Overview of Corporate Governance Structure
The Board of Directors makes decisions on management strategy policies and important management matters, and supervises the execution of business by the directors. As a company with Audit & Supervisory Board, the Audit & Supervisory Board and the members audit the execution of duties by directors from a standpoint independent of the Board of Directors.
Role of Members of the Board of Directors
The Board members shall focus on management and supervisory functions, such as decision-making on corporate strategy policies, and other important matters, as well as strengthening supervisory functions.
Composition of the Board of Directors
The Articles of Incorporation limit the number of the Board Members to ten or fewer. Additionally, at least two independent Outside Directors shall be appointed to enhance the corporate governance system and enable the Company's management to benefit from new insights from outside the Company.
Qualifications and Nomination Procedures for the Board Members
-
The Board Members shall be selected from among those who possess high ethical standards as well as excellent character, insight, ability, and a wealth of experience.
- Outside Directors shall be appointed from those who are recognized as independent from the Company's management based on the criteria for independence of Outside Directors separately stipulated.
- The Board of Directors shall be composed of directors with different backgrounds in terms of expertise and experience, and consideration shall be given to the diversity of the Board of Directors as a whole.
- Candidates for new Board Members shall be determined by the Board of Directors after fair, transparent, and rigorous deliberations by the Group Nominating Committee, in light of this Article.
Responsibilities of Outside Directors
- Outside directors shall provide advice based on their own knowledge, independent of the execution of business operations, while giving due consideration to the opinions of minority shareholders and other stakeholders, so as to ensure the sustainable growth of the company and to enhance its corporate value over the medium to long term.
- Outside Directors shall supervise management through the selection and dismissal of senior management and other important decisions of the Board of Directors, as well as oversee conflicts of interest between the Company and management, controlling shareholders, etc.
Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members
- Outside Directors with independence under these standards are those who meet the requirements as Outside Directors required by laws and regulations, and who do not fall under any of the following items.
- (1) A person who is an executive officer (Note 1) of the Company and its subsidiaries (hereinafter referred to as the "Company Group"), or a person who has been an executive officer of the Company Group in the 10 years prior to his/her appointment.
(2) A major shareholder of the Company (Note 2), an executive officer of a corporation or organization that is a major shareholder of the Company (including a person who has been a major shareholder for the past three years), or an executive officer of a corporation or organization in which the Company Group is a major shareholder (including a person who has been a major shareholder for the past three years)
(3) An executive of a company that has a significant business relationship with the Company Group (Note 3), its parent company, or a significant subsidiary of the parent company.
(4) Lawyers, accountants, consultants, etc., or persons who receive a large amount of remuneration or other assets (Note 4) from the Company Group other than remuneration for directors and corporate auditors.
(5) An executive of a corporation, organization, etc. that receives donations, etc. exceeding a certain amount (Note 5) from the Company Group
(6) A person who belongs to an auditing firm that is the accounting auditor of our Group, or a person who has belonged to an auditing firm that is the accounting auditor of our Group in the past three years.
(7) An executive of a company that accepts directors from our group or has accepted directors from our group in the past three years, or its parent company or its subsidiary, etc.
(8) Spouse or relative up to the second degree of kinship of a person falling under any of the above (1) through (7).
(9) Any other person who is likely to have a substantial conflict of interest with the Company's general shareholders as a whole on a permanent basis for reasons other than those considered in (1) through (8) above.
(Note 1) "Executive officers" means executive directors, executive officers, corporate officers, employees who execute business, and other similar officers.
(Note 2) A major shareholder is a shareholder who directly or indirectly holds 10% or more of the total voting rights.
(Note 3) A company with which a major business relationship exists means a person who falls under any of the following categories: (i) A person who has a significant business relationship with the Company Group.
(i) A company with which our Group has an important business relationship
A party that has received payment from our Group in an amount exceeding 2% of the consolidated net sales of the party in any of the three immediately preceding fiscal years
(ii) A person who is an important business partner of our Group
(iii) A person who has made payments to our Group in an amount exceeding 2% of consolidated net sales or provided loans to our Group in an amount exceeding 2% of our total consolidated assets as of the end of the immediately preceding fiscal year in any of the three immediately preceding fiscal years.
(Note 4) "Large amount of remuneration or other property" means remuneration or other property income that exceeds an average of ¥10 million per year for the immediately preceding three fiscal years, or an average of 2% of the annual gross income of the relevant entity for the immediately preceding three fiscal years, if the person receiving such property is a corporation or organization, respectively.
(Note 5) Donations, etc. exceeding a certain amount refers to donations and grants made by the Company in excess of the greater of an average of ¥10 million per year for the immediately preceding three fiscal years or 2% of the annual gross income of the relevant corporation or organization for the immediately preceding fiscal year.
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- Even if any of the above items (1) through (9) conflict with each other, the Group Nominating Committee may select a candidate as an outside director/auditor with independence if the Committee comprehensively judges the candidate's independence and determines that the candidate is suitable as an Outside Directors with independence. In such a case, the candidate must satisfy the requirements for Outside Directors under the Companies Act, and must be able to provide an external explanation as to why he/she is appropriate as an independent Outside Directors.
