | ● | ● | ● | ● | |||
| Misao Fudaba | Outside Director | ● | ● | ● | ||||
| Naomi Motojima | Outside Director | ● | ● | |||||
| Kazuo Kinameri | Standing Audit & Supervisory Board Member | ● | ● | ● | ● | |||
| Hiroki Ishida | Standing Audit & Supervisory Board Member | ● | ● | ● | ● | |||
| Asli M. Colpan | Outside Audit & Supervisory Board Member | ● | ● | ● | ||||
| Hirofumi Yasuhara | Outside Audit & Supervisory Board Member | ● | ● | ● | ||||
| Toshikazu Tagawa | Outside Audit & Supervisory Board Member | ● | ● | ● | ||||
Training the next-generation managers
The Group is focusing on training next-generation managers and overseas base managers.
A Management School was established so that candidates can acquire skills related to perspective (viewing things as a manager), knowledge (basic knowledge required of management), and thinking (critical thinking). Starting in 2003, approximately 20 people have been selected each year, and classes are offered throughout the year. Management attends the last meeting, and reports on issues such as future business expansion are provided. This is the training of next-generation managers.
Implementation and Status of the Internal Control System
Based on “compliance with social norms,” which is stipulated in the Company’s “Corporate Code of Conduct,” Sumitomo Rubber Industries maintains the guideline that “corporate activities must adhere to laws and ordinances, social norms and standards of public decency.” Moreover, the Company has established “systems to ensure that in the execution of their duties, Directors comply with laws and the Company’s Articles of Incorporation and that Group operations undertaken by the Company and its subsidiaries are always appropriate,” thereby securing strict legal compliance. In addition to complying with laws and its Articles of Incorporation, Sumitomo Rubber Industries aims to fulfill its corporate social responsibilities and, to this end, has established a strict code of corporate ethics while pursuing sound business operations. To that end, the Company formulated “Regulations on Corporate Ethics Activities” in February 2003. Simultaneously and in line with these regulations, the Company established the “Corporate Ethics Committee,” which meets on a quarterly basis and is chaired by the President, with the aim of strengthening its Group-wide compliance system.
Furthermore, Sumitomo Rubber Industries set up a “Corporate Ethics Helpline (Compliance Consultation office)” directly controlled by the President as a corporate ethics helpline for employees. This enables the Corporate Ethics Committee to investigate any problems that arise within the Group and give sufficient attention to ensuring that those employees who come forward are not penalized. With a close eye on legal issues, the Company also takes such measures as seeking advice from corporate attorneys as circumstances demand.
Tax Policy
As a global enterprise that is dedicated to observing and respecting all applicable laws and regulations, engaging in fair and transparent business activities, contributing extensively to our communities and society and earning the trust and respect of our stakeholders, the Sumitomo Rubber Group (hereinafter, “our Group”) has made it our basic management policy to continue producing new value for more pleasant and attractive lifestyles for our customers while continually enhancing our corporate value for our stakeholders. One aspect of this basic management policy is our Group’s dedication to fulfilling our tax obligations in an appropriate and ethical manner so that we may contribute to the development of the local and regional communities in which we operate.
Our Management of Tax Risks
By a resolution of our Board of Directors, our Group has established and fully implemented the necessary framework to ensure the proper execution of business of our Group. Management risks that may adversely and materially affect the business activities of the Group shall be addressed by the relevant division and/or subsidiary in advance through analysis of those risks and the planning of countermeasures in accordance with company regulations concerning risk control, which stipulate risk management rules for the entire Group. Further, we have also established and implemented a system of checks to ensure that our business activities are fair and honest while striving to minimize our Group’s tax risks. If necessary, advice and guidance may be sought from professionals, including our tax advisors, in analyzing and planning countermeasures against such risks.
Our Approach to Tax Planning
Our Group engages in tax planning activities that appropriately reflect economic entities and are in full accordance with OECD Guidelines as well as the relevant laws and regulations of the various countries in which we operate. Further, our Group has pledged that we will neither exploit tax havens as a means of avoiding taxation nor engage in either business dealings whose primary aim is the reduction of our tax burden.
Our Relationship with Tax authorities
Our Group considers daily communication with every stakeholder to be an essential aspect of remaining conscious of the responsibilities of our Group. Our Group hopes to build a trust-based relationship with Tax authorities through the appropriate disclosure of all pertinent information in a timely manner and fully intends to enhance the transparency of our operations. We will also file tax returns and pay taxes on time in accordance with all relevant laws and regulations while working with Tax authorities to cooperate with official requests by promptly providing all requested information while.