Our Company / Corporate Governance

Complete Compliance

Corporate Governance Organization

Taiyo Nippon Sanso's Board of Directors consists of 7 members, two of whom are independent, and operates to ensure correct business judgement. It holds a regular meeting every month to discuss important matters and hear reports about business activities.

A Advisory Committee on Appointments and Remuneration has also been established as a discretionary advisory committee under the Board of Directors. The committee is comprised of the Company chairman, president (CEO) and independent outside directors. The committee strives to secure transparency and objectivity of decision making by receiving advice from the independent outside directors when consulted by the Board of Directors on the selection of executive officers, candidates for directors and auditors, and the successor to the president (CEO). The committee also advises the Board on revisions of the Company's internal regulations on director's compensation.

In addition to the Board of Directors, the Management Council, which meets twice a month in principle and consists of full-time directors, business division heads and suchlike, is set up for prompt decision making. The term of a director is limited to one year to facilitate responsible management in each fiscal year.

Under the provisions of Article 427, Paragraph 1 of the Company Law, Taiyo Nippon Sanso has entered into contracts with the two independent directors to limit their liability for damages in accordance with Article 423, Paragraph 1 of the Company Law, and to set their minimum liability for damages in accordance with Article 425, Paragraph 1 of the Company Law. The Audit & Supervisory Board also consists of four members, three of whom are independent. Audit & Supervisory Board members attend meetings of the Board of Directors and the Management Council, independently audit the business activities of directors and impartially give advice to the Board and Council. The Audit & Supervisory Board hears reports on the plans and results of audits from accounting auditors.

Furthermore, working with the Accounting Auditor and Corporate Audit Office, it also meets to hear explanations of internal audit results from the Corporate Audit Office.

Compensation for Directors

Compensation for directors and Audit & Supervisory Board Members in Fiscal Year 2017 (from April 1, 2016 to March 31, 2017) was as shown below. In this regard, compensation for directors consists of basic compensation, medium-term performance-based compensation and short-term performance-based compensation. Medium-term performance-based compensation fluctuates according to the degree of target achievement in each fiscal year towards the medium-term management plan goal, and short-term performance-based compensation fluctuates according to the degree of performance prudence since the performance of the previous fiscal year.

Compensation for Directors in Fiscal Year 2017 Breakdown

(Million yen)
Compensation paid to directors 479
Compensation paid to Audit & Supervisory Board Members 104

(Reference)
Compensation paid to accounting auditors in fiscal year 2017 100
Total amount of monetary and property compensation paid by the Company and its subsidiaries to accounting auditors 160

Accountability

Taiyo Nippon Sanso recognizes that ensuring the timely disclosure of corporate and financial information is a key component of corporate governance, and is taking steps to fulfill its obligation to provide adequate explanations to investors as well, and to ensure that investor feedback is properly communicated to management. In an effort to translate this commitment into action, company officers attend two presentations for analysts and institutional investors every year, where they participate in question-and-answer sessions with the participants on such topics as the Company's performance, forecasts for subsequent periods and the formulation and progress of medium-term management strategies, and endeavor to respond in a manner that provides both information and deep insight as representatives of the Company.

Risk management and compliance

Taiyo Nippon Sanso has established the Risk Assessment Committee as a cross-sectional risk management system for the entire company. The committee oversees the risk conditions of the Group, clarifies the department responsible for each risk category, and constantly reviews appropriate risk management frameworks by verifying specific cases.
In addition, Taiyo Nippon Sanso recognizes the need to manage risks in the following categories in particular: security, safety, quality assurance, environment and intellectual property. To oversee risk management and address related issues across the Group, we have published the Technological Risk Control Code, which is managed by Technological Affairs Division, and also established the Technology Risk Management Committee. Both the Risk Assessment Committee and the Technology Risk Management Committee regularly report their activities to the Board of Directors.
Furthermore, we have published the Taiyo Nippon Sanso Group Code of Conduct and accompanying guidebook, which outlines the standards of conduct for all officers and employees to observe in daily operations in relation to compliance with laws and ordinances, corporate ethics and internal guidelines.
To enforce this code, we have also established a Compliance Committee and Internal Control Office, which is directly controlled by the president. We have also established the position of Chief Compliance Officer (CCO).
The CCO ensures compliance occurs, and the Compliance Committee regularly reports its activities to the Board of Directors.
In addition, weset up a compliance helpline. The system enables employees to promptly seek advice when they discover suspected illegal or unfair acts, thereby ensuring the early detection and correction of compliance infringements.
In addition, Taiyo Nippon Sanso established the Technical Audit Office, which is part of its Technological Affairs Division, and an Audit & Supervisory Board that is directly controlled by the president, to audit business activities across the Group and to ensure laws and internal regulations are followed.

Principles of Corporate Governance