Corporate governance
Directors & Officers
Basic approach
In addition to Vision for 2030 "Your Reliable Partner for a Brighter Future," Idemitsu Kosan formulated Vision for 2050 "Shaping Change" in November 2022, aiming to achieve a carbon-neutral, circular society by 2050. As the global trend toward carbon neutrality accelerates in 2050, it is highly likely that energy systems and social structures will have changed significantly. In the process, many challenges will arise, including discontinuous technological innovation, and there will be a demand for people to deliver new technologies in a form that is acceptable to society.
In response to these social issues and environmental changes, we will fulfill our "responsibility to support people's lives" and "Responsibility to protect the global environment now and in the future" by promoting provide for society based on the knowledge we have cultivated through the stable supply of energy and the relationships of trust with local communities. We will continue to focus on building good relationships with stakeholders, including customers, shareholders, business partners, local communities, and employees, by improving the transparency of our management and striving for healthy and sustainable growth.
The Corporate Governance Code aims to achieve sustainable growth and improve mid- to long-term corporate value through dialogue with shareholders. Our company aims to be "a company that is widely expected and trusted by society," and will fundamentally comply with the Corporate Governance Code.
We will continue to aim for transparent and fair management by frankly discussing the actual state of our management and the environment surrounding it with our independent outside directors and independent outside Audit & Supervisory Board Member who have diverse knowledge and backgrounds and by sincerely incorporating their opinions.
Policy
Governance
Overview of corporate governance system
At our company, the Board of Directors oversees important decision-making, such as business strategies and business plans, and business execution, in accordance with laws, regulations, the Articles of Incorporation, and rules. The Articles of Incorporation stipulate that the chairman of the Board of Directors will be decided by the Board of Directors and that a director other than the President may be selected as chairperson, separating the roles of chairman and president to enhance the objectivity of the Board of Directors. From fiscal 2021, an outside director has served as chairman of the Board of Directors. In addition, to ensure swift decision-making, authority regarding business execution has been delegated to the President, Directors (concurrently Executive Officers), Executive Officers, and General Managers.
Moreover, the execution of duties is audited by Audit & Supervisory Board Members and the Audit & Supervisory Board, which remain independent of the Board of Directors.
●Corporate governance system diagram
● Composition of the Board of Directors and the Audit & Supervisory Board
:male 
:female| Fiscal year | Director | Audit & Supervisory Board Member | ||||||
|---|---|---|---|---|---|---|---|---|
| Director | Of which, Outside Director | Percentage of women | Outside Director Ratio |
Audit & Supervisory Board Member | Outside Audit & Supervisory Board Member | Percentage of women | Outside Audit & Supervisory Board Member Ratio |
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| 2024 | 10 people
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4 people
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20%
 (2 people) |
40%
 (4 people) |
2 people
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2 people
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25% (1 people) |
50%
 (2 people) |
| 2023 | 11 people (9 mele, 2 female) |
4 people (2 male, 2 female) |
18% | 36% | 2 people (2 male) |
2 people (1 male, 1 female) |
25% | 50% |
| 2022 | 11 people (9 mele, 2 female) |
4 people (2 male, 2 female) |
18% | 36% | 2 people (2 male) |
2 people (1 male, 1 female) |
25% | 50% |
Each committee
Nomination and Compensation Advisory Committee
In order to increase the transparency and objectivity of functions related to nomination and compensation, we have established the Nomination and Compensation Advisory Committee, which is composed of independent outside directors, as an advisory body to the Board of Directors. In response to inquiries from the Board of Directors, the committee will report on proposals for the General Meeting of Shareholders regarding the appointment and dismissal of directors and Audit & Supervisory Board Member, the appointment and dismissal and position of executive officers with titles, as well as director compensation and revisions to the compensation system. The committee met a total of seven times in fiscal 2023.
●Composition and attendance of the Nomination and Compensation Advisory Committee (FY2023)
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●Main discussions and recommendations (FY2023)
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・Proposal for appointment of advisors ・Revised the basic policy on corporate governance ・Skill matrix disclosure proposal ・Proposal for revision of regulations for executive officers with titles ・2024 Executive Structure |
・Changes in the policy for determining the details of individual remuneration for directors, etc. ・Additional trust contributions for stock compensation ・Setting performance-linked targets for fiscal 2023 and action targets for directors ・Revision of stock distribution regulations ・Revision of executive compensation system (level of compensation for outside directors) |
●Composition of the Nomination and Compensation Advisory Committee (FY2024)
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Safety and Safety Assurance Advisory Committee
As an advisory body to the Board of Directors, we report on issues to strengthen safety, especially technical issues, in order to prevent large-scale disasters at Refineries/Complexes. Ensuring safety and security and stable supply against recent, increasingly severe natural disasters are becoming increasingly important. Therefore, we select themes and issues based on the latest information and knowledge, and the working group established within the Safety & Environmental Protection Headquarters receives recommendations from experts and implements measures.
Advisory Board
The committee is made up of external experts and serves as an advisory body to the president, providing an opportunity for external experts to offer suggestions on management issues.
Personnel Committee
The Board was established as an advisory body to the President with the objectives of placing the right people in the right positions for executive officers and other positions, achieving fair and impartial evaluations, and enhancing the transparency of the decision-making process. It is made up of the Representative Director and President, Executive Vice Presidents, and officers appointed by the Representative Director and President, and discusses and reports on matters such as the appointment, dismissal, placement, and evaluation of executive officers and the appointment of members of the Management Committee.
