Corporate Governance

Basic Approach to Corporate Governance

Our Business Philosophies is “The boundless pursuit of the Value of Light,” “Business innovation by maximizing our potential as a manufacturer,” and “Ensuring the welfare of those who truly support our mission,” based on the Stanley Group Vision, the basic values shared throughout the Group. We aim to create social value and contribute broadly to society through our global business activities, as well as our pursuit of “the Five Ways of Creating Value with Light.” Creating: creating light, Recognizing: sensing and recognizing with light, Informing:processing information with light, Energizing: harnessing light’s energy,and Expressing: producing feeling with light.
We strive to meet the expectations of all our stakeholders by pursuing transparency and fairness in management and striving to establish world-class corporate governance.

Corporate Governance System

Role of Each Meeting

Name Function Participants Main Agenda Items
Board of Directors To make decisions on important operational matters and conduct statutory reporting as a statutory meeting body Directors, Audit & Supervisory Board Members
  • Items stipulated by law
  • Important operational matters
Management Meeting To discuss and deliberate important management matters and set the direction for company-wide strategies, report on and give approval to important matters in accordance with rules and regulations Representative Director, Directors with titles, Members appointed by Representative Director
  • Items stipulated by the Guidelines for Administrative Processing and Operations and other internal regulations
  • Items deemed necessary by Directors
Division meetings To report on and give approval to important business management matters and business execution matters concerning the overall operations of divisions Executive General Managers of divisions, General Managers, Presidents of domestic and overseas group companies
  • Important matters that concern division operation, items proposed by members
Officers’ Meeting To discuss medium- to long-term strategic issues Directors, Audit & Supervisory Board Members, and Executive Officers/Operating Officers
  • Items proposed by Directors
  • Items proposed by the Management Meeting/ Executive Officers’ Meeting
Executive Officers’ Meeting Executive Officers/Operating Officers discuss items on the Management Meeting agenda and each division issue Executive Officers/Operating Officers
  • Discussion of strategic topics for each division
  • Other items proposed by Executive Officers/ Operating Officers

Improving the Effectiveness of the Board of Directors

Our Management Meeting comprising with our key Directors deliberate on important matters with company-wide impact, in order to carefully decide on such matters from multi-faceted viewpoints before consulting with the Board of Directors. We have also adopted an Executive Officer system to separate our “Decision Making/Supervisory Functions” from our “Business Execution Functions.” Moreover, “Operating Officers” have been set up with the aim of strengthening execution functions—each position is in charge of a specialized medium- to long-term strategic topic and vigorously works toward achieving their goals, thus creating a structure that facilitates faster business execution.
Outside Officers are provided with briefings in advance, and discussions at the Board of Directors meetings are based on the feedback and questions raised during the advance briefings, with the aim of improving the quality and efficiency of discussions at the Board of Directors meetings.

FY2023 Board of Directors Meeting Agenda

53 resolved matters:
Management policy, business planning, approval of consolidated and non-consolidated financial statements, creation and revision of important internal regulations, important organization and personnel items, important investment and financing items, etc.
19 reported matters:
Report on execution of duties by Directors, response by Governance Committee regarding Officer system, report on auditing results, auditing plans, report on J-SOX evaluation report, etc.

Evaluation of Effectiveness of the Board of Directors

The Company evaluates the effectiveness of the Board of Directors (via self-evaluation), with the purpose of validating the efficient and appropriate functioning of the Board of Directors and improving its functions as a whole.

Method of Evaluation

An anonymous questionnaire containing the questions shown on the right is distributed to each Director and Audit & Supervisory Board Member every year. Based on the results of the tabulated responses, the Governance Committee, whose main members are Outside Officers, evaluates the effectiveness of the Board.

Main content of questionnaire

  • Composition an size of the Board of Directors
  • Operation of the Board of Directors
  • Board of Directors’ role, etc.
  • Overview

Analysis and Evaluation

The questionnaire conducted in November 2023 resulted in an average score of 4.18 (+0.19 year-on-year) on a 5-point scale, indicating that the Board of Directors is generally operating effectively. It also revealed that overall, there are no significant differences in evaluation results between internal and external companies.
Feedback from some respondents for free-answer questions indicated that improvements are needed, including the “Succession plans” and “Responses by the Board of Directors for Sustainability.”

Composition and size Operation Role, etc. Overview
Overall 4.1 4.2 4.1 4.4
Internal officers 4.2 4.3 3.9 4.4
Outside officers 4.0 4.1 4.2 4.5
Change in overall average values over the three recent years
    • 5.0　 Appropriate/Functioning
    • 4.0　 Mostly appropriate/Mostly functioning
    • 3.0　 Ordinary/Neither satisfied nor dissatisfied
    • 2.0　 Only somewhat appropriate/Only somewhat functioning
    • 1.0　 Not appropriate/Not functioning

Future Measures

Following the appointment of a female Outside Director in 2022 and a female Outside Audit & Supervisory Board Member in 2023, we are continuing efforts to increase diversity from various angles, including knowledge of the electronics business and global perspectives. Enhancing comprehensiveness of the skills matrix as the Board of Directors serves to bring a variety of opinions presented by a diverse range of members to management, so as to boost corporate value.
We will also expand the scope of discussions on the Succession Plan and addressing sustainability to improve effectiveness.

