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Corporate governance

Basic concept

JTEKT continuously strives to enhance corporate governance in order to fulfill its corporate social responsibility and increase its corporate value.

Promotion structure

At JTEKT, the Board of Directors meets every month to make management decisions on important matters and supervise directors’ performance of duties. Furthermore, two independent directors from outside the Company were appointed to strengthen the supervising function of the Board of Directors. In addition, subcommittees under the Board of Directors, such as executive director meetings, management meetings, and Companywide registered meetings, are held to fulfill deliberations on individual matters and supervise the performance of duties by managing officers. As a way of monitoring management, we have adopted an auditing system to inspect directors’ performance of duties, which consists of five members of the Audit & Supervisory Board, three of whom are outside members.
Internal audits are conducted by the independent Global Audit Department, which inspects the validity and lawfulness of overall operations and procedures. Members of the Audit & Supervisory Board, the accounting auditor, and the Global Audit Department liaise together and hold conferences regularly and as necessary.
In addition, we maintain and operate an internal control system in line with both the Companies Act and the Financial Instruments and Exchange Act.

Corporate Governance System

Corporate governance system

Board of Directors 16 times Makes decisions about important matters within management, and supervises directors’ performance of duties.
Executive director meetings 24 times Supplements the Board of Directors, deliberates important matters within management, and determines fundamental policies.
Management meetings 24 times Supplements the Board of Directors, and manages the progress of policies within the performance of duties. In addition, these meetings enable problem points and issues within performance of duties to be shared extensively among directors and officers.
Audit & Supervisory Board 15 times Inspects the appropriateness of methods and results of audits of the directors’ performance of duties, and of audits performed by the accounting auditor.
Companywide registered meetings - The Board of Directors, executive director meetings, and management meetings delegate authority to Companywide registered meetings to examine the policies and direction of the Company through specialized and sufficient deliberations from the standpoint of duty performance.

Outside directors

JTEKT appoints outside directors who fulfill requirements for outside directors and possess experience and insight within their field. They are also selected based on the excellence of their character and viewpoints, and for their high ethical standards, perspectives, and knowledge in accordance with the JTEKT policy for appointing directors.
Furthermore, JTEKT conducts the appointment of outside members of the Audit & Supervisory Board from a perspective of audit neutrality and objectivity. These members are also selected based on their experience and viewpoints, as shown below.

Appointment of Outside Directors and Outside Members of the Audit & Supervisory Board
Position Name Main reasons (experience, insight, etc.) for appointment Independent Director Attendance record in FY2017 (attended/held)
Board of Directors Audit & Supervisory Board
Director Takao Miyatani Abundant experience and a high level of insight regarding monozukuri (building excellent products), obtained as a manager within the manufacturing industry and chairman of a trade organization 16/16 -
Director Iwao Okamoto Held key positions within the Ministry of Economy, Trade and Industry (METI) and for an incorporated foundation, obtaining ample experience and a high level of insight regarding industry and economic activities within Japan and overseas 16/16 -
Director Takeshi Uchiyamada Rich experience and deep insight relating to monozukuri as a manufacturing business executive - 12/13
(After
appointment)
-
Member of the Audit & Supervisory Board Takashi Yoshida Considerable knowledge relating to financial and accounting matters as a certified public accountant 13/13
(After
appointment)
11/11
(After
appointment)
Member of the Audit & Supervisory Board Hiroyuki Wakabayashi Rich experience and broad insight relating to corporate governance as a manufacturing business executive - 12/13
(After
appointment)
9/11
(After
appointment)
Member of the Audit & Supervisory Board Yumiko Sakurai Considerable knowledge relating to financial and accounting -
(Appointed in
June 2019)
-
(Appointed in
June 2019)

