Corporate governance

Basic approach to corporate governance

The goal of Aichi Steel is to contribute to sustainable development of the Earth and society through sound corporate activities. With this in mind, we aim to manage our company in a way that always enjoys extensive trust of our shareholders, investors and society by establishing and maintaining an organization capable of responding swiftly to changes in business environments and a fair and transparent management system.

We also fully comply with the Corporate Governance Code, and submit a report regarding disclosure to the Tokyo Stock Exchange. We review our compliance status once a year and make amendments or changes as required.

Aichi Way

In January 2018, we established the Aichi Way as a set of universal values and codes of conduct for the Aichi Steel Group with a focus on the three concepts of Sustain, Appreciate, and Create.

By instilling the Aichi Way among all Group officers and employees, and ensuring each person puts it into practice, we aim to strengthen our business foundations and show our integrity as a business group.

Aichi Way

Corporate governance structure

Aichi Steel uses an Audit & Supervisory Board. This system concentrates authority and responsibility for business execution to the Board of Directors, as the ultimate body for management decision making, and assigns the role of audit and supervision of the Board of Directors to the Audit & Supervisory Board and Audit & Supervisory Board Members, which are independent of the Board of Directors and business execution. We believe this system achieves appropriate management decisions and execution of duties while providing sufficient organizational checks and balances.

We employ two independent outside directors and two outside Audit and Supervisory Board Members, with extensive experience and broad insights as managers, who supervise and audit the execution of duties of the directors, and we develop systems that function effectively to ensure objectivity and neutrality of management oversight.

Internally, we also develop and properly operate systems to ensure the appropriateness of our operations in line with the Internal Control System Basic Policy.

Corporate governance system diagram

Status of the Board of Directors and the Audit & Supervisory Board

The Board of Directors, comprising Directors appointed by shareholders, makes decisions regarding material matters affecting the Company through discussion and mutual supervision regarding such aspects as necessity, legality, and efficiency. Audit & Supervisory Board Members and the Audit & Supervisory Board examine these decisions for legal violations and other compliance matters. From fiscal 2018, discussions, including with outside Directors, have been held several times a year on special topics such as challenges and future business strategies.

2015 2016 2017 2018 2019
Directors and Audit
& Supervisory Board
Members
13 15 15 10 10
Outside Directors 1 2
(including 1 female)
2
(including 1 female)
2
(including 1 female)
2
(including 1 female)

Attendance rates in fiscal 2019

No. of
Meetings
Director
attendance rate
Auditor
attendance rate
Inside
directors
Outside
directors
Standing
members
Outside
members
Board of
Directors
13 98.1% 96.2% 100% 100%
Audit &
Supervisory Board
13 -
(Directors are not members of
the Audit & Supervisory Board)
100% 100%

Selection and removal of senior management, and nomination of Director and Audit & Supervisory Board Member candidates

In November 2018, we established a voluntary Executive Remuneration and Nomination Committee, with the majority of members being independent outside Directors and the chairman also being an independent outside Director. For the purpose of selection and removal of senior management, and nomination of Director and Audit & Supervisory Board Member candidates, the Committee regularly and as required evaluates and carefully considers experience and knowledge, performance and other factors, and then reports to the Board, which makes the necessary decisions

Outside Directors and outside Audit & Supervisory Board Members

When selecting outside executives, we refer to the Enforcement Rules for Securities Listing Regulations established by the stock exchange. After comprehensive evaluations of candidate knowledge, experience and abilities, we select persons who we judge capable of overseeing our business.

List of outside Directors and outside Audit & Supervisory Board Members

Outside Directors

Name Reasons for selection
Koichi Yasui Mr. Koichi Yasui has abundant experience, broad insight, and an excellent and highly ethical character acquired through active performance as a corporate manager following experience in important positions in the sales division of Toho Gas Co., Ltd., one of the core companies in the Chubu area. He will provide the management of the Company with useful opinions and advice from an independent standpoint and experience in other industries.
Yuko Arai Ms. Yuko Arai has abundant experience, broad insight, and an excellent and highly ethical character acquired through active performance in important positions in the sales division of All Nippon Airways Co., Ltd. and ANA Sales Co., Ltd., which operate globally. She will provide the management of the Company with useful opinions and advice from an independent standpoint and experience in other industries.

Outside Audit & Supervisory Board Members

Name Reasons for selection
Koichi Ito Mr. Koichi Ito has abundant experience, broad insight, and an excellent and highly ethical character acquired through active performance in important positions in the sales division of Toyota Industries Corporation, which operates globally. He will provide the management of the Company with useful opinions and advice.
Katsuyuki Ogura Mr. Katsuyuki Ogura has abundant experience, broad insight into accounting, finance and audit businesses, and an excellent and highly ethical character acquired through active performance in administrative divisions, including accounting and personnel affairs, of Toyota Motor Corporation, which operates globally. He will provide the management of the Company with useful opinions and advice.

