Board of directors
- Selection of Directors
- Appointments of Outside Directors
- Remuneration Policy
- Overview of the compensation system
- Method used to determine the amount of compensation
- Compensation limits
- Development and Selection of Successors
- Analysis and Evaluation of the Board of Directors’ Effectiveness
- Officer Training
- Support System for Outside Directors
Selection of Directors
The regulations for candidates for director positions stipulate that candidates should have impressive leadership abilities, decision-making skills, vision and planning abilities, and should also have the personal qualities and insight fitting a director, among other qualities. Additionally, current directors who are up for reelection cannot have an attendance rate at Board of Directors’ meetings below 85% without a legitimate reason. In addition, when selected as a candidate, a specific skill matrix should be considered for those skills that directors should have, in light of the Group’s management strategies and business characteristics. The Board of Directors also strives for a balanced structure that reflects gender, global, cultural and other types of diversity in order to facilitate appropriate, swift decision-making and promote supervisory functions.
Individuals meeting the requirements who have the skills and who qualify as candidates for director are proposed as official candidates to the Board of Directors after their eligibility and the overall balance of the Board of Directors, among other factors, have been discussed by the Nomination and Compensation Committee. The Board of Directors holds discussions on the candidates for director in light of these reports and the views of the Audit and Supervisory Committee and presents the candidate proposals at the General Meeting of Shareholders.
Skill Matrix
*chart can be scrolled left and right.
| Name | Experience and expertise | |||||||||
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| Corporate management |
Knowledge about international business and overseas conditions | Financial accounting | Technology development | Manufacturing and quality | Environment | Sales and procurement | HR development and diversity | Legal issues and risk management | ||
| Management strategy |
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Masanari Yasuda REPRESENTATIVE DIRECTOR, PRESIDENT |
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Eiji Toba REPRESENTATIVE DIRECTOR, SENIOR MANAGING OFFICER |
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Akihiko Hayashi DIRECTOR, SENIOR MANAGING OFFICER |
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Yasushi Suzaki DIRECTOR, MANAGING OFFICER |
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Hiroshi Naito DIRECTOR, OPERATING OFFICER |
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Takeshi Ogita DIRECTOR |
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Kaori Matsusita DIRECTOR |
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Tatsuo Sekine DIRECTOR, AUDIT AND SUPERVISORY COMMITTEE MEMBER |
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Hajime Hayashi DIRECTOR, AUDIT AND SUPERVISORY COMMITTEE MEMBER |
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Tomoko Nakada DIRECTOR, AUDIT AND SUPERVISORY COMMITTEE MEMBER |
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Kenichi Naito DIRECTOR, AUDIT AND SUPERVISORY COMMITTEE MEMBER |
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Nomination and Compensation Committee
Outside Directors
Independent directors
Appointments of Outside Directors
The Company selects persons with extensive experience in corporate management or expertise in various fields as outside directors in order to provide advice and supervision on management from an independent standpoint, taking into account the characteristics of the company’s business.
When selecting outside directors, in addition to satisfying the criteria for independence set forth in the Companies Act, the Ordinance for Enforcement of the Companies Act, and by Tokyo Stock Exchange, Inc., the company makes its decisions in accordance with its regulations for candidates for directors and Independence Standards for Outside Directors it has set forth. The regulations stipulate that directors may concurrently serve as officers for up to three listed companies including TS TECH.
