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Corporate Governance

Basic Thinking

Sodick’s managerial principle is to contribute to the development of society by supplying superior products and supporting the manufacturing performed by our customers based on our guiding spirit of “Create,” “Implement,” and “Overcome difficulties.”
The company believes that the most important element of this is to manage itself in ways that are transparent and readily comprehensible at all times by all of its stakeholders, including its shareholders and investors, customers, and employees.
Sodick strives to make efficient use of its management resources, strengthen itself in the areas of risk management and compliance, and maximize corporate value for all of its shareholders and investors.

Corporate Governance Structure

Overview of the Structure

  • Sodick has chosen “Company with an Audit & Supervisory Board” as its organizational plan in line with the Companies Act. The Board of Directors engages in decision-making regarding important management issues and carries out its supervisory function with respect to general management. The fairness and transparency of management are ensured by giving full rein to management oversight from an independent standpoint as carried out by Audit & Supervisory Board Members.
  • Sodick has adopted an executive officer system to realize corporate management that is prompt and highly efficient. The Board of Directors entrusts the execution of business to executive officers based on the management organization and segregation of duties.
  • To supplement the functions of the Board of Directors, Sodick has established advisory committees on personnel and compensation whose members may include External Directors on an optional basis. It has also created a governance structure that has increased the transparency of decision-making and further enhanced the Board’s monitoring and oversight functions.

Diagram of Our Corporate Governance Structure

Diagram of Our Corporate Governance Structure

Structure at a Glance  (as of March 2018) 

Organizational configuration Company with Audit & Supervisory Board
Executive management structure Executive officer system
Matters concerning directors No. of directors 12 Note 1:
Term of appointment for directors per the articles of incorporation 2 years
Chair of the Board of Directors President
Matters concerning auditors Audit & Supervisory Board to be established ? Yes
No. of Audit & Supervisory Board Members 5 Note 2:
Matters concerning External Directors/
auditors
No. of External Directors
(of which, independent officers)
4 (4)
No. of External Audit & Supervisory Board Members
(of which, independent officers)
3 (1)
  • Note 1: The number of directors as per the articles of incorporation will be no more than 15.
  • Note 2: The number of Audit & Supervisory Board Members as per the articles of incorporation will be no more than five.

Role of Each Organization

Board of Directors

  • Oversees supervisory functions over decision-making on important issues and management in general as stipulated in the Board of Directors regulations, including setting basic policy on management and appointing executive officers.
  • Regular meetings of the Board of Directors take place once per month, and when necessary the board also convenes extraordinary meetings.
  • The Board is comprised of 12 directors who supervise management and make important management decisions. They include six directors who are also serving as executive officers and six non-executive directors (two representative directors, four outside directors).
  • Opinions, advice, and cross-checking from External Directors serve to improve and revitalize the transparency and credibility of the Board of Directors while also strengthening its management supervision functions.
  • Business meetings, joint technical meetings, quality control meetings, and business report meetings may be held to broaden and deepen understanding of the company and manage it effectively. Directors attend these meetings in order to flexibly make decisions about basic and important items related to the execution of business.

Audit & Supervisory Board

  • The Audit & Supervisory Board is comprised of five Audit & Supervisory Board Members, three of whom are external auditors.
  • The function of the Audit & Supervisory Board is to supervise management from an outside perspective. It determines policies on auditing and the assignment of duties, and receives reports on the implementation and results of audits from the auditors. In addition, it receives reports from directors and accounting auditors on the state of their execution of their duties, and requests explanations thereof as necessary.

Advisory Committee on Personnel

  • The Advisory Committee on Personnel is comprised of four directors, two of whom are external directors.
  • It formulates appointment criteria and policies regarding personnel matters involving directors, Audit & Supervisory Board Members, and executive officers; selects candidates for those positions; and evaluates the current holders of said positions.