DE&I Committee
In order to create an environment where diverse employees can work with enthusiasm and thrive, and to co-create new value, we have established the DE&I Committee as an advisory body to the President. The DE&I Committee is made up of directors as well as a diverse range of executives with different attributes such as gender and occupation, and outside directors also participate as advisors. The committee identifies issues related to DE&I promotion, makes recommendations to management, reports regularly to the Board of Directors, and plans and promotes other company-wide initiatives.
Management Committee, Enterprise Risk Management Committee
We have established the Management Committee and Enterprise Risk Management Committee as forums for discussing and examining management strategies and issues for the entire Group and each executive division. Both committees are chaired by the President and comprise members who emphasize diversity in their fields of expertise and areas of responsibility, and are structured to hold comprehensive and effective discussions on cross-divisional issues and risks.
The Management Committee is a deliberative body that plans and considers strategies related to the Group's management and ensures smooth and proper decision-making on important business operations, while Enterprise Risk Management Committee determines and monitors risk management policies related to the Group's management.
Subordinate to these two committees are committees in each specialized field for the purpose of discussing issues related to business execution and risk management from a more practical and specialized perspective.
●List of each committee
| Committee name | Chairperson | Committee member | Held | Role |
|---|---|---|---|---|
| Management Committee | President | Members appointed by chairperson after deliberation by Personnel Committee | Principle 3 times/month |
Discussion and examination of management strategies and management issues for the entire group and each executive department, and deliberation of business execution |
| Enterprise Risk Management Committee | President | Committee members appointed by chairperson | Principle 2 times/year |
Discussion and consideration of management strategies and management issues for the entire group and each executive department, determination and monitoring of risk management policies |
| Risk Management and Compliance Committee | General affairs officer | Related General Managers | Principle 4 times/year |
Deliberating and formulating important policies for promoting operational risks management, responding to cases of compliance concerns, planning compliance promotion activities, and monitoring the status of activities |
| Information Disclosure Committee | Public Relations Manager | Related General Managers | Held as necessary | Considering and deciding on disclosure of information, etc. |
| Investment & Finance Committee | General Manager of Corporate Planning Department | Related General Managers | Held as necessary | Deliberation and escalation of matters related to investment and financing, and formulation of investment standards, etc. |
| Derivatives Committee | General Affairs Manager | Related General Managers | Held as necessary | Deliberation of derivative transactions, confirmation and reporting of risk management status |
| Procurement Committee | Chief Procurement Officer | Related General Managers | Held as necessary | Deliberation and examination of matters related to estimates and orders for services, construction, materials, etc. |
| Credit Committee | General Affairs Manager | Related General Managers | Principle 1 time/month |
Measures to collect bad debts, etc., and establishment of basic policies regarding debt management, etc. |
| Research & Development Committee | Officer in charge of intellectual property and research | Related General Managers | Principle 4 times/year |
Consideration of matters related to the direction, strategy, and issues of company-wide R&D |
| Personnel committee | President | President and CEO, Vice Presidents, and officers designated by the President and CEO | Held as necessary | Increase transparency, fairness, and impartiality in the decision-making process for the appointment, dismissal, placement, and evaluation of directors, as well as the appointment of members Management Committee |
| DE&I Committee | Vice president | In addition to directors, a diverse range of people with different attributes such as gender and occupation, as well as outside directors who act as advisors, are also involved. | Principle 1 time/month |
Identifying issues related to the promotion of DE&I and making recommendations to management, regularly reporting to Board of Directors, and planning and promoting other company-wide initiatives. |
Risk management
Overview of Board of Directors
In fiscal 2023, during the period of Medium-term Management Plan covering fiscal 2023 to 2025, we systematically discussed business structure reforms, investments in human capital, evolution of business platform and governance, and management issues that will contribute to improving corporate value, which will be discussed at the Board of Directors and Outside Officer Meetings.
List of major items to be discussed at the Board of Directors (FY2023)
Management & Business Strategy
・ Basic Chemicals Business strategy
・ Earnings contribution of Nison Refinery Petrochemical Limited (NSRP)
・ Strategies for hydrogen, ammonia and synthetic fuel
・ Progress of lithium battery materials initiatives and strategies for business expansion
・ Refineries/Complexes Reviewing the system and establishment of CNXcenter
・ Investment review and future business structure reforms
・ Restructuring of R&D structure
・ Company-wide procurement strategy
Governance
・ Basic Policy on Internal Control (Expand efforts to prevent deficiencies and inappropriate conduct in quality assurance to overseas affiliates)
・ Selection of priority themes to be discussed at the Board of Directors and Outside Officer Meetings
・ Revision of the Basic Policy on Corporate Governance
・ Revision of performance-linked stock-based compensation for directors, etc.
・ Future measures to further improve the effectiveness of the Board of Directors
IR, General Meeting of Shareholders, Shareholder Returns and Dividends
・ Measures to realize management that is conscious of the cost of capital and stock price (analysis of the current situation regarding market valuation, etc., formulation of plans [upward revision of ROE targets and specific measures to achieve them, Shareholder Returns and Dividends review of policies, etc.])
