Our Basic Policy
ROHM Group strives to pursue the best possible corporate governance in order to achieve our company Mission and the Basic Management Policy.
In addition, based on the recognition that the company is supported by stakeholders including its customers, business partners, employees, shareholders, investors, and local communities, we believe that corporate management and actions must be rooted in fairness, soundness and transparency. Moreover, based on an accurate understanding of the cost capital of the company from a stakeholder perspective, we stated the basic idea of the corporate governance is to maximize sustainable corporate growth and medium to long term corporate value. We are working to enhance corporate governance in accordance with the following basic policy.
- Properly cooperate with all stakeholders including shareholders, and to address and to deal with ESG (environmental, social, and governance) issues.
- To respect the rights of shareholders, secure their equal treatment, and engage in constructive dialog with shareholders who share the mid-to-long term perspective.
- To disclose corporate information in a timely and appropriate manner as a part of ensuring our transparency.
- To make the roles and responsibilities of the Board of Directors clear, hold meetings of the Board of Directors in a timely and appropriate manner, facilitate decision-making processes, and ensure that outside officers proactively express their views from an independent and objective standpoint and that the Board of Directors oversees the execution of business.
Based on these views, the "Corporate Governance Policy" and "Corporate Governance Report" are established and published.
Corporate Governance System
In order to strengthen the supervisory function of the Board of Directors, further promote corporate governance and improve and improve corporate value, we made a transition to a Company with an Audit and Supervisory Committee from a Company with the Board of Auditors via the resolution of the 61st ordinary general shareholders meeting held on 27th June 2019.
・The Board of Directors
In the semiconductor and electronic component industry, the most effective way of making prompt and accurate decisions is to retain Directors (Members of the Boards) who are versed in operations and technologies, and have extensive experience in executive authorities and supervision.
The Board of Directors consists of 11 directors (including 5 independent Outside Directors), and The Audit and Supervisory Committee consists of 5 directors. Therefore, more than one third of the Board of Directors is independent Outside Director. The Board of Directors make swift and decisive decisions by constructive discussion under fair and transparent management.
In addition, we take into consideration the diversity of the members of the Board of Directors in establishing selection criteria for Directors.
In order to complement functions of the Board of Directors and establish a more flexible management structure which can appropriately and swiftly respond to the rapidly, we have introduced Corporate Officer System since Sep 2019.
ROHM also have established Executive Meeting which is consisted of the Corporate Officers to help the decision of the President and discuss the important execution of duties for practical and efficient decision.
・Independent Outside Director
As standards of independence Outside Directors, we enacted and disclosed the “Independence Standards for Outside Officers”. Furthermore, we have designated all 5 of Outside Directors as independent Outside Directors pursuant to the requirement for outside director in Companies Act and the rules of the Tokyo Stock Exchange, and reported that information to the Exchange.
・The Audit and Supervisory Committee
The Audit and Supervisory Committee establish audit policies, standards, and plans.
Additionally, by visiting each division of ROHM and Group companies, inspection of business and financial status of ROHM and utilizing the Internal Control System through cooperation with Internal Audit Division which is independent from business execution, the Audit and Supervisory Committee audit legality and appropriateness of Directors’ business executions.
The Audit and Supervisory Committee consists of 5 members (4 of Directors are independent Outside Directors), all members are appointed by the criteria that require appropriate experience and skills as well as necessary knowledge on financial, accounting and the law. To support the Audit and Supervisory Committee’s duty, we establish a secretariat of the Committee comprised of staffs with necessary competencies.
・Internal Audit Division
Internal Audit Division check the status of the Formulation and the Operation of the Internal Control System, whether or not in-house rules are well observed, and whether not ROHM’s assets are secured by holding meeting with the individual divisions of ROHM and its affiliates at home and abroad, inspecting documents and reports, and others. The contents of audits are reported to ROHM’s Internal Audit Division as needed, and Opinion are exchanged on matters that require improvement regarding internal control.
