Corporate Governance

Corporate Governance

Approach and Governance System

To drive sustainable growth and enhance corporate value over the medium and long terms, the GS Yuasa Group is committed to establishing an organization and systems that enable fast, efficient responses to a changing business environment. At the same time, our basic policy on corporate governance is to make every effort to thoroughly implement and strengthen compliance and enhance the soundness and transparency of management.

A new governance structure began in fiscal 2017 based on this philosophy. GS Yuasa Corporation, the holding company, is responsible for formulating management strategies for all of the Group's businesses, as well as management for the entire Group and oversight of the Group's business execution. GS Yuasa International Ltd., the Group's core operating company, is the key decision-making body for business execution, consolidating and strengthening business execution and making swift business-related decisions.

The Board of Directors makes fast and effective decisions related to the Group's management by prioritizing strategic decision making and supervisory functions for management policy. In addition, monitoring has been reinforced by appointing multiple independent outside directors.

Governance Structure (FY 2021)

image:Governance Structure

Efforts to strengthen corporate governance

image:Efforts to strengthen corporate governance

Evaluating the effectiveness of the Board of Directors

Led by outside directors and the president, evaluations of the effectiveness of the Board of Directors have been implemented once a year since fiscal 2016. In fiscal 2020 as well, all directors and corporate auditors completed a questionnaire on the structure, management, agenda, and duties of the board. As a result of analysis and evaluation of the questionnaire replies, it was deemed that the Board of Directors is operating effectively.

However, opinions and suggestions were made calling for further improvements concerning such matters as internal control and the risk management setup and its involvement in successor plans of the Nomination and Compensation Committee. We will continue to address these issues.

Evaluation and improvement measures in the most recent two years are shown below.

Evaluating the effectiveness of the Board of Directors

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Evaluation itemsFY2020 evaluation (Targeted period: January–December 2019)FY2021 evaluation (Targeted period: January–December 2020)
Composition of the Board of Directors There were opinions on the ratio of outside directors and appointment of female directors.
Our response
In the light of the results of discussions in the Nomination and Compensation Committee, we appointed a female outside director and increased the number of independent directors to more than one-third of the board. As a result, composition of the board has come to further reflect our diversity.
Overall, the evaluation was affirmative. As issues to be addressed going forward, however, there were suggestions on such matters as the ratio of outside directors and international diversity, including the appointment of foreign directors.
Management of the Board of Directors Improvements made in the previous fiscal year to review the time setting of meetings of the Board of Directors and other important conferences were positively appraised, and overall the evaluation was affirmative. Regarding important matters, however, there were suggestions that further improvements should be made to enable efficient reports.
Our response
We conducted a review of the timing of reports and subject matter.
Overall, the evaluation was affirmative, recognizing that improvements had been made and that appropriate reports were being given on the progress of issues to be discussed in the Board of Directors, including important matters. However, there were also calls for further improvements to substantiate report content.
Agenda of the Board of Directors There was a suggestion that discussions should be further deepened prior to referral to the Board of Directors.
Our response
We considered a review of the Group’s decision-making process, including the arrangement of meetings other than those of the Board of Directors.
The Group’s decision-making process, which is being examined to address an issue raised in the previous fiscal year, commenced operation in April 2021, so they were not a subject of this effectiveness evaluation. The effectiveness of the decision-making process is scheduled to be considered in fiscal 2021.
Duties of the Board of Directors Regarding the fostering of next-generation management, there was a suggestion that awareness of the duties and responsibilities of directors should be further raised through training and other activities for related persons, including executives of GS Yuasa International Ltd., our core business subsidiary.
Our response
We held new training sessions and other activities for related persons, including executives of GS Yuasa International Ltd.
There were suggestions for further improvements to be made regarding internal control and the risk management setup and involvement in the successor plans of the Nomination and Compensation Committee.
In response, it was decided to consider the improvement of monitoring arrangements, such as the regular supply of information relating to overseas sites, and the expansion of information sharing relating to senior employees in the Nomination and Compensation Committee.

Establishment of Nomination and Compensation Committee

On February 26, 2019, the Board of Directors voted to establish a discretionary Nomination and Compensation Committee, chaired by an independent outside director, and serving as an advisory body to the Board of Directors. The goal of the committee will be to strengthen the independence, objectivity and accountability of Board of Director functions such as director nominations and compensation.