・ Shareholder Returns and Dividends Additional acquisition of treasury shares in line with the policy
・ Policy for cross-shareholdings
・ Measures to further expand the number of shareholders and investors (stock splits, lottery benefits, construction and operation of a communication platform with shareholders (Idemitsu Connect), etc.)
・ Market reaction after the announcement of financial results
・ Review of the Ordinary General Meeting of Shareholders and Initiatives for the Next Fiscal Year
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The above are some of the items to be discussed. In addition to the above, the committee deliberates on matters stipulated by laws and regulations, articles of incorporation, etc., and makes necessary resolutions.
Outside Directors Meeting
In order to further enrich discussions at Board of Directors, we held four meetings of outside directors and independent outside Audit & Supervisory Board Member each year to exchange information and share awareness on the following matters:
・ Internal Audit Department Initiatives (FY2022 Review and FY2023 Initiatives)
・ Internal control initiatives (FY2022 review and FY2023 basic policy)
・ Trends in the supply and demand market for crude oil and Petroleum products
・ Basic Chemicals supply and demand market trends
・ Human resource strategies for achieving Medium-term Management Plan
・ Overseas Petroleum business
Executive Training
Following 2022, we conducted executive training in October 2023. An external lecturer was invited to give a talk on the topic of economic security, and all directors and Audit & Supervisory Board Member participated.
Evaluation of the Effectiveness of Board of Directors
The Company's policy is for all directors and Audit & Supervisory Board Member to evaluate the effectiveness of Board of Directors as a whole at least once a year and to disclose a summary of the results.
Since fiscal 2015, we have been conducting surveys of all directors and Audit & Supervisory Board Member, and strive to improve the evaluation process every year in order to increase its effectiveness. The survey items are designed and responses are analyzed with the advice of external specialist institutions.
In addition to the questionnaire, in fiscal 2023, for the first time, individual interviews were conducted by legal counsel familiar with the Company's business situation with all outside officers (directors and Audit & Supervisory Board Member). This enabled us to grasp the officers' awareness of issues that could not be found through the questionnaire alone, and to thoroughly discuss the identification of issues and efforts to further improve the effectiveness of Board of Directors.
Details of the effectiveness evaluation process
●Process for the assessment of the Board of Directors’ effectiveness
Evaluation Results
Based on the issues identified in FY2022, we implemented the following initiatives in FY2023.
| Issues identified for fiscal 2022 and initiatives for fiscal 2023 | |
|---|---|
| (1) Business strategy and Human Resources Strategy |
During the period of Medium-term Management Plan (FY2023-FY2025), we have selected key themes to be discussed at the Board of Directors and Outside Officer Meetings, etc. In FY2023, we discussed the following themes: - Individual business strategies (lubricants, electricity, coal, lithium, etc.) ・Review Refinery and Complex structures, and establishment of CNXcenter ・SAF, Blue Ammonia, e-Methanol ・Measures to improve PBR ・Measures for individual investors ・Human Resources Strategy In each business strategy, the discussion focused on screening 16 new business projects that contribute to carbon neutrality, and decided to prioritize four key areas: Blue Ammonia, e-methanol, SAF, and lithium solid electrolytes. On the other hand, a wide range of issues were discussed, including measures to improve PBR, measures for individual investors, and human resources strategies. |
| (2) Dealing with shareholders and investors | The Board of Directors has strived to provide more transparent and timely information disclosure in line with the quarterly financial statements disclosure timing, taking into account the market's concerns and requests. As a result, the Company was selected as the No. 1 outstanding company in the energy sector (22 companies) in the 2023 "Selection of Excellent Disclosure Companies by Securities Analysts". In addition, the Company has further enhanced communication with shareholders and investors by holding live briefings by the President and holding the ESG Top Seminar with the participation of outside officers. |
As a result of the effectiveness evaluation for fiscal 2023, it was determined that the effectiveness of Board of Directors was ensured overall. Through questionnaires and individual interviews, issues and initiatives were identified to further improve effectiveness.
We will continue to strive to improve the quality of future decision-making by Board of Directors, aiming to create Board of Directors that leads to further enhancement of corporate value.
| Issues identified for fiscal 2023 and future initiatives | |
|---|---|
| ・Issues to be discussed in depth in the future include Diverse resource conservation / circulation solutions, Smart Yorozuya, digital transformation strategies, enterprise risk management (ERM), procurement strategies, etc. ・CNX-related matters: responding to the speed of changes in the environment ・How to advance discussions by taking advantage of the knowledge and experience of outside directors with diverse backgrounds ・Clarifying the strategic positioning of proposed proposals ・Selection process for CEO and management team and training policy ・Strengthening coordination between agenda items at meetings of outside officers and the Board of Directors |
As a result of the discussions, we have decided on the issue of "further enhancing discussions on management issues and strategy discussions" and will implement the following initiatives in response to the issue stated on the left. ❶We will continue to deepen discussions on business structure reforms, human resources strategy, and measures to improve PBR, and in fiscal 2024, we will particularly focus on discussing digital transformation strategy, ERM, and procurement strategy as company-wide issues that support our business foundation. ❷ We will develop an annual roadmap for the priority themes selected in ❶ and systematically discuss them at meetings of the Board of Directors and outside officers, etc. |
Management monitoring
Our management monitoring system includes supervision by the Board of Directors, audits by Audit & Supervisory Board Member, and accounting audits, as well as internal audits by the Internal Audit Department based on the "Internal Audit Regulations" and internal control evaluations based on the "Internal Control Evaluation Regulations for Financial Reporting."
