Board Members

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

1. 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.

2. 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.
3. 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.
4. 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

1. 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.
2. 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

1. 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.
2. • 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

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

1. 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.
2. 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.
3. 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 Audit & Supervisory Board Members (Reasons for nomination)

Attendance status of Board of Directors, Audit & Supervisory Board・and other committees

Basic Principles/Corporate Governance Structure

Basic Principles/Corporate Governance Structure