Role of the Group Nominating Committee
The Group Nominating Committee, as an advisory committee independent of the Board of Directors, shall fairly and transparently deliberate on the appointment, dismissal, and reappointment of Directors and Audit & Supervisory Board Members, taking into consideration the Group's performance, etc., and shall decide on the Committee's proposal, which shall be submitted to the Management Council and the Board of Directors.
Election and Dismissal of Management Executives and Nomination of Candidates for the Board Members
When the Board of Directors selects and dismisses management executives and nominates candidates for Members of the Board of Directors and Audit & Supervisory Board Members based on the above, the reasons for the nomination of candidates for Members of the Board of Directors and Audit & Supervisory Board Members shall be stated in the reference materials for the General Meeting of Shareholders for all Directors and Audit & Supervisory Board Members including internal Directors and Audit & Supervisory Board Members. In the event of dismissal of senior management, the reasons for such dismissal shall be disclosed.
Compensation for Board Members
Policies on Determining the Details of Compensation,
etc. for Each Individual Member of the Board of Directors
The Group Remuneration Committee deliberates on the
remuneration for members of the Board of Directors while
ensuring transparency, fairness, and objectivity. Design of
the remuneration system and the specific amount of
remuneration are determined by the Board of Directors.
Remuneration for members of the Board of Directors
excluding Outside Directors of the Board of Directors, shall
be designed to contribute to continued increases in corporate
value. Specifically, it shall consist of base salary as well as a
performance-based bonus serving as short-term incentive, and
a share compensation system serving as medium- to long-term
incentive. In order to ensure supervision of management that is
fully functional from an independent stance, remuneration for
Outside Directors shall consist of base salary only, without
short-term or medium- to long-term incentive.
【Base salary】
Basic remuneration for members of the Board of Directors
shall be an annual base salary. Its amount shall be
determined based on position (rank), responsibilities, and
term of office. It shall be paid on a monthly basis.
【Performance-based bonus】
Performance-based bonus for members of the Board of
Directors (excluding Outside Directors) shall be paid at a
certain time each year. The amount of bonus to be paid to
members of the Board of Directors with special titles shall
be determined by multiplying the annual base salary by a
bonus calculation coefficient defined for each position (rank)
and a payment coefficient based on the Company’s business
performance (operating profit, etc.) for the previous fiscal
year. For members of the Board of Directors who also serve
as employees of the Company, the incentive provided shall
be calculated by incorporating the performance-based
bonus into the bonuses provided to them as employees.
【Restricted share compensation】
For the purpose of providing incentives to sustainably
increase the Company’s corporate value, as well as for the
purpose of further promoting value sharing with the
shareholders, restricted shares shall be granted at a certain
time each year within the scope of the maximum amount
and maximum number of shares approved at the General
Meeting of Shareholders. The number of restricted shares to
be granted to individual members of the Board of Directors
shall be determined in consideration of their position (rank),
responsibilities, term of office, and other factors.
Policy on Determining the Proportion of Each Type
of Remuneration, etc.
Based on the belief that it is important for management to
work with a medium- to long-term perspective, the proportion
of base salary, performance-based bonus, and restricted share
compensation shall be configured with emphasis on the level and
stability of basic remuneration (base salary) with additional
consideration of improvement in single-year business performance
and the pursuit of shareholder interests
The proportion of each type of remuneration for members of
the Board of Directors (excluding Outside Directors) is not fixed
because the amount of remuneration is determined according to
business performance in each fiscal year. However, the proportion
of base salary, performance-based bonus, and restricted share
compensation fits roughly in the following scope:
Base salary: 55-70%, Performance-based bonus: 15-30%,
Restricted share compensation: 10-15%
Total Amount of Compensation, etc. by Board Member Classification, Total Amount by Type of Compensation, etc.,
and the Number of Target Board Members in FY2022
Classification |
Total amount of
compensation,etc.
(Millions of yen) |
Total amount by type of compensation, etc. (Millions of yen) |
Number of target
Board Members
(Persons) |
Base salary |
Performance-based
bonus |
Restricted share
compensation |
Members of the Board
of Directors
(Outside Directors) |
30
(30) |
30
(30) |
-
(-) |
-
(-) |
3
(3) |
Audit & Supervisory
Board Members
(Outside Audit &
Supervisory
Board Members) |
50
(13) |
50
(13) |
-
(-) |
-
(-) |
4
(2) |
Total (Outside
Board Members) |
81
(44) |
81
(44) |
-
(-) |
-
(-) |
7
(5) |
Notes:
1. The amount of compensation or the like for members of the Board of Directors does not include the portion of employees’ salary paid to members of the Board of Directors who also serve as
employees of the Company.