Nomination committee functions include consulting on proposals for nominating new directors and for selecting a new corporate president and plans for successors (including human resource development), in addition to reporting findings to the Board of Directors. Meanwhile, the compensation committee will consult on policy determinations for director compensation as well as for individual director remuneration, and reporting findings to the Board of Directors.

Nomination and Compensation Committee structure

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ClassificationPosition titleNames
Chairperson Outside Director Ikuo Otani
Committee member Outside Director Takayoshi Matsunaga
Outside Director Yoshiko Nonogaki
President Osamu Murao
Vice President Toshiyuki Nakagawa

Reasons for Appointing Internal Directors

To enable the Board of Directors to effectively fulfill its duties as the Board of Directors of the holding company, we select, in a well-balanced manner, persons with knowledge, experience, skills, and so on relating to the business of our Group as a whole and persons who can make statements and act from an objective standpoint and a long-term, wide-ranging perspective. In addition, we strive to achieve a size and composition that can reflect diverse opinions, including gender and international viewpoints. In the selection of candidate directors, the Board of Directors asks the Nomination and Compensation Committee for advice and makes a final decision in the light of its report.

Skills matrix of directors and auditors (FY2020)

image:Skills matrix of directors and auditors (FY2020)

Policy on the Independence of Outside Directors

Candidates selected as outside directors must meet the requirements for independence set out in the Companies Act and possess the experience and insight to objectively and fairly judge the legality and appropriateness of the execution of the company's duties from the shareholders' perspective without being limited by being in charge of business implementation. Also, we believe in the importance of employing people who are outwardly independent and use the Tokyo Stock Exchange's independence standards as their reference.

Independent outside director independence standards and qualities

In selecting outside director candidates, in addition to their meeting the requirements for externality as stipulated in the Companies Act, the Company strives to determine whether they have the experience and insight to make objective and neutral judgments about the legality and appropriateness of the execution of the Company's business from the standpoint of shareholders, without being subject to restrictions imposed by the executive management.

Further, the Company believes that it is desirable to have human resources who are considered independent from the perspective of those outside the Company also, and for this reason, the Company uses the independence standards, etc. set forth by the Tokyo Stock Exchange, as a reference.

Record of Attendance by Outside Directors at Board of Directors and Auditor Meetings

The record of attendance by outside directors at meetings of the Board of Directors and auditors in fiscal 2020 is shown below.

Record of Attendance by Outside Directors at Board of Director and Auditor Meetings

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NamesBoard of DirectorsAuditor Meeting
Number of attendances
/ Number of meetings
Number of attendances
/ Number of meetings
Ikuo Otani,
Outside Director
17 / 17-
Takayoshi Matsunaga,
Outside Director
17 / 17-
Yoshiko Nonogaki,
Outside Director
13 / 13-
Katsuya Ohara,
Outside Corporate Auditor
(Full-time)
17 / 1714 / 14
Tsukasa Fujii,
Outside Corporate Auditor
(Part-time)
17 / 1714 / 14

Note: At the Annual General Meeting of Shareholders held on June 29, 2021, auditor Katsuya Ohara retired upon the expiration of their terms.

Note: Director Yoshiko Nonogaki was appointed at the Annual General Meeting of Shareholders held on June 26, 2020, and 13 meetings of the Board of Directors have been held since her appointment.

Remuneration of Directors

To continuously enhance our corporate value and strengthen our corporate competitiveness, the remuneration of directors is ranked and structured in consideration of such factors as securing and retaining talented human resources and increasing their motivation to achieve better business performance.

At a Board of Directors meeting held on February 25, 2021, a policy was approved for determining the content of remuneration, including the remuneration of individual directors. In deciding the policy, the Board of Directors referred the matter to the Nomination and Compensation Committee and received its report.

A director’s remuneration consists of a fixed basic remuneration, a performance-linked annual bonus as a short-term incentive, and a performance-linked stock remuneration scheme as a medium- to long-term incentive. The basic remuneration (cash remuneration) is decided in consideration of such factors as the standard amount in accordance with the director’s position and so on, consolidated business performance, assessment of the business performance of the relevant division and individual, and levels in listed companies with about the same business scale as the Company. The annual bonus, a short-term performance-linked remuneration, is calculated in consideration of business performance in the fiscal year and degree of improvement and target achievement since the previous year with the aim of increasing awareness of the need to contribute to sustained business growth and enhanced corporate value. It is paid to directors (excluding outside directors) after approval by the Shareholders’ Meeting. The stock remuneration scheme is aimed at increasing the awareness of directors of the need to contribute to medium- to long-term business growth and enhanced corporate value. In principle, company shares are issued at the time of a director’s retirement through a trust set up by the Company commensurate with the number of points granted according to position and degree of achievement of mid-term management plans.