The Internal Audit Department, which reports directly to the President, regularly audits executive departments from an independent standpoint to check the effectiveness of the self-management that each executive department implements based on company regulations, as well as the progress of risk management and internal control. The results of the audits are reported to the President, Audit & Supervisory Board Member, Executive Officer in Charge, and the General Managers of the relevant executive departments. Executive departments that receive recommendations for improvement during audits prepare improvement implementation plans, submit them to the General Manager of the Internal Audit Department, and make improvements. The Internal Audit Department also conducts follow-up audits as necessary. Annual reviews of internal audits and plans for the next year are regularly reported to full-time directors and general managers of executive departments at the "Management Information Liaison Meeting," and to outside directors and Audit & Supervisory Board Member at the "Outside Officer Meeting."
Audits by Audit & Supervisory Board Members
The four Audit & Supervisory Board Member audit the status of business execution by directors and other executives by attending board meetings and reviewing business reports, financial statements, and consolidated financial statements submitted to the general meeting of shareholders. They also attend important meetings other than board meetings, such as the Management Committee, and conduct daily audits to enhance their effectiveness by meeting with officers, general managers, branch managers, managers of complexes, and presidents and auditors of subsidiaries, and Audit & Supervisory Board Member, as well as on-site inspections of major departments. In principle, meetings are held with the representative director once a quarter to discuss issues and exchange opinions.
● Audit & Supervisory Board Activity Results (FY2023)
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[Matters to be resolved] Appropriateness of accounting audits, consent to reappointment and compensation of accounting auditors, audit policy and plans, audit reports by the Board of Audit & Supervisory Board Member, etc. [Reports and discussion items] Full-time Audit & Supervisory Board Member activity report, internal audit office activity report, investment review report, carbon neutral initiative status report, etc. |
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Outside Audit & Supervisory Board Member participated in 17 cases |
We will continue to visit the refining subsidiary where inappropriate conduct in product quality testing was discovered last fiscal year to check on the status of its response. |
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(June, September, December, March) |
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14 General Managers |
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In addition, we have a Group Audit & Supervisory Board Member Meeting, which covers 13 members, including Audit & Supervisory Board Member who have been dispatched to affiliated companies, and we also work with the General Affairs Department Management Consulting Group, which dispatches non-executive Audit & Supervisory Board Member to 66 affiliated companies both in Japan and overseas.
Initiatives
Nomination and training of candidates for directors and Audit & Supervisory Board Member
Nomination of director candidates
In order to fulfill the roles and responsibilities of the Board of Directors, we need a certain number of directors who are familiar with the Company's business and issues.In order to ensure the independence and objectivity of the Board of Directors, we require diversity in the knowledge, experience, and abilities of the directors. We believe that it is important to ensure that Based on the above idea, we make selections that take into account the overall balance by utilizing human resource standards, skill/career matrices, etc.
The President thoroughly evaluates each candidate's abilities, knowledge, and performance, and then submits a draft proposal to the Nomination and Compensation Advisory Committee, and the Board of Directors makes decisions based on the recommendations of the Nomination and Compensation Advisory Committee.
The committee also deliberates on the dismissal of directors as necessary and reports the results to the Board of Directors.
Nomination of Audit & Supervisory Board Member candidates
Candidates will be selected from those who have appropriate experience and ability, as well as the necessary knowledge of finance, accounting, and legal matters. In addition, full-time corporate Audit & Supervisory Board Member candidates will be selected from individuals who are familiar with the Company's business and issues and who can accurately, fairly, and efficiently carry out audits and supervision of the Company. We make selections that take into account overall balance by utilizing human resource standards, skill matrix, etc.
The president will submit a draft proposal that fully evaluates the abilities, knowledge, and performance of each candidate to the Nomination and Compensation Advisory Committee, and the Board of Directors will take into account the Nomination and Compensation Advisory Committee's report and, with the consent of the Board of Audit & Supervisory Board Member, It has been decided.
Formulation of succession plan
The Nomination and Compensation Advisory Committee deliberates on the selection and development of next-generation officer candidates based on long-term plans and reports to the Board of Directors. We are currently working on selecting and training candidates, including a succession plan for the president.
Independence standards for outside officers
In order for the Board of Directors to exercise its supervisory function and Audit & Supervisory Board to exercise its auditing and supervisory functions, persons who meet the "Independence Standards for Outside Officers" will provide useful advice to the Company's management, taking into account their diverse knowledge and backgrounds. We have appointed outside officers with the necessary knowledge and experience. Our basic policy is that at least one-third of the board members be independent outside directors, and that at least half of the company Audit & Supervisory Board Member are independent outside corporate Audit & Supervisory Board Member.
Skill matrix
While fulfilling our social mission of providing a stable supply of energy, we hope to contribute to the realization of carbon neutrality society by 2050, seize this as a business opportunity, and evolve into a corporate entity that continues to grow sustainably. To this end, it is extremely important that directors and Audit & Supervisory Board Member with diverse knowledge and experience engage in lively discussions at board meetings to improve the quality of discussions regarding overall management strategy, including human resources strategy.