Executive remuneration

When determining executive remuneration, the Executive Remuneration and Nomination Committee, which has a majority of members being independent outside Directors and the chairman also being an independent outside Director, carefully considers the issue and then reports to the Board of Directors, which makes the necessary decisions.

Remuneration for Directors, excluding outside Directors, comprises a fixed monthly remuneration, performance-linked bonuses, and stock compensation.

Monthly remuneration is determined in accordance with individual roles and responsibilities up to a maximum limit set at the General Meeting of Shareholders. Bonuses are determined with full consideration given to factors such as performance linked to consolidated operating profits and employee bonus levels, and are paid after resolution of the General Meeting of Shareholders. Stock compensation is provided as a way of further sharing value with shareholders and as an incentive to continue improving company value. It is allocated as restricted stock.

Remuneration for outside Directors and Audit & Supervisory Board Members comprises monthly remuneration only, up to a maximum limit set at the General Meeting of Shareholders.

Total remuneration, total remuneration by type, and number of executives for each executive classification

(Fiscal 2019)

Executive classification Total
remuneration
(million yen)
Total remuneration by type
(million yen)
Number of
executives
Fixed
remuneration
Performance-
based
remuneration
Retirement
bonus
Directors
(excluding outside Directors)
283 211 72 - 5
Audit & Supervisory
Board Members
(excluding outside
Audit & Supervisory
Board Members)
70 70 - - 3
Outside executives 36 36 - - 6

Ensuring effectiveness of the Board of Directors

To confirm the effective operation of the Board of Directors as a whole, we survey all members of the Board of Directors, including outside Directors and Audit & Supervisory Board Members, and report the evaluation results to the Board of Directors.
These results confirm that the composition, operation, deliberation and oversight of business execution of the Board of Directors are generally appropriate, and that the Board of Directors as a whole operates effectively. On the other hand, they also show that some issues remain, including greater provision of information to outside executives.
Going forward, we will strive to further improve effectiveness in response to these issues and changes in the social environment.

Communication with shareholders and investors

In line with our policy for constructive dialogue with shareholders, we actively engage in dialogue with shareholders and investors and work to promote mutual understanding.
Executives in charge of accounting are responsible for dialogue with shareholders. They work to enhance engagement through channels including individual meetings, regular briefings on financial results for institutional investors and on company information for individual investors, and plant tours.
When necessary, opinions and other information gained through dialogue are provided internally as feedback.
We maintain a period of silence between the day after closing accounts through to the day before announcing results. While limiting dialogue with shareholders and investors, we take other necessary measures in accordance with our company rules to ensure proper management of insider information within the company.

Main IR activities

  supplementary explanation
Regular briefings for individual investors We hold briefings organized by securities companies. We discuss various topics including company overviews, financial results, and medium-term management plans.
Regular briefings for analysts and institutional investors We hold briefings for analysts and institutional investors twice a year (end of second quarter and end of fiscal year). We discuss financial results and medium-term management plans.
Website publication of IR materials We publish financial summaries, securities reports, business reports, medium-term management plans, annual report briefing materials, and Aichi Steel Integrated reports (CSR, Financial, and Environmental reports).
Division/contact for investor relations Finance & Accounting Div.

Directors and Audit & Supervisory Board Members

Nine male and one female executives (10% female representation among executives)

Takahiro Fujioka
President

Attendance at Board of Directors meetings
13 of 13 (100%)

Motoshi Nakamura
Executive Vice President

Attendance at Board of Directors meetings
13 of 13 (100%)

Naohiro Yasunaga
Director and Managing Executive Officer
General Manager, Manufacturing Innovation Headquarters

Attendance at Board of Directors meetings
13 of 13 (100%)

Katsunori Kojima
Director and Managing Executive Officer
Smart Company President

New

Koichi Yasui
Outside Director

Attendance at Board of Directors meetings
12 of 13 (92%)

Yuko Arai
Outside Director

Attendance at Board of Directors meetings
13 of 13 (100%)

Hiroaki Chino
Audit & Supervisory Board Member

Attendance at Board of Directors meetings
10 of 10 (100%)

Takashi Goto
Audit & Supervisory Board Member

Attendance at Board of Directors meetings
13 of 13 (100%)

Koichi Ito
Outside Audit & Supervisory Board Member

Attendance at Board of Directors meetings
13 of 13 (100%)

Katsuyuki Ogura
Outside Audit & Supervisory Board Member

Attendance at Board of Directors meetings
13 of 13 (100%)

Notes:
1 Koichi Yasui and Yuko Arai are outside Directors.
2 Koichi Ito and Katsuyuki Ogura are outside Audit & Supervisory Board Members
3 To prevent the situation where the number of Audit & Supervisory Board Members of the Company is less than the number required by law, the Company appoints one (1) Substitute Audit & Supervisory Board Member in advance as prescribed in Article 329, paragraph 3 of the Companies Act. Details of the Substitute Audit & Supervisory Board Member are below.

Yu Munakata

April 1997 Joined Sekiya Law Office (current Sekiya Munakata Law Office) (to present)