The KOBELCO Group recognizes that corporate value includes not only business results and technological capabilities but also the stance on social responsibility to all stakeholders who may be affected by its business activities, such as shareholders, other investors, customers, suppliers, local communities, and employees in the KOBELCO Group. Earnestly undertaking efforts to improve all these factors leads to the enhancement of corporate value.
Therefore, corporate governance is not merely a form of the organization, but it is a framework for realizing all the efforts the KOBELCO Group is undertaking. In the development of the framework, the Group places importance on establishing a system that contributes to improving corporate value by taking appropriate risks; collaborating with stakeholders; promoting appropriate dialogue with investors in the capital market; maintaining the rights of and fairness for shareholders; and ensuring transparency.
In keeping with this basic policy, the KOBELCO Group pursues improvements in corporate governance.
The Company believes the source of its corporate value is to generate synergies across a wide range of segments in different demand fields, business environments, sales channels and business scales, while recognizing that the pursuit of technological development and innovation, which is the cornerstone of the Company’s sustainable growth, cannot be achieved without discussions with manufacturing sections.
Furthermore, the Company believes it is necessary for the Board of Directors to hold active discussions and make appropriate decisions regarding the risk management and the distribution of management resources for a wide range of businesses, and at the same time, to flexibly supervise business execution. In order to achieve this, it is desirable that the Board of Directors have members with a correct understanding of the Company’s business execution instead of completely separating the supervisory and execution functions.
In line with this approach, the Company has adopted an Audit & Supervisory Committee whose members have voting rights on the Board of Directors. Under this governance structure, the Company aims to enable comprehensive audits of its extensive businesses, maintain and strengthen the supervisory function of the Board of Directors, and accelerate decision-making on management, with no clear boundaries that separate the supervisory and execution functions.
In order to improve the effectiveness of monitoring, the Company has established advisory committees, which are responsible for providing appropriate recommendations to the Board of Directors regarding compliance, nomination & compensation, quality management, and corporate governance. In order to improve the effectiveness of business execution, the Company established the Executive Council as a forum where executives, including the President, discuss important matters. In addition, the Company has set up various committees as auxiliary bodies to the Executive Council in order to oversee and promote important matters related to the business units, such as sustainability and business portfolio management. The activities of these committees are monitored by the Board of Directors.
The number of Directors (excluding Directors who are Audit & Supervisory Committee Members) shall be not more than 15 as stipulated under the Articles of Incorporation of the Company. The Company takes the following measures to ensure that an appropriate number of Directors constitutes the Board of Directors to facilitate substantial discussion at meetings of the Board of Directors as well as enhance the auditing function, while considering its diversity.
At the Ordinary General Meeting of Shareholders in June 2021, the number of Directors was reduced from 16 to 13. The idea was to place greater emphasis on decisions related to important management directions as well as on risk management and other forms of monitoring toward the establishment of a management system that contributes to achieving sustainable growth and enhancing corporate value.
|To facilitate practical discussion at meetings of the Board of Directors, enhancing the supervisory function and ensuring its diversity||Six Independent Directors are appointed out of 13 Directors.
* Five Directors who are Audit & Supervisory Committee members
(including three Independent Directors)
|To reflect a fair and neutral viewpoint of Independent Directors as well as the viewpoint of stakeholders including minority shareholders||Six Independent Directors are assigned.|
|To enhance fairness and transparency of the Board of Directors and advance growth strategies as a company||The ratio of Independent Directors is one-third or more.
The Chairman of the Board of Directors is selected from among the Independent Directors in principle.
|To strengthen the monitoring functions of the Board of Directors||Executive Directors include the President and Directors who oversee specific key Companywide functions.
Eight Non-executive Directors (five Directors who are Audit & Supervisory Committee Members and three Independent Directors) form a majority of the Board of Directors.
In principle, the Audit & Supervisory Committee of Kobe Steel consists of five members, including two Internal Directors and three Independent Directors. This membership is not only in accordance with the rules on audit and supervisory committees of Japan’s Companies Act, which requires at least three Non-Executive Directors (a majority of whom must be Independent Directors), but it also ensures transparency and fairness and encourages satisfactory auditing for the diversified management of a wide range of business segments. The Chair of the Audit & Supervisory Committee is selected from among the Independent Directors.
Full-time Internal Audit & Supervisory Committee Members are mainly responsible for acting as liaisons between the management team and the Audit & Supervisory Committee and for coordinating with the internal audit departments. Independent Audit & Supervisory Committee Members are responsible for providing expert knowledge with respect to auditing and for maintaining fairness. To ensure these roles are fulfilled, the Company appoints Independent Audit & Supervisory Committee Members from diverse fields, including legal, financial, and industrial circles.