Since creating and disclosing the skill matrix for directors in 2020, we have continued to review it as appropriate in light of the management issues we face.
In 2023, based on Medium-term Management Plan (FY2023-2025), we reviewed the fields expected of directors and Audit & Supervisory Board Member and selected the fields listed in the table below. With diversity in mind, we appoint officers with knowledge and experience in these fields.
To address issues in areas where the board members are insufficient (fields that require a high level of expertise, such as economic security), we invite outside experts to serve on the advisory board and in executive training.
| Perspective | Expected field | Reasons for selecting it as a promising field |
|---|---|---|
| A perspective that leads to change | Management Philosophy and business strategy | You will be required to have a deep understanding of and put into practice our company's management objectives and raison d'être, and steer management towards realizing Vision for 2050 while also taking into account economic security, SDGs, digital transformation, and other factors in this disruptive business environment. |
| Human resource development/DE&I | In order to realize the human resources strategy's goal of "creating a group of resilient, resilient people who can carve out the future no matter what the future holds," it is necessary to promote human resource development and Expanding DE&I. | |
| Co-creation/international business | In order to increase provide for society capabilities toward realizing Vision for 2050, it is necessary to build co-creation relationships with a variety of partners, taking into account an international perspective. | |
| Perspectives that support business management | Manufacturing/Research | Knowledge of the safety and environmental aspects of manufacturing, technical knowledge, innovative advanced technology trends, and research areas are required. |
| Sales· | Knowledge of sales, sales, and retail marketing in each business, as well as knowledge of procurement and supply is required. | |
| Governance/Legal | Knowledge of governance from a shareholder perspective, risk management related to business operations, and legal knowledge is required. | |
| Finance/Accounting/Taxation | Knowledge of finance, accounting, and taxation is required to help ensure capital efficiency and profitability. |
●Skill Matrix: Director
| Full name | Tenure period |
Areas in which the Company particularly expects directors | As a promising field Reason for adding ● |
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| Management Philosophy Business Strategy |
Human resource development/ DE&I |
Co-creation/ international business |
Manufacturing/ the study |
Sales· supply |
Governance/ legal affairs |
Financial accounting· Taxation |
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| Shunichi Kito [Reappointment] |
11 years | ● | ● | ● | ● | As President, he led the business integration, and with the insight he has gained from his experience as a director in charge of the accounting, human resources, and fuel business divisions, he is expected to be a leader in formulating and executing growth strategies to realize Vision for 2050. | |||
| Atsuhiko Hirano [Reappointment] |
4 years | ● | ● | ● | ● | With his experience as president of a business company, his insight as a corporate planning officer, and his extensive international business experience in key positions in the solar and Petroleum divisions, we expect him to be an effective leader in promoting structural reform of our business, including building a co-creation relationship. | |||
| Noriaki Sakai [Reappointment] |
3 years | ● | ● | ● | ● | With his in-depth knowledge and expertise gained from serving in accounting, finance and human resources departments, as well as his insight into governance centered on safety environment and quality assurance, he is expected to contribute to strengthening the management foundation for the sustainable development of the Company, including business structure reforms and investments in human capital. | |||
| Masahiko Sawa [Reappointment] |
2 years | ● | ● | ● | ● | In addition to his expertise in research and development and Manufacturing & Technology Department, he is expected to be the head of CNX Strategy Headquarters, which will lead to mid- to long-term business strategy planning and company-wide CNX implementation, as well as the promotion of business structure reforms as a technical executive. He is also leading work style reform and DE&I in Manufacturing & Technology Department. | |||
| Masakazu Idemitsu [Reappointment] |
5 years | ● | ● | As a member of the founding family, he has a deep understanding of The Origin of Management and the raison d'être of the Company, and from the perspective of long-term governance as a major shareholder, we can expect him to contribute to sustainable development based on the Company's management philosophy and strengthening of the Company's management foundation. | |||||
| Kazunari Kubohara [Reappointment] |
5 years | ● | ● | With his expertise as a lawyer in corporate law and social issues, as well as his familiarity with the real estate business, he is expected to strengthen the company's management foundation based on a multifaceted governance perspective. | |||||
| Takeo Kikkawa [Reappointment] [Outside the Company] [Independence] |
7 years | ● | ● | ● | As an expert in business administration, particularly in the energy industry, he has insight into trends in domestic and international energy transitions and related advanced technologies, as well as ample insight into corporate management, and as an outside director he is expected to oversee the strengthening of the Company's management foundation and business structure reforms. | ||||
| Maki Kado [Reappointment] [Outside the Company] [Independence] |
3 years | ● | ● | ● | With his management experience from serving in key positions at global beverage companies, his extensive experience and wide-ranging knowledge in DE&I practices and retail marketing, he is expected to be able to oversee the strengthening of investments in human capital and business structure reforms as an outside director. | ||||
| Jun Suzuki [Reappointment] [Outside the Company] [Independent] |