In view of their role and independence, auditors receive only the fixed basic remuneration.

Total Amount of Remuneration, Etc. by Category and by Type, and Number of Applicable Persons

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CategoryTotal amount of
remuneration, etc.
(Millions of yen)
Number of
applicable persons
Directors
(excluding outside directors)
2026
(including 2 retirees)
Auditors
(excluding outside corporate auditors)
492
(2 incumbents)
Outside directors/auditors585
(3 incumbent directors + 2 incumbent auditors)

Note: The above figures are the total amount of remuneration, etc. paid to directors by GS Yuasa and our subsidiaries.

Composition of GS Yuasa Corporation's director remuneration

image:Composition of GS Yuasa Corporation's director remuneration

Internal Control System

To strengthen the management foundation, the GS Yuasa Group has improved the system and relevant rules to ensure the maintenance of ethical business practices based on the Companies Act. This system includes mechanisms to ensure effective auditing, information management, and risk management throughout the Group.

To comply with the internal control reporting system required under the Financial Instruments and Exchange Act, we are maintaining an internal control system and financial reporting mechanisms to meet all requirements.

Our international subsidiaries and other consolidated Group companies evaluate the status of the improvement and implementation of internal controls. Following external audits, reports on these internal controls are publicly disclosed.

Policy on cross-shareholdings

Shares held by the Company for purposes other than pure investment are those of business partners, etc., with which the Company expects to maintain medium- to long-term relationships, expand transactions, and generate synergies and which the Company believes will enhance corporate value and benefit shareholders and investors. For this reason, the Board of Directors verifies the rationality of holding each individual stock every year. As a result of this verification, the Company attempts to reduce the number of shares held when it judges that there is no rationality in holding such shares.

Criteria for ensuring the proper exercise of voting rights in relation to cross-shareholdings

The Company exercises its voting rights in relation to cross-shareholdings after comprehensively evaluating the rationality of the proposals of investee companies from the perspective of improving corporate value over the medium to long term.

Change of independent auditor

The term of Deloitte Touche Tohmatsu LLC as our independent auditor expired at the end of GS Yuasa’s 16th Annual General Meeting of Shareholders on June 26, 2020. Since Deloitte Touche Tohmatsu had audited our accounts continuously for many years, we decided it was necessary to freshly evaluate and review our independent auditor. Prior to the expiration of Deloitte Touche Tohmatsu’s term, therefore, we conducted a comparison of several auditing firms, including Deloitte Touche Tohmatsu, in accordance with GS Yuasa’s independent auditor evaluation and selection criteria. As a result, we chose KPMG AZSA LLC as our new independent auditor. As well as this firm having the expertise, independence, and suitability required of an independent auditor, and also the capacity to audit the GS Yuasa Group’s global business activities in a uniform manner, we judged that by changing the independent auditor, we could look forward to audits being carried out from a fresh perspective using different methods than in the past.

Executives (As of June 29,2021)

GS Yuasa Corporation

President
Osamu Murao
Vice President
Toshiyuki Nakagawa
Managing Director
Masahiro Shibutani
Director
Kazuhiro Fukuoka
Outside Director
Ikuo Otani
Outside Director
Takayoshi Matsunaga
Outside Director
Yoshiko Nonogaki
Corporate Auditor
(Full-time)
Masayuki Murakami
Corporate Auditor
(Full-time)
Akio Furukawa
Outside Corporate Auditor
(Part-time)
Tsukasa Fujii
Outside Corporate Auditor
(Part-time)
Akira Tsujiuchi

GS Yuasa International Ltd.

President
Osamu Murao
Vice President
Toshiyuki Nakagawa
Managing Director
Masaru Sawada
Managing Director
Masahiro Shibutani
Director
Ryoichi Okuyama
Director
Masaya Nakagawa
Director
Kazuhiro Fukuoka
Director
Takashi Taniguchi
Director
Takao Omae
Director
Hiroaki Matsushima
Corporate Auditor
(Full-time)
Masayuki Murakami
Corporate Auditor
(Full-time)
Akio Furukawa
Outside Corporate Auditor
(Part-time)
Hideki Matsuyama