・The Director Remuneration Council /The Officer Nomination Council
To improve independence, objectivity and transparency of the Appointment and the Remuneration of Directors, we established the Director Remuneration Council and the Officer Nomination Council and a majority of the member shall be independent Outside Directors, as an advisory body to the Board of Directors. The president acts as chairman of the councils in both council, and they consist of 3 members.
The Director Remuneration Council member discuss the Remuneration System and the Remuneration based on the system, and the Council submits basis reports for Remuneration of Directors who are not the Audit and the Supervisory Committee member to the Board of Directors. On the other hand, it submits basis reports for Remuneration of Directors who are the Audit and the Supervisory Committee member to the Committee.
The Officer Nomination Council discusses the appointment/dismissals of the President, Director with title, and Corporate Officer with title (excluding Senior Corporate Officer) and submits basis reports to the Board of Directors.
・CSR Committee and various specialist committees
ROHM Group considers CSR to be a key point for sustainable management and has had a CSR Committee chaired by the President since 2011. The objective of this committee is to achieve rapid decision-making in response to both the long-term outlook and the present problems and to the demands from the wide variety of stakeholders. The CSR Committee is comprised of all the directors, including the external directors, and also the heads of the departments with equivalent authority. The various specialist committees beneath the CSR Committee report and discuss the CSR related activity situation and activity plans in order to rotate the PDCA cycle for the CSR management and strengthen the CSR management system.
Based on the Director Remuneration Council’s recommendations, the Company’s Board of Directors resolved at the Board meeting held on March 12th, 2021 to adopt the following policies for determining the Remunerations of each Director.
・Policy on Determining Remuneration
- The basic policy
The remuneration and bonuses (hereinafter referred to as the “Remunerations”) of Directors shall be linked to the profits of shareholders in order to clarify management responsibilities and to fully operate as a sound incentives for sustainable corporate growth and increase corporate value over the mid-to long-term. In determining the Remunerations of each Directors, the basic policy shall be to set an appropriate level based on the responsibilities of each position.
To be specific, the Remunerations of an Executive Director consist of fixed remuneration, performance-linked remuneration and non-monetary remuneration (stock options), while the Remunerations of an Independent Outside Director, who performs an oversight function independently from the execution of the Company's operations, consist only of fixed remuneration.
We establish the Director Remuneration Council, a majority of the member shall be independent Outside Directors, as an advisory body to the Board of Directors, and discusses a system of Director remuneration and each Director's Remunerations based on this system in order to raise independency and objectivity and transparency of the Remunerations of Directors.
- Policy for determining the amount of fixed remuneration (including the timing for payment of Remunerations)
The amount of fixed remuneration for the Company's Directors shall be determined according to the positions and responsibilities of the Directors by comprehensively taking into consideration all relevant factors, including the remuneration levels of peer companies. The fixed remuneration shall be paid in cash monthly.
- Policy for determining the content and amounts of performance-linked remuneration and non-monetary remuneration (including the timing for payment of Remunerations)
Performance-linked remuneration, which is a monetary remuneration that reflects the Company's achievement of performance indicators, is designed to serve as an incentive for Directors to further increase awareness about their contribution to improvements in the Company’s business performance for each fiscal year. The amount of performance-linked remuneration shall be calculated according to the level of achievement of the Company's consolidated net sales and operating profit targets for the immediately preceding fiscal year and shall be paid in cash at a certain time each fiscal year.
Non-monetary remuneration shall be provided in the form of restricted stock options to further promote value sharing with shareholders. Based on the resolution of the Company's Board of Directors, Executive Directors shall make in-kind contribution of all monetary remuneration receivables that are to be granted under the Restricted Stock Option Plan, and shall, in return, receive shares of the Company’s common stock that will be issued or disposed of by the Company. Restricted stock options shall be granted to Executive Directors at a certain time each fiscal year.