1 year | ● | ● | ● | ● | With his knowledge of corporate management and governance gained through his experience as president and chairman of a global chemical company, as well as his knowledge of a wide range of businesses, including chemicals and pharmaceuticals, and related technologies, he is expected to be able to oversee the strengthening of the Company's management foundation and business structure reforms as an outside director. | |||
| Shiori Nagata 【new】 [Outside the Company] [Independence] |
- | ● | ● | ● | ● | With his career experience across a wide range of industries, he has a strategic perspective and specialized knowledge of corporate planning and management. As an outside director, he can be expected to provide strategic advice and specialized knowledge, as well as oversight of organizational improvements and improvements to the decision-making process. | |||
| Full name | Tenure period |
Areas in which the Company particularly expects directors | Reasons for Marking areas of Expectation with ● |
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|---|---|---|---|---|---|---|---|---|---|
| Management Philosophy/ Management strategy |
Human resource development/ DE&I |
Co-creation/ international business |
Manufacturing/ the study |
Sales/ supply |
Governance/ legal affairs |
Financial accounting/ Taxation |
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| Shunichi Kito [Reappointment] |
11 years |
● | ● | ● | ● | As president, he led business integration, and with his insight gained from his experience as a director in charge of accounting, human resources, and fuel business divisions, he is expected to lead the formulation and execution of growth strategies to realize Vision for 2050. | |||
| Atsuhiko Hirano [Reappointment] |
4 years |
● | ● | ● | ● | With his experience as president of a business company, his insight as a corporate planning officer, and his extensive international business experience in key positions in the solar and fuel oil divisions, he is expected to be an effective leader in promoting structural reform of our business , including building co-creation relationships. | |||
| Noriaki Sakai [Reappointment] |
3 years |
● | ● | ● | ● | With his in-depth knowledge and expertise gained from having worked in accounting, finance, and human resources, as well as his insight into governance centered on safety and quality assurance, he is expected to contribute to strengthening the management foundation for the sustainable development of the Company, including through business restructuring and human capital investment. | |||
| Masahiko Sawa [Reappointment] |
2 years |
● | ● | ● | ● | In addition to his expertise in research and development and manufacturing technology, he is expected to promote business restructuring as a technical executive by formulating mid- to long-term management strategies and promoting company-wide CNX as the head of the CNX Strategy Division. is also leading work style reform and DE&I in the manufacturing technology division. | |||
| Masakazu Idemitsu [Reappointment] |
Five years |
● | ● | As a member of the founding family, he has a deep understanding of The Origin of Management and the company's raison d'être, and from the perspective of long-term governance as a major shareholder, we can expect him to contribute to sustainable development based on the company's management philosophy and to strengthen its management foundation. | |||||
| Kazuya Kubohara [Reappointment] |
Five years |
● | ● | Due to his expertise in corporate law and social issues as a lawyer, and his familiarity with real estate business, he is expected to strengthen the management foundation based on a multifaceted governance perspective. | |||||
| Takeo Kikkawa [Reappointment] [External] [Independent] |
7 years |
● | ● | ● | As an expert in business administration, especially energy industry theory, I have insight into domestic and international energy transition trends and related advanced technologies, as well as ample insight into corporate management.As an outside director, I have been instrumental in strengthening our company's management base and business structure reforms We can expect a director who will lead the way. | ||||
| Maki Kado [Reappointment] [External] [Independent] |
3 years |
● | ● | ● | As an outside director, he can be expected to strengthen investments in human capital and supervise business structure reforms due to his management experience gained through holding important positions at global beverage companies, DE&I practice, rich experience in retail marketing, and wide-ranging insight. | ||||
| Jun Suzuki [Reappointment] [External] [Independent] |
1 year |
● | ● | ● | ● | Based on his knowledge of corporate management and governance through his experience as president and chairman of a global chemical company, and his knowledge of a wide range of businesses such as chemicals and pharmaceuticals, as well as related technology, he is able to strengthen the company's management base and supervise business structure reforms as an outside director. can be expected. | |||
| Shiori Nagata [New] [External] [Independent] |
- | ● | ● | ● | ● | With his career experience across a wide range of industries, he has a strategic perspective and specialized knowledge of corporate planning and management. As an outside director, he is expected to provide strategic advice and specialized knowledge, as well as oversight of organizational improvements and improvements to the decision-making process. | |||
●Skill Matrix: Audit & Supervisory Board Member
| Full name | Tenure period |
Areas in which the Company particularly expects directors | As a promising field Reason for adding ● |
||||||
|---|---|---|---|---|---|---|---|---|---|
| Management Philosophy Business Strategy |
Human resource development/ DE&I |
Co-creation/ international business |
Manufacturing/ the study |
Sales· supply |
Governance/ legal affairs |
Financial accounting· Taxation |
|||
| Tsutomu Yoshioka | 3 years | ● | ● | ● | With experience as president of a business company, Audit & Supervisory Board Member of a listed company, executive of the information systems department, and head Petroleum Marketing Department, he is well-suited to audits in the areas of management foundations that support strategies and digital transformation. | ||||