2. The number of target Board Members is the number of Board Members paid remuneration by the Company. In addition to the above, the total amount of compensation, etc. received by five
members of the Board of Directors of the Company from Group companies (ASKA Pharmaceutical Co., Ltd. and ASKA Animal Health Co., Ltd.) was ¥282 million.
3. The performance index for performance-based remuneration, etc. is operating profit, which was ¥5,108 million for FY2022. This index was chosen because it is an important indicator of
achievement of management goals. Therefore, it was determined to be an appropriate index for performance-based remuneration.
4. Non-monetary remuneration, etc. is in the form of Company shares.
5. Based on the resolution of the Extraordinary General Meeting of Shareholders held on June 24, 2021, the upper limit on compensation for members of the Board of Directors was set at ¥500
million per year (including ¥70 million for Outside Directors and excluding the portion of employee salary paid to members of the Board of Directors who also serve as employees of the Company).
The number of members of the Board of Directors at the end of the Extraordinary General Meeting of Shareholders was six (including three Outside Directors). Separate from this compensation,
the upper limit on restricted share compensation was set at ¥100 million per year based on the resolution of the Extraordinary General Meeting of Shareholders held on June 24, 2021. The number
of members of the Board of Directors at the end of the Extraordinary General Meeting of Shareholders was three (excluding Outside Directors).
6. Based on the resolution of the Extraordinary General Meeting of Shareholders held on June 24, 2021, the upper limit on compensation for Audit & Supervisory Board members was set at ¥150
million per year. The number of Audit & Supervisory Board members at the end of the Extraordinary General Meeting of Shareholders was four.
Training Policy for Officers
- The Company shall collect and provide information on economic conditions, industry trends, legal compliance, corporate governance, financial accounting, and other matters necessary for directors and executive officers to fulfill their roles and responsibilities, and shall support them in the execution of their duties.
- The Company shall support the roles and responsibilities of Directors, including Outside Directors, by smoothly providing them with information on the management environment, management issues, and management strategies of the Group in a timely manner after their appointment.
- When deemed necessary, the Company shall provide opportunities for them to receive advice from outside experts and participate in workshops, etc., the cost of which shall be supported by the Company.
Outside Directors (Reasons for nomination)
Outside Director
Yasunori Yoshimura
Reasons for nomination |
He has significant expertise and extensive experience as a medical scientist, and we assessed that he can play an important role in the management of the Company from an independent standpoint as an outside director. Moreover, given that he meets all of the standards for the independence of outside directors stipulated by both the Company and the requirements of independent officers stipulated by the Tokyo Stock Exchange, and there is no risk of a conflict of interest with the Company's general shareholders, he has therefore been designated as an independent officer. |
Outside Director
Minoru Awabayashi
Reasons for nomination |
He has deep insight into corporate management and supervision of business execution, extensive trade and domestic and international distribution knowledge, and experience working overseas for a U.S. consulting firm. Thus, we have judged that he will provide appropriate advice and supervision of the Company's management.
Moreover, he meets all of the criteria for the independence of outside officers stipulated by the Company and the requirements for independent officers stipulated by the Tokyo Stock Exchange. There is no risk of a conflict of interest between him and the Company's general shareholders. We have therefore designated him as an independent officer. |
Outside Director
Yasuji Enokido
Reasons for nomination |
He has deep insight into corporate management and supervision of business execution, rich experience in business restructuring and new business fields, and a global perspective cultivated through his work overseas. Thus, we have determined that he can provide appropriate advice and supervision of the Company's management.
Moreover, he meets all of the criteria for the independence of outside officers stipulated by the Company and the requirements for independent officers stipulated by the Tokyo Stock Exchange. There is no risk of a conflict of interest between him and the Company's general shareholders. We have therefore designated him as an independent officer. |
Outside Audit & Supervisory Board Members (Reasons for nomination)
Outside Audit & Supervisory Board Member
Takao Kimura
Reasons for nomination |
Not only is he knowledgeable about drug development, but he also has extensive experience in corporate management, and we assessed that he will be able to conduct appropriate audits of the Company's Board of Directors from an objective and neutral standpoint. Moreover, given that he meets all of the standards for the independence of outside directors stipulated by both the Company and the requirements of independent officers stipulated by the Tokyo Stock Exchange, and there is no risk of a conflict of interest with the Company's general shareholders, therefore he has been designated as an independent officer. |
Outside Audit & Supervisory Board Member
Keiko Fukuchi
Reasons for nomination |
We assessed that she can provide advice and recommendations to ensure the propriety and appropriateness of decision-making by the Board of Directors, based on her professional expertise, mainly regarding tax and finance, from a highly independent standpoint as a tax accountant. Moreover, given that she meets all of the standards for the independence of outside directors stipulated by both the Company and the requirements of independent officers stipulated by the Tokyo Stock Exchange, and there is no risk of a conflict of interest with the Company's general shareholders, therefore she has been designated as an independent officer. |
Attendance status of Board of Directors, Audit & Supervisory Board・and other committees
Basic Principles/Corporate Governance Structure
Basic Principles/Corporate Governance Structure