Governance Committee

The Governance Committee consists of four Outside Directors, three Outside Audit & Supervisory Board Members, and one Representative Director. Its purpose is to provide a broad range of advice that ties into the Company’s sustainable growth, as an advisory body to the Board of Directors.
Vibrant discussions and opinions are held and exchanged mainly among Outside Officers regarding the evaluation, selection and dismissal of Representative Directors, the evaluation, election and dismissal of Directors, officer compensation system and the amounts of annual compensation, etc., the evaluation of the effectiveness of the Board of Directors and other matters. The Board of Directors decides on each matter in consideration of the content of the response by the Governance Committee, through which we are ensuring the independence and objectivity of the functions of the Board of Directors and are working to strengthen our governance and improving our corporate value over the medium to long term.

  • Members (as of June 27, 2024)
    • Masakatsu Mori (Outside Director)
    • Hirokazu Kono (Outside Director, Chairperson)
    • Yozo Takeda (Outside Director)
    • Satoko Suzuki (Outside Director)
    • Mitsuhiro Amitani (Outside Audit & Supervisory Board Member)
    • Koichi Uehira (Outside Audit & Supervisory Board Member)
    • Eri Yokota (Outside Audit & Supervisory Board Member)
    • Yasuaki Kaizumi (President and Representative Director)

Internal Audit

Internal Audit Organization, etc

The Company has established the Corporate Governance Department as an internal audit department under the direct control of the Representative Director. It is a dedicated independent organization comprising 17 people including certified internal auditors, and strives to maintain and improve the soundness of business execution by auditing our Group’s operations as a whole in accordance with the internal audit regulations, from the perspective of the effectiveness of internal controls, compliance, etc.

Mutual Coordination between Internal Audits, Audits by the Audit & Supervisory Board Members, and Accounting Audits, etc.

The General Manager of the internal audit department attends the Audit & Supervisory Board meetings held every month to report on audit plans and the results and collects information to facilitate mutual collaboration between the two parties.
The above General Manager also attends meetings with the Audit & Supervisory Board Members and Accounting Auditor, receives reports about the Accounting Auditor’s audit plans, the results of accounting audits during the fiscal year and at fiscal year-end and results of internal control audits, and additionally exchanges information.
If the results of audits by the Audit & Supervisory Board Members,internal audit department, or Accounting Auditor are relevant to the internal control department, they notify the internal control department of the relevant information and mutually coordinate.

Initiatives to Ensure Effectiveness of Internal Audits

The Internal Audit Department conducts audits in line with an annual audit plan developed through risk-base approach and verifies the improving status on items required to improve in follow-up audits conducted at a later date. In addition to regular reports provided to the Representative Director and the Audit & Supervisory Board, the results of audits and improving status are reported to all Directors.

Officer Compensation

Basic Policy

As described below, the policy for compensation, etc. of Directors and Audit & Supervisory Board Members ( “officers”) are determined by the Board of Directors for Directors and by the Audit & Supervisory Board for Audit & Supervisory Board Members, respectively, with the purpose of determining officer compensation, etc. in a fair and appropriate manner, through discussions and responses by the Governance Committee, the optional committee equivalent to the Appointment and Remuneration Advisory Committee.

  • The compensation system shall be objective when viewed by stakeholders including shareholders.
  • The compensation system shall be partially linked to performance, in order to clarify responsibility for business execution.
  • The policy is determined appropriately in light of economic trends, the Company’s business environment, performance, in line with medium- to long-term corporate value, and standards of other companies based on survey data of officers’ compensation conducted by external specialist institutions.

Overview of the Officer Compensation System

Officer Compensation consists of the following elements. It is calculated using a coefficient set for each element of the system.

  • Introduce a restricted stock compensation system for Directors (excluding Outside Directors) as shareholder value-linked compensation, with the purpose of increasing their motivation more than ever before to contribute to increasing stock prices, shareholder value, and corporate value.
  • Provide share subscription rights as regular stock options to Directors (excluding Outside Directors) and managers free of charge, in order for them to share the risks and rewards of fluctuations in stock prices with shareholders, and to increase their motivation more than ever before to contribute to increasing stock prices, shareholder value, and corporate value.
  • Compensation for Outside Directors and Audit & Supervisory Board Members shall only be fixed compensation from the perspective of ensuring independence.
  • Regarding the time of payment, fixed compensation will be paid monthly. Other compensation will be paid (allocated) at a certain time.

Matters related to the organization for determining the content of compensation for each Director and its verification

The Board of Directors will make a resolution to delegate the authority to determine the amount to be allocated to each Director according to the predefined calculation method to the Representative Director. Furthermore, regarding the appropriate exercise of this authority by the Representative Director, we will consult with the Governance Committee and obtain their view for reference.

Total compensation, etc. per officer category (FY2023)*

Officer category Number of
eligible officers
(Persons)		 Total
Compensation
(Millions of yen)		 Total Compensation by Type (Millions of yen)
Fixed compensation Bonus Shareholder value-linked compensation,
Regular stock options
Directors
(excluding Outside Directors)		 6 499 208 226 64
Audit & Supervisory Board Members
(excluding Outside Members)		 3 60 59 1 －
Outside Officers 8 60 60 － －
  • Includes compensation for two Audit & Supervisory Board Members who retired from their positions at the conclusion of the 118th Ordinary General Meeting of Shareholders held on June 29, 2023.
Corporate Governance Report
To Governance