| Hidefumi Kodama | 2 years | ● | ● | ● | With experience in mid- to long-term business strategy planning, experience as a financial manager, and experience in international Resources and coal business management, we can expect audits to be conducted from the perspectives of finance, accounting, and international business. | ||||
| Yumiko Ichige [Outside the Company] [Independent] |
2 years | ● | ● | As an attorney, she is well-versed in the governance of listed companies, actively promotes women's participation in the workforce, is well-versed in the field of intellectual property, and has experience as a member of the Japan Patent Office Council. As such, she is expected to provide audits of the management foundation that supports the company's strategies as an outside Audit & Supervisory Board Member. | |||||
| Masahiko Tezuka 【new】 [Outside the Company] [Independence] |
- | ● | ● | ● | He has held key positions at major auditing firms, served as executive director and chairman of the Japanese Institute of Certified Public Accountants, and has ample experience auditing global businesses. As an outside Audit & Supervisory Board Member, he is expected to provide guidance and audits from the perspectives of management strategy, international business, governance, and more. | ||||
| Full name | Tenure period |
Areas in which the Company particularly expects directors | Reasons for Marking areas of Expectation with ● |
||||||
|---|---|---|---|---|---|---|---|---|---|
| Management Philosophy/ Management strategy |
Human resource development/ DE&I |
Co-creation/ international business |
Manufacturing/ the study |
Sales/ supply |
Governance/ legal affairs |
Financial accounting/ Taxation |
|||
| Tsutomu Yoshioka | 3 years |
● | ● | ● | With experience as a president of a business company, an auditor of a listed company, an executive of an information systems department, and a head of a sales department, he is expected to be able to audit the management foundations that support strategy and the DX field. | ||||
| Hidefumi Kodama | 2 years |
● | ● | ● | Due to his experience in medium- to long-term management strategy planning, experience as a financial manager, and experience in international Resources and coal business management, he can be expected to perform audits from a financial/accounting and international business perspective. | ||||
| Yumiko Ichige [External] [Independent] |
2 years |
● | ● | As a lawyer, she is well-versed in the governance of listed companies, actively promotes the empowerment of women, is familiar with the intellectual property field, and has experience as a member of the Patent Office Council, so as an outside corporate auditor, she can be expected to audit the management foundations that support strategy. | |||||
| Masahiko Tezuka [New] [External] [Independent] |
- | ● | ● | ● | He has held key positions at major auditing firms, served as executive director and chairman of the Japanese Institute of Certified Public Accountants, and has ample experience auditing global businesses. As an outside auditor, he is expected to provide guidance and audits from the perspectives of management strategy, international business, governance, and more. | ||||
-
● indicates the areas in which the target Audit & Supervisory Board Member is expected to excel. It does not represent all of the target person's qualifications and experience.
Training
We provide and arrange training opportunities and cover the costs for training suited to each Director and Audit & Supervisory Board Member including independent outside Directors and independent outside Audit & Supervisory Board Member, to enable them to acquire the necessary knowledge regarding the Company's business, finances, organization, etc. when they assume their position, to fully understand the roles and responsibilities expected of them, and to continually update them during their term of office.
Executive compensation
Basic Policy on Executive Compensation
Our basic policy regarding the compensation of our directors (directors and senior executive officers) is to ensure that it leads to improvements in company performance and medium- to long-term corporate value in order to realize the Group's management vision, and to ensure that the remuneration system and decision-making process are transparent, reasonable, and fair so that we can fulfill our accountability to stakeholders, including customers, society, the environment, shareholders, business partners, and employees. Based on this basic policy, our executive compensation system is as follows:
Compensation Level
We review our personnel system as necessary and appropriately, taking into account factors such as changes in the business environment and external survey data, from the perspective of promoting and securing talented human resources who will contribute to the realization of our medium- to long-term management vision, and providing appropriate incentives.
Compensation Decision Process
The Company has established the Nomination and Compensation Advisory Committee, which is composed of independent outside directors, as an advisory body to the Board of Directors. Based on the recommendations of this committee, the Board of Directors determines the amount of compensation for Audit & Supervisory Board Member and the calculation method thereof. In addition, the compensation for individual auditors is determined through discussion among Audit & Supervisory Board Member. Executive compensation is paid within the upper limit of compensation, etc., resolved at the general meeting of shareholders.
Compensation Structure
The compensation system for our directors (excluding non-executive directors and outside directors) and senior and above-ranked executive officers places emphasis on linking performance over the short and medium to long term, respectively, and in order to properly evaluate management efforts toward improving medium to long term corporate value, it consists of (1) fixed compensation, (2) performance-linked bonuses, and (3) performance-linked stock compensation. Note that the compensation for non-executive directors and outside directors consists only of fixed compensation, from the perspective of properly ensuring the supervisory function of judging the appropriateness of business execution from an objective standpoint.
