Corporate Governance

Basic Concept

Tsubakimoto Chain Co. regards enhancing corporate governance as one of the most important management tasks to create value for customers and contribute to society.
We have thus formulated this approach into the basic corporate governance policy stated below and strives to improve the corporate governance.

Basic Corporate Governance Policy

Promotion System

The Company makes a clear line between strategy formulation and oversight for the Group by the Board of Directors and business execution by the COO and the executive officers who are also members of the Management Meeting. Furthermore, the Company the strategy meeting, which is positioned as the second-highest decision making body in the Company after the Board of Directors, to deliberate and make decisions regarding important Groupwide business strategies and management policies.

Overview

Corporate Governance Structure

Skill Matrix of Board Members

Note: The above table indicates a maximum of three of the main skills possessed by each director, rather than representing all of their skills.

Measures Taken for Corporate Governance

The Company has implemented the following management structure reforms to enhance the independence of the Board of Directors, to invigorate discussions at meetings of the Board of Directors on strategies for medium-to-long term growth, and to strengthen the supervisory function of the Board of Directors over the business execution.

Establishment of a Nomination and Remuneration Committee

In the fiscal year ended March 31, 2020, the Company established a Nomination and Remuneration Committee, which is chaired by an outside director, as a voluntary advisory body to the Board of Directors to bolster the independence, objectivity, and accountability of the Board of Directors.
This committee holds discussions for matters such as nominations and remunerations of directors and appointment and dismissal of the CEO and/or the COO, and reports to the Board of Directors.

Reasons for Appointments of the Independent Directors/Audit & Supervisory Board Members

Compensation for the Directors and Audit & Supervisory Board Members

Compensation for Directors

The Board of Directors passed a resolution on the policy for determining the method for calculating compensation after deliberations and reporting by the Nomination and Remuneration Committee, a voluntary advisory body to the Board of Directors comprising a majority of outside directors.

So that compensation for internal directors provides an effective incentive for realizing sustainable improvements in corporate value over the long term, the Company has adopted a compensation system that focuses on the link between business performance and shareholder profit. Specifically, this system comprises fixed compensation and performance-based compensation, which are monetary compensation, and ｓtock compensation restrictions, which is non-monetary compensation.

Given that they perform the role of carrying out management supervision from an objective and neutral standpoint, compensation for outside directors comprises only fixed compensation, which is monetary compensation.

Compensation for the Audit & Supervisory Board Members

Given that they perform the role of carrying out management supervision from an objective and neutral standpoint, compensation for Audit & Supervisory Board members comprises only fixed compensation, which is monetary compensation.

We abolished director bonuses at the conclusion of the 97th Annual General Meeting of Shareholders held on June 29, 2006, and abolished the system of retirement benefits for directors at the conclusion of the 99th Annual General Meeting of Shareholders held on June 27, 2008. At the 111th Annual General Meeting of Shareholders held on June 26, 2020, the Company introduced stock compensation restrictions on transfer to directors other than outside directors.

*1: Numbers less than 1 million yen have been rounded down.

*2: The above includes one director whose term of service concluded at the 113th Annual General Meeting of Shareholders held on June 29, 2022, and one director whose term of service concluded on April 12, 2022 due to the director passing away.

Evaluation of the Effectiveness of the Board of Directors

We have been evaluating the effectiveness of the Board of Directors since 2018 in order to improve its performance.
The Company requires all of its directors and Audit & Supervisory Board members to complete a questionnaire on matters including the Board of Directors’ structure, operation, and agenda items. Based on an analysis and evaluation of the questionnaire results, we have determined that the Board of Directors is functioning effectively.
In light of the results of the previous evaluation, we have been striving to ensure that the necessary reports are correctly prepared through the post-review committee structure, as well as to further enhance and expand the provision of information through a variety of meetings, including Board of Directors information exchange meetings, opinion exchange meetings, and Mid-term Management Plan progress report meetings, all with the aim of further enhancing discussions on medium- and long-term management policies and strategies at Board of Directors meetings. As a result, some participants commented again that it was be beneficial to share information on business activities, business performance, management policies, and management issues.
Nevertheless, we received many more meaningful opinions than in the past, mainly about items concerning the operation and agenda of the Board of Directors, indicating that we should further enhance discussions on medium- and long-term management resource allocation policies, global management personnel training policies and diversification of the management level, risk management, and other topics. We will continue to consider improvements to further enhance the Board’s effectiveness.

Response to Japan’s Corporate Governance Code

For details on the Company’s corporate governance status and its compliance with the Corporate Governance Code, refer to the Corporate Governance Report as linked below.

Internal Control System

For the Company and other Group companies, we have formulated internal control regulations and established the Internal Control Committee in accordance with our Basic Policy on Internal Control. The Internal Control Committee is responsible for advancing ongoing initiatives in the following areas that are inclusive of the entire organization and participated in by all employees.

(1) Internal control initiatives stipulated by the Companies Act

We have established an emergency contact system on a global scale to enable information on risks that occur within the Group to be promptly communicated to senior management. We also implement annual risk management status surveys of major subsidiaries in Japan and overseas to ascertain the status of their risk management and follow up on their activities.

(2) Internal control initiatives described in the Financial Instruments and Exchange Act

Based on the Financial Instruments and Exchange Act, the Group has established internal control initiatives to ensure the appropriateness of the preparation process of its consolidated financial statements.
As overseas sales have increased in recent years, the number of overseas subsidiaries covered by these initiatives has increased each year. For this reason, with the aim of quickly introducing these initiatives at overseas subsidiaries, we are taking steps toward establishing related materials for, and the sharing of expertise with, overseas subsidiaries while concentrating efforts on enhancing the efficiency and accuracy of evaluations.

(3) Internal control initiatives conducted by the Group on a voluntary basis

The Group is advancing Tsubaki Internal Control Operation (TICO) initiatives for documenting the procedures of important work in each department. As activities that ensure the appropriateness of controls of risks for each type of work and objectively judge if there is unreasonableness or waste through visualizing important work, the TICO activities play a part in the Group’s important internal control initiatives.