| Name | Reason for Appointment |
|---|---|
| Takeshi Ogita | Mr. Ogita was engaged in the management of a pharmaceuticals company for many years. Based on his extensive experience and broad insight as a corporate manager, he provides beneficial opinions and suggestions on the management of the Company as an Outside Director. We selected hiｍ as Outside Director, in the expectation that he can continue to contribute to ensuring the soundness of management, by reflecting his extensive experience and insight in the management of the Company. He serves as Chairman of the Board of Directors from June 2022. |
| Kaori Matsushita | Ms. Matsushita has extensive experience and insight gained through the planning and promotion of new business and corporate alliance strategy at a comprehensive IT vendor, and diversity management support at a consulting company. We selected her as Outside Director, in the expectation that she will continue to contribute to enhancing diversity and ensuring the soundness of management of the Company. |
| Hajime Hayashi | Mr. Hayashi has broad insight and extensive experience as an attorney. Since his appointment as Outside Director of the Company, he has appropriately performed audits, such as by giving advice on the management of the Company as necessary. We selected him as an Outside Director who is an Audit & Supervisory Committee Member, in the expectation that he can continue to contribute to ensuring the soundness of management, and the audit and supervision of the Company’s management. |
| Tomoko Nakada | Ms. Nakada has extensive overseas experience and broad insight as an attorney. Since her appointment as an Outside Director of the Company, she has appropriately performed audits, such as by giving advice on the management of the Company as necessary. We selected her as an Outside Director who is an Audit & Supervisory Committee Member, in the expectation that she can continue to contribute to ensuring the soundness of management, and the audit and supervision of the Company’s management. |
| Kenichi Naito | Mr. Naito has extensive experience and insight through financial accounting, domestic and international sales, supervising sales of group companies, corporate management at a major general chemicals manufacturer as well as auditing duties as an auditor. We selected him as an Outside Director who is an Audit & Supervisory Committee Member, in the expectation that he can contribute to ensuring the soundness of management, and the audit and supervision of the Company’s management. |
Remuneration Policy
TS TECH’s basic policy on executive compensation is to ensure that it is transparent and reasonable, with the potential to further motivate sustained business growth.
We established the Nomination and Compensation Committee, chaired by an outside director and composed of three outside directors and two internal directors, as an advisory body to the Board of Directors. When reviewing the level and calculation method of compensation in consideration of the basic policy and social conditions, revising the compensation structure, or determining the individual compensation for directors for each fiscal year, the Board of Directors makes resolutions based on consultations with the Nomination and Compensation Committee and the deliberations of the Audit and Supervisory Committee.
Officer compensation consists of basic fixed compensation, performance-linked remuneration as a short-term incentive, and non-monetary stock-based compensation as a medium- to long-term incentive to enhance the Group’s corporate value over the medium to long term and further share value with shareholders. The composition of annual compensation is approximately 60% base compensation, 25% performance-linked compensation, and 15% stock-based compensation.
Outside directors and directors who are Audit and Supervisory Committee Members are paid basic compensation only given that their role is to audit and supervise management from an independent perspective.
Overview of the compensation system
The company determines the amount of each form of compensation according to a compensation table, in accordance with rank, individual performance, and other factors.
Performance-linked compensation is linked to the indicators of average rates of growth in consolidated revenue and consolidated operating income over the past three terms and the rates of change in amounts of dividends and number of months’ salary paid as employee bonuses, to incorporate the perspective of value sharing with shareholders and employees.
Specifically, the company calculates the compensation amounts by multiplying a performance-linked compensation index coefficient calculated using the formula below by the amounts for each rank in the compensation table.
Method used to determine the amount of compensation
The company calculates individual compensation amounts and numbers of shares in accordance with each compensation table, based on individual evaluation by the Executive Committee, which is composed of all representative directors, and directors working in Japan (excluding directors who are Audit and Supervisory Committee members). The advice of the Nomination and Compensation Committee is then sought regarding these amounts. For performance-linked compensation, compensation amounts are calculated using the method above, and the advice of the Nomination and Compensation Committee is then sought regarding these amounts.
The Nomination and Compensation Committee deliberates on the appropriateness and suitability of the amounts of base compensation, performance-linked compensation, and stock compensation for each individual, reports the results to the Audit and Supervisory Committee, and reports back to the Board of Directors.
The final decision is made by the Board of Directors based on the content of the report by the Nomination and Compensation Committee and the results of deliberation by the Audit and Supervisory Committee. The base compensation for directors who are Audit and Supervisory Committee Members is determined based on discussions among directors who are Audit and Supervisory Board Members.
Compensation limits
The maximum amount of compensation (not including stock compensation) for directors (excluding directors who are Audit and Supervisory Board Members) is 750 million yen per year (of which the maximum amount for outside directors is 30 million yen), as resolved at the 75th Annual General Meeting of Shareholders held on June 25, 2021.
The maximum amount of stock compensation for directors (excluding directors who are Audit and Supervisory Board Members) is 150 million yen per year, and the maximum number of shares is 50,000 shares, as resolved at the 75th Annual General Meeting of Shareholders held on June 25, 2021.
The maximum amount of compensation for directors who are Audit and Supervisory Board Members is 90 million yen per year, as resolved at the 75th Annual General Meeting of Shareholders held on June 25, 2021.