Advisory Committee on Compensation

  • The Advisory Committee on Compensation is comprised of four directors, two of whom are external directors.
  • It formulates policy on compensation for directors and executive officers, and deliberates over compensation standards, appraisals, and amounts.

Strengthening Management Supervisory Functions

External Directors and External Audit & Supervisory Board Members

  • Four of Sodick’s 12 Directors are external directors. They apply their objective perspectives and wealth of knowledge and experience to management, strengthening the corporate governance structure. Furthermore, three of the five Audit & Supervisory Board Members are external Audit & Supervisory Board Members, increasing the objectiveness and fairness of management supervision.
  • Prior to meetings of the Board of Directors, the external directors and external Audit & Supervisory Board Members and supervisors issue reports to the board in writing about any necessary information, and about any items to be decided or investigated by the board. The external Audit & Supervisory Board Members and supervisors also convene regular monthly meetings of the Audit & Supervisory Board with every Audit & Supervisory Board Members and supervisor in attendance, where they exchange a wide range of information and opinions.

Main Activities of the External Directors and External Auditors and the Reasons for Their Appointments
(December 2018 fiscal year)


External Directors
Name Independent
officer
Board of
Director meetings
(13)
Audit &
Supervisory
Board
meetings
(13)
Reason for appointment
Toshiaki
Kurihara
Yes 13/13 - In addition to abundant experience at financial institutions, possesses broad insights cultivated from serving as a Director and Audit & Supervisory Board Members at business corporations. Was appointed as an external director to receive the benefit of his useful advice regarding Sodick’s management strategy. Additionally, was nominated as an independent officer because he has no stake in the company – guaranteeing full independence from the president and other managers of corporate affairs – and there is no concern that any conflicts of interest with general shareholders would arise.
Katsuhisa
Furuta
Yes 13/13 - Possesses broad insights about control and robot engineering cultivated through many years of research at universities, as well as experience with engaging in organizational operations as a university president and academic society chairman. Was appointed as an external director to receive the benefit of his useful advice regarding Sodick’s management strategy. Additionally, was nominated as an independent officer because he has no stake in the company – guaranteeing full independence from the president and other managers of corporate affairs - and there is no concern that any conflicts of interest with general shareholders would arise.
Ichiro
Inasaki
Yes 10/10
(Note 1)
- Possesses broad insights about precision engineering cultivated through many years of research at universities as well as expert knowledge pertaining to Sodick’s business areas, and also has a deep understanding of Sodick’s businesses. Therefore, was appointed as an external director to bring this high-level expertise to bear on enhancing Sodick’s businesses. Additionally, was nominated as an independent officer because he has no stake in the company - guaranteeing full independence from the president and other managers of corporate affairs - and there is no concern that any conflicts of interest with general shareholders would arise.
Kazunao
Kudo
Yes 10/10
(Note 1)
- Not only has manufacturing technology and production know-how, but a wealth of managerial experience from launching a business in China, and therefore was appointed as an external director to receive the benefit of his advice regarding Sodick’s manufacturing in general. Additionally, was nominated as an independent officer because he has no stake in the company – guaranteeing full independence from the president and other managers of corporate affairs – and there is no concern that any conflicts of interest with general shareholders would arise.

External Audit & Supervisory Board Member
Name Independent
officer
Board of
Director meetings
(11)
Audit &
Supervisory
Board
meetings
(10)
Reason for appointment
Masahiro
Shimojo
Yes (Note 2) (Note 2) Mr. Shimojo possesses high-level specialized knowledge and broad insights as an attorney, as well as a wealth of experience at other companies as an outside auditor and audit committee member (equivalent to an Audit & Supervisory Board Member). He has been asked to serve as an Outside Audit & Supervisory Board Member in order to utilize his extensive experience in enhancing the Company’s auditing system.
Takashi
Nagashima
Yes 13/13 13/13 Mr. Nagashima possesses high-level specialized knowledge and broad insights as a certified public accountant and licensed tax accountant. He has been asked to serve as an Audit & Supervisory Board Member in order to utilize this experience in enhancing the Company’s auditing system.
Tomio
Okuyama
  13/13 13/13 Mr. Okuyama possesses a wealth of experience and insights gained at financial institutions, and has been asked to serve as an Audit & Supervisory Board Member in order to objectively audit the soundness of management, including the extent to which internal governance has been established and the handling of risk.
  • Note 1: In the event that this individual cannot attend a Board of Directors meeting, they are sent an appropriate report on the details of the meeting and asked for their opinions and advice regarding the management of the company.
  • Note 2: Was appointed in March 2019, and therefore has no corresponding activity from the December 2018 fiscal year.