- Policy for determining the remuneration ratio by type of Remunerations for each Director
Based on the levels of remuneration identified by benchmarking peer companies of comparable business size to the Company in related industries and business categories, the Director Remuneration Council shall consider the remuneration ratio by type of Remunerations.
If the target financial performance indicator is achieved 100%, the approximate ratio by type of Remunerations shall be fixed remuneration: performance-linked remuneration: non-monetary remuneration.
- Policy for determining the content of Remunerations for each Director
With regard to the Remunerations of the Directors, based on the Director Remuneration Council's recommendations, the Company's Board of Directors shall adopt, by resolution, the Director Remuneration Rules which specify the director remuneration system, remuneration ratio by type and calculation methods, among other things.
The Company's Board of Directors shall respect the Director Remuneration Council's recommendations and shall determine the Remunerations of each Director in accordance with the Director Remuneration Rules.
[The Mar 2021] Remunerations of Directors
|Director Category||Total Remuneration (Million JPY)||Total Remuneration by Type (Million JPY)||Number of Directors (Target)|
|Fixed Remuneration||Performance-linked Remuneration||Non-monetary Remuneration|
|Director (Excluding Outside Directors)||288||172||87||28||8|
*The table above includes 2 directors who retired at the conclusion of the 62nd Ordinary General Shareholders Meeting held on June 26th, 2020.
*The amount of remuneration paid to Directors does not include the amount of employee salaries paid to employee Directors.
Analysis and Evaluation of Effectiveness for the Board of Directors
At ROHM, each Officer is given a questionnaire evaluating the effectiveness of the Board of Directors, and the Board of Directors holds discussions based on these questionnaires’ results to analyze and assess the effectiveness of the Board.
Based on the results, independent Outside Directors individually interviewed the President to discuss issues for enhancing the effectiveness of the Board of Directors and measures to be taken for this purpose, as well as to exchange views on the desired state of the Board of Directors and ways to further improve governance.
(1)Operation of the Board of Directors (e.g., agenda, meeting frequency, materials on proposals, open and lively discussions, duration of deliberation, reporting of results)
(2)Roles and functions of the Board of Directors (e.g., appropriate decision making, supervisory function for overall management, size, diversity)
(3)Roles and responsibility of Directors (e.g., roles and responsibility of Outside Directors, information sharing and opinion exchanges among Outside Directors)
(4)Improvements made since last year (improvements regarding issues with low average scores in last year’s questionnaire)
(5)Functions and operation of the Director Renumeration Council and the Officer Nomination Council (e.g., agenda, meeting frequency, duration of deliberation)
・Overview of Results and Future Actions
We have confirmed that the Board of Directors makes decisions appropriately through approval of the execution of important operations by meeting on an adequate schedule with an adequate frequency, has appropriately received reports on the progress and results of previously decided projects, secures fair and transparent management by exercising supervision over management, and performs its function toward the fulfillment of the Management Vision and the President Policy, as well as the establishment of the Medium-Term Management Plan, and that the Director Renumeration Council and the Officer Nomination Council have been functioning properly. Based on the results, we have concluded that the overall effectiveness of the Board of Directors is generally ensured.
However, we recognize that there is room for improvement in terms of the composition of the Board of Directors, the timing to distribute the handouts, and prior briefings to improve the understanding of Outside Directors.
The Board of Directors will take steps to heighten its effectiveness based on the results of this evaluation.
Basic Policy on Cross-shareholdings of Listed Companies
To achieve sustainable corporate growth and increase corporate value over the mid- to long-term of ROHM Group, we believe that cross-shareholding of our major business partners in order to maintain strong business relationships with them is an important way.
With this end in view, annually the Board of Directors quantitatively and qualitatively examines each of cross-shareholdings in terms of economic rationality, the benefits of holding and other factors. And shares unneeded to continue holding will be gradually reduced.