Remuneration for directors and members of the Audit & Supervisory Board

Remuneration for directors consists of monthly amounts and bonuses, and is conducted through a remuneration system that reflects work responsibilities and performance, and is linked to company performance. Bonuses are composed of STI*1 and LTI*2 and evaluated based on single-year consolidated operating income, sales growth rate, and profitability ratio according to the Medium-term Business Plan. Individual bonuses are examined at the Executive Remuneration Meeting, consisting of representative directors and independent outside directors, and determined through a resolution by the Board of Directors.
Remuneration for members of the Audit & Supervisory Board consists of monthly payments, and does not include bonus payments. This system for remuneration is not greatly influenced by company performance and is therefore ensured independence from management.
Monthly amounts of remuneration for directors and other remuneration are set within the upper limit for total remunerations based on the decision of the Annual Meeting of Shareholders held on June 27, 2012. Monthly amounts of remuneration for each director are decided by the Board of Directors, and monthly amounts of remuneration for each member of the Audit & Supervisory Board are decided through consultation with the members.

*1 STI … Short-term incentive: Remuneration system that rewards single-year performance and achievements
*2 LTI … Long-term incentive: Remuneration system that rewards performance and achievements over the medium to long term

Total Amount of Corporate Officer Remuneration (Fiscal 2018)

Category Number of allowances Amount of remuneration, etc.
Directors 15 ¥556 million
Members of the Audit & Supervisory Board 8 ¥99 million yen
Total 23 ¥656 million yen
  • The amount of remuneration, etc., during the tenure of the three directors and four members of Audit & Supervisory Board who retired at the end of the 118th Annual Meeting of Shareholders held on June 27, 2018, including the number of employees paid.
  • The total amount of remuneration on the left includes the following amount of expenses treated as executive bonuses during the fiscal year.
    9 Directors \163 million yen
  • On the left, the total amount of remuneration for outside directors was ¥33 million (three people).
  • On the left, the total amount of remuneration for outside members of the Audit & Supervisory Board was ¥22 million (five people).

Evaluating the Efficacy of the Board of Directors

The Board of Directors, in which multiple outside directors participate, engages in lively discussions based on diverse knowledge and abundant experience. JTEKT strives to conduct the Board of Directors in a way that facilitates timely decision-making.
With regard to the analysis and evaluation of the efficacy of the Board of Directors, the Members of Audit & Supervisory Board monitor the “efficacy of important meetings, including the Board of Directors” and the Board of Directors Secretariat implements a “survey on the efficacy of the Board of Directors” (once per year) targeting members of the Board of Directors and the Audit & Supervisory Board and conducts quantitative evaluations with regard to the “roles and responsibilities of the Board of Directors” and the “systems and operations that support the efficacy of the Board of Directors.”
In fiscal 2018, in an effort to improve efficacy, JTEKT added management themes other than those cases introduced at Board of Directors’ meetings and shared this information with the aim of enhancing the function of the Liaison Meeting for Outside Directors and Members of the Audit & Supervisory Board, leading to livelier discussions at Board of Directors’ meetings. In terms of Board of Directors’ meeting operations, while we are cognizant of the need for certain improvements, overall the meetings are generally functioning properly and we have determined that the efficacy of the Board of Directors overall is maintained.

Analysis and Evaluation Process / Overview of Evaluation Results

System for Ensuring Appropriate Operations within the JTEKT Group

In order to share its principles with regard to management, JTEKT disseminates its approach to corporate social responsibility and corporate activities standards to subsidiaries both in Japan and overseas. In addition, we clarify systems and roles of relevant departments to subsidiary management, guiding and cultivating subsidiaries from both business and function perspectives.
With regard to major subsidiaries, the Board of Directors formulates basic policies on internal control system maintenance and is instructed to periodically confirm the operating status of these systems.

Overview of the Operating Status of the Abovementioned Systems

  • JTEKT conducts activities to promote the “JTEKT WAY” formulated in April 2016 and shares these values globally.
  • Individual issues related to the management and business activities of subsidiaries are managed and supervised appropriately through the utilization of advance consultations and reporting systems in accordance with their importance, as well as consent and approval procedures conducted through the Board of