Independence of External Officers

  • Sodick appoints external officers in light of its own original eligibility criteria concerning the independence of external officers (see below) in striving to enhance oversight functions for management and transparency, as well as to strengthen its corporate governance structure.

Prerequisites for Ensuring the Effectiveness of the Board of Directors and Audit & Supervisory Board

Evaluating the Effectiveness of the Board of Directors

  • Every fiscal year, each director performs a self-evaluation regarding the extent to which they have fulfilled their professional duties. This is done to see if Sodick’s Board of Directors is performing its professional duties in accordance with our guidelines in order to boost the effectiveness of our corporate governance.
  • Based on the aforementioned self-evaluations by each director, the Audit & Supervisory Board Members analyze and evaluate the effectiveness of the Board of Directors on the whole and disclose an overview of the results of this.
  • On the basis of the aforementioned policy, in December 2018 the directors performed self-evaluations regarding the effectiveness of the Board of Directors on the whole. Afterwards, at the meeting of the Audit & Supervisory Board held, the effectiveness of the Board of Directors was analyzed and deliberated over based on the self-evaluations from the directors. The results of this were that the Board of Directors was assessed to be functioning satisfactorily for its effectiveness in terms of its management status, deliberation status, and management and oversight functions.
  • For its part, Sodick has determined that the effectiveness of the Board of Directors has been adequately ensured as of this point in time based on the results of the aforementioned evaluation. In order to improve further deliberations and improve supervisory functions, we will review the criteria for discussion, and so forth.

Training for the Board of Directors and Audit & Supervisory Board

  • Newly appointed directors and Audit & Supervisory Board Members take part in training by the Japan Audit & Supervisory Board Members Association.
  • Independent external directors and independent external Audit & Supervisory Board Member look at descriptions of business and observe major business centers and so forth, while also explicating business strategies where appropriate.
  • Other directors, Audit & Supervisory Board Members, and executive officers acquire the knowledge and ways of thinking necessary in order to improve corporate value through e-learning by the Tokyo Stock Exchange.

Opportunities are provided for executive officers and others to participate in management, such as through business report meetings, in order to cultivate successor personnel. In addition, from this fiscal year we launched initiatives aimed at developing human resources at the executive management level, including training in drawing up long-term business strategy. However, as there is scope for further discussion concerning successor planning and training, the training system and the content of this, the Board of Directors will continue to hold discussions on this area.

Improving Transparency of Management

Officer Compensation

Process for Determining Officer Compensation

  • The annual shareholders’ meeting determines the broad framework regarding compensation for directors. As for the amount of compensation for each director, representative directors drafts proposed amounts after discussions based on the decisions of the Board of Directors. The actual amounts are set after approval has been received from the Advisory Committee on Compensation, which is comprised of representative directors and external directors.
  • The annual shareholders’ meeting decides on the broad framework of compensation for Audit & Supervisory Board Members. Within those limits, the amounts of compensation for each Audit & Supervisory Board Members are decided by discussions among the Audit & Supervisory Board Members.

Guidelines for Determining Compensation for Officers

Compensation for Sodick officers entails computing benchmark amounts for each officer based on increases and decreases in the following three sums and then adjusting the whole and individual amounts based on this.