In addition, at least one of the Audit & Supervisory Committee Members must have a considerable degree of knowledge on finance and accounting in order to improve the effectiveness of audits.
A new internal reporting (whistle-blowing) system is in place that allows employees to contact the Audit & Supervisory Committee.
The Company has established the Meetings of Independent Directors to take full advantage of the Independent Directors’ capabilities. The meetings are a platform where the Company shares with Independent Directors information regarding the Company’s businesses excluding the nomination and compensation of executives.
The Meetings of Independent Directors consist solely of Independent Directors. Regular meetings are held every quarter and ad-hoc meetings are held when necessary.
The Executive Directors of the Company attend the Meetings of Independent Directors as appropriate to share information and exchange opinions with the Independent Directors.
The Company has established the Compliance Committee, as an independent advisory body to the Board of Directors, which deliberates matters regarding compliance with laws, regulations, and ethics concerning the Company’s business activities.
The Compliance Committee consists of the President, the Executive Officer overseeing Companywide compliance, the Executive Officer responsible for Companywide compliance, an external lawyer (without a retainer agreement executed by the Company) in charge of receiving reports via the Internal Reporting (whistle-blowing) System, Independent Directors, and external experts. The majority of the committee consists of members from outside of the Company.
The Compliance Committee formulates fundamental policies regarding Groupwide compliance activities, monitors the progress of compliance activities, and submits reports and recommendations on necessary actions to the Board of Directors.
The Compliance Committee holds regular meetings semiannually and ad-hoc meetings when necessary.
The Company has established the Nomination & Compensation Committee, as an advisory body to the Board of Directors, which makes recommendations on important matters concerning the nomination and compensation of Directors and Executive Officers, including a successor to the Chief Executive Officer, in order to enhance fairness and transparency in the management of the Board of Directors. The Nomination & Compensation Committee consists of three to five members appointed by the Board of Directors, including the President, with the majority of members comprising Independent Directors. Meetings are held at least once every fiscal year and as needed. The Board of Directors fully respects the opinions of the Nomination & Compensation Committee and its decisions on relevant matters.
The Company has established the Quality Management Committee, as an advisory body to the Board of Directors, which undertakes the continued monitoring of the effectiveness of measures to prevent a recurrence of the quality misconduct in the Group, in addition to continuously monitoring and advising on activities to strengthen quality management across the Group. Members of the Quality Management Committee include two internal executives of the Company and three external experts selected by the Board of Directors who have technical knowledge or legal knowledge on quality control. The committee is chaired by one of the external members.
The Company has established the Corporate Governance Committee, as an independent advisory body to the Board of Directors, which deliberates matters regarding corporate governance, including the formulation of basic policies, in order to realize corporate governance that helps to achieve sustainable growth of the Group and enhance corporate value.
The Corporate Governance Committee consists of the President, the Director or Executive Officer overseeing the Corporate Planning Department, the Director or Executive Officer overseeing the General Administration and CSR Department, and Independent Directors appointed by the Board of Directors. Independent Directors form a majority of the committee. The Committee Chair is selected from Independent Directors through vote among the members. The Corporate Governance Committee meets at least once every fiscal year and calls a meeting as needed.
The Board of Directors is responsible for deliberating and deciding on matters concerning the execution of important business and legal matters as well as for overseeing business execution.
However, to ensure prompt decision-making, the Company has established deliberation standards for meetings of the Board of Directors and delegated authority, within a certain scope, to persons responsible for specific duties, including the President and other executives.
In addition, by appointing Executive Officers as assistants to Directors who execute duties, the Company has established a system that enables the delegation of business management responsibilities and prompt decision making with respect to business management.
The term for Directors (excluding Audit & Supervisory Committee Members) and Executive Officers shall be one year to enable the Company to respond flexibly to a volatile business environment.
The Company has established an executive remuneration system in order to improve corporate value over the medium to long term, as well as to effectively offer incentives for executives to carry out their expected roles to their fullest capacities.
Remuneration for the Company’s executives (excluding remuneration for Directors who are Audit & Supervisory Committee members) consists of basic remuneration paid as fixed compensation, performance-based compensation linked to the achievement of business result targets for each fiscal year, and stock compensation with the goal of sharing values with shareholders. Taking into consideration their duties, part-time Inside Directors and Independent Outside Directors are not eligible for performance-based compensation, and Independent Outside Directors are not eligible for stock compensation.
The Company’s Directors who are Audit & Supervisory Committee members are only paid basic remuneration as fixed compensation, taking into consideration their duties.
The remuneration framework for Executive Officers (excluding Directors) is the same as the framework for Directors.
In fiscal 2020, remuneration and other amounts payable to the Accounting Auditor by the Company totaled 153 million yen, and the total amount of money and other financial interests payable by the Company and its subsidiaries was 474 million yen.