Development and Selection of Successors
The TS TECH Group has set out the qualities, skills, and experience we seek in the people who will take on responsibility for management as directors and executive officers. We offer selective training and other programs to develop the successors who will drive the company’s future success.
In our step-by-step selective training programs for managers and general managers, we aim to nurture human resources with advanced interpersonal skills, dignity, and management capabilities. We do this by enhancing the skills and knowledge required of managers, such as skills in management strategy and financial accounting, as well as broadening perspectives, using various curricula.
At the stage where we select our successors, the Nomination and Compensation Committee, chaired by an outside director, determines director and executive officer candidates’ suitability as next-generation management personnel, including their career background, areas of expertise and personability. After a process of careful deliberation the final decision is made by the Board of Directors.
Analysis and Evaluation of the Board of Directors’ Effectiveness
In an effort to maintain and improve the Board of Directors’ functions, we evaluate its overall effectiveness yearly. These evaluations of effectiveness have been conducted continuously since fiscal 2019. This is the fifth of these evaluations.
Fiscal 2024 Evaluation Process
1. Each director conducts a questionnaire-based self-evaluation (February–March 2024)
| Subjects: | All directors | |
|---|---|---|
| Aggregation method: | Anonymous questionnaire responses. External organization commissioned to perform aggregation. | |
| Evaluation items:* | Board of Directors’ composition | Board of Directors’ composition, level of diversity, agenda items, etc. |
| Management strategy and business strategy | Supervision of management strategy/Appropriate allocation of management resources/Appropriate supervision of human resource strategy, etc. | |
| Corporate ethics and risk management | Compliance with corporate ethics and supervision/Monitoring of material risks/Whistleblower system, etc. | |
| Monitoring business performance and evaluating and compensating management | Relationship between business performance and management indicators/ Details of executive compensation and the process for its determination/ Process for appointment and dismissal of officers, etc. | |
| Dialogue with shareholders | Sharing value with stakeholders/Disclosure of non-financial information, etc. | |
- The structure of the questions was completely revised to identify new issues from the perspective of continuously improving the Board of Directors.
2. Board of Directors conducts discussions and summarization (May 2024)
The overall effectiveness of the Board of Directors is analyzed and evaluated on the basis of the questionnaire results, as well as comparisons with the previous fiscal year’s evaluation results, and trends seen in responses to each of the questions. Deliberations are held on policies to be taken to further increase effectiveness.
Evaluation Results and Future Initiatives
Overall Evaluation Results
- Our Board of Directors was evaluated as making progress in ensuring diversity in its composition, as holding active discussions in which each director makes use of their respective expertise and experience, and as maintaining its effectiveness.
- Both inside and outside directors evaluated the Board of Directors’ meetings as having room for improvement in terms of deepening discussions, improving operational methods including provision of information, strengthening oversight of risk management, and enhancing the effectiveness of the process for appointment and dismissal of officers.
Future Initiatives
- To strengthen supervision of risk management, review reporting routes and hold study sessions to raise awareness
- Based on the evaluation results, discussions are being held among the directors to consider improvement measures aimed at further enhancing the effectiveness of the Board of Directors
- Review the way discussions are conducted at meetings other than Board of Directors’ meetings to deepen discussions at Board of Directors’ meetings,
- Review processes to evolve into a more effective committee by clarifying the roles of the Nomination and Compensation Committee
Officer Training
We provide opportunities for directors to attend external specialist seminars when they first take up their posts. In addition, we hold study sessions once a year for all directors in principle, including corporate officers, to deepen their knowledge and insight on topics related to legal affairs, finance, and management.
Even after their appointment, we provide opportunities for directors to attend external training to enhance their knowledge. For directors who are members of the Audit and Supervisory Committee, we offer opportunities to gain a deeper understanding of the company's operations by conducting on-site inspections to confirm the conditions and management status of each division and subsidiary.
Support System for Outside Directors
For outside directors to effectively fulfill their roles and responsibilities at Board of Directors’ meetings, prior to the deliberations at such meetings, the responsible executives provide advance briefings of the agenda items and exchange opinions, and the legal department also shares information on important compliance, risk management, whistleblowing, etc.
Furthermore, based on the results of the evaluation of the effectiveness of the Board of Directors’ meetings, we are working to build internal systems, such as promoting the participation of outside directors in meetings related to business strategy, to enhance the provision of information.