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classification |
(excluding non-executive)/ Senior Executive Officers and above |
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● Image of compensation composition ratio for internal directors (excluding non-executive directors) / senior and above-ranked executive officers
●Compensation system and performance-linked remuneration system
| Types of compensation etc. | Performance evaluation indicators | Overview | |||
|---|---|---|---|---|---|
| Index | Evaluation weight |
||||
| Fixed | Fixed compensation | - | - | compensation will be paid monthly based on role and responsibilities. | |
| Fluctuation | Short term | performance-linked bonuses | Profitability index * | 40% | The payment amount is designed to vary between 0 and 50%, and is paid in June of each year. |
| Human capital related indicators | 20% | ||||
| Degree of achievement of behavioral goals (Directors)/goals in areas of responsibility (Senior and higher ranking executive officers) | 40% | ||||
| Medium to long term | performance-linked stock compensation | Capital efficiency indicators (ROIC/ROE) | 40% | From the perspective of sharing value with shareholders and sustained improvement of corporate value, we place particular emphasis on linking with Vision for 2030 and this Medium-term Management Plan. It is designed to fluctuate within a range of 0-50% depending on the achievement level of financial indicators related to the transformation of the business portfolio and non-financial indicators in line with materiality. In order to provide an incentive for directors and other executives to improve corporate value from a medium- to long-term perspective, stock points are awarded to them every June and shares are issued to them after they leave the company. |
|
| Fossil fuel business revenue ratio | 20% | ||||
| CO₂ reduction (CN, essential for realizing a recycling-oriented society) |
20% | ||||
| Employee engagement (Evaluation of initiatives aimed at Maximize employee growth and engagement) |
20% | ||||
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Net income/consolidated operating income belonging to owners of parent company + equity method investment profit/loss excluding inventory valuation effects
Clawback system
If any Director, etc. commits an act of material misconduct, violation, etc., we may confiscate the beneficial rights to the shares to be delivered under the performance-linked stock compensation (malus) or demand the return of money equivalent to the shares, etc. delivered (clawback), from the Director, etc.
Total amount of compensation for each executive category
The total amount of compensation for Directors for fiscal year 2023, the total amount by type of compensation, etc., and the number of eligible officers are as follows:
| Classification | Number of people (given name) |
Fixed remuneration (one million yen) |
performance-linked compensation (million yen) | Total amount of compensation etc. (one million yen) |
|
|---|---|---|---|---|---|
| Cash reward | Stock compensation | ||||
| Directors (excluding outside directors) | 7 | 287 | 176 | 135 | 599 |
| Audit & Supervisory Board Member (excluding outside Audit & Supervisory Board Member) | 2 | 62 | - | - | 62 |
| Outside Directors and Audit & Supervisory Board Member | 7 | 93 | - | - | 93 |
| Total | 16 | 443 | 176 | 135 | 755 |
| Classification | Number of people (people) |
Fixed compensation (million yen) |
Performance-linked compensation (million yen) |
Total amount of compensation etc. (million yen) |
|
|---|---|---|---|---|---|
| Cash reward | Stock compensation | ||||
| Directors (excluding outside directors) | 7 | 287 | 176 | 135 | 599 |
| Audit & Supervisory Board Members (excluding outside auditors) | 2 | 62 | - | - | 62 |
| Outside Director/Outside Audit & Supervisory Board Member | 7 | 93 | - | - | 93 |
| Total | 16 | 443 | 176 | 135 | 755 |
-
The above table includes one director (including one outside director) who retired at the conclusion of the 108th Ordinary General Meeting of Shareholders held on June 22, 2023.
Total amount of compensation, etc. for those whose total compensation, etc. is 100 million yen or more
| Full name | Officer classification | Company classification | Fixed remuneration (one million yen) |
performance-linked compensation (million yen) | Total amount of compensation etc. (one million yen) |
|
|---|---|---|---|---|---|---|
| Cash reward | Stock compensation | |||||
| Shunichi Kito | Director | Submitting company | 81 | 54 | 43 | 179 |
| Susumu Nibuya | Director | Submitting company | 50 | 37 | 26 | 114 |
| Atsuhiko Hirano | Director | Submitting company | 49 | 33 | 26 | 108 |
| Noriaki Sakai | Director | Submitting company | 49 | 33 | 26 | 108 |
| Full name | Officer classification |
Company classification |
Fixed compensation (million yen) |
Performance-linked compensation (million yen) |
Total amount of compensation etc. (million yen) |
|
|---|---|---|---|---|---|---|
| Cash reward | Stock compensation | |||||
| Shunichi Kito | Director | Submitting company | 81 | 54 | 43 | 179 |
| Susumu Nibuya | Director | Submitting company | 50 | 37 | 26 | 114 |
| Atsushi Hirano | Director | Submitting company | 49 | 33 | 26 | 108 |
| Noriaki Sakai | Director | Submitting company | 49 | 33 | 26 | 108 |
Cross-held listed stocks
Policy for holding cross-shareholdings of listed companies
The Company holds strategic shareholdings necessary for maintaining and expanding mid- to long-term transactions, and once a year reviews the appropriateness of these shareholdings and proceeds with reducing them. Specifically, the Company examines the shares from both a quantitative perspective, i.e., whether the benefits and risks associated with the shareholding are commensurate with the capital cost, and a qualitative perspective, such as improving business stability, and then decides whether to sell the shares after deliberation at Board of Directors. For stocks that the Company has decided to sell, the Company proceeds with the sale after gaining the understanding of the business partners through sufficient dialogue and taking into consideration the impact on the share price. As of the end of fiscal year 2023, the Company will hold 11 stocks.
Standards for exercising voting rights regarding cross-shareholdings
Our policy on exercising voting rights regarding listed cross-shareholdings is based on whether it will sustainably increase the corporate value of both our company and the cross-shareholding. We will determine whether the cross-shareholding will sustainably increase its corporate value, taking into consideration the business strategy and performance of the cross-shareholding, and, if necessary, exercise our voting rights after receiving an explanation of the agenda items. If there is a risk of a conflict between the interests of our company and the agenda items of the cross-shareholding, we will exercise our voting rights as necessary, taking into consideration the opinions of our independent outside directors and outside experts.