  • Standard amount for each officer
  • Increase or decrease in amounts linked to business performance according to consolidated current net income
  • Amount appropriate to the officer’s job responsibilities Compensation for external directors Is a fixed amount, and no performance-linked compensation is provided.

Details for Officer Compensation (December 2018 Fiscal Year)

Officer
category
Total
compensation
(million yen)
Total compensation by type
(million yen)
No. of eligible
officers
(people)
Basic
compensation
Stock
options
Bonuses Retirement
benefits
for
officers
Director
(excluding Outside Directors)
309 309 - - - 11
Audit & Supervisory
Board Members
(excluding Outside Directors)
31 31 - - - 2
External officer 47 47 - - - 8
Total 386 386 - - - 21

  • At present, the company does not confer compensation in the form of stock options, bonuses, or retirement benefits.

IR Activities

Sodick regards all of its shareholders and investors as important stakeholders, and places importance on constructive dialogue to improve corporate value. Our Investor Relations Department handles these dialogues with shareholders. In cases where shareholders have individual requests, we consider having directors and others respond to them within reasonable limits by taking into consideration factors like the purpose of the meeting and the importance of the topic. The opinions we receive from our shareholders and investors are reported to the Board of Directors and Business Report Committee as needed, and will be put to use for the future management of the company.

  • For all of our shareholders and investors, the company makes every effort to provide information swiftly based on the principles of transparency, fairness, and continuity, and promotes IR activities conducive to further improving corporate value. The Investor Relations departments are responsible for dialogue with our shareholders and investors. To respond to dialogues from shareholders reasonably and smoothly, it coordinates with the relevant departments, including Accounting and Financial Affairs, Legal Affairs, and Compliance for the promotion of IR activities.
  • Financial results briefings for institutional investors and analysts are held two times per year to serve as a dialogue initiative that is separate from the individual meetings. The annual shareholders’ meeting is also seen as a valuable and important opportunity for dialogue with our shareholders, and efforts are made to set aside adequate question-and-answer time and to conduct tours of our showrooms after the shareholders meeting.
  • For our individual investors, a dedicated page has been created at the company’s website. There, we plan to post information about the company’s businesses, performance, corporate philosophy, etc.
  • Sodick issued an integrated report and held factory tours for analysts and institutional investors in order to promote a constructive dialogue.
  • Regarding measures for controls applying to insider information, Sodick has formulated a Disclosure Policy that is available via our homepage.

Our Structure for Timely Disclosures

Our Structure for Timely Disclosures

Enhancing Internal Management

Internal Governance

Based on the Companies Act, Sodick enacted its Basic Policy on Internal Governance Systems at the Board of Directors meeting on May 17, 2006, in order to ensure propriety in our operations. It was subsequently revised at the Board of Directors meeting on April 17, 2015. This internal governance system strives to build more optimal and efficient structures through continuous reassessment and improvement.

Compliance Structure

  • Sodick evaluates the effectiveness of its internal governance systems through its Internal Audit Office. The results of these evaluations are reported to the directors and Audit & Supervisory Board Members. The company has also established a Compliance Helpline (whistle-blower system) whose purpose is to quickly discover and rectify compliance infractions or potential instances thereof.
  • Sodick has set down compliance regulations as well as the Sodick Group Action Guidelines for Corporate Ethics and Standards for Corporate Behavior (Compliance Guidelines). These form a code of conduct whose purpose is to encourage group officers and employees to act in ways that conform to laws, the articles of incorporation, and social codes. To ensure that they are thoroughly adhered to, the company provides training and education on them to its officers and employees.

Risk Management Structure

  • Sodick has established basic rules for risk management. The company works to determine, analyze, evaluate, and take appropriate measures to avoid the risks present in each department. To prepare for the occurrence or potential occurrence of unforeseen situations that would have a major impact on management, the company has also established a Risk Management Committee and set up the necessary preemptive policies on responding.
  • The Risk Management Committee engages with monitoring and overseeing the company-wide risk management situation, and reports important risks to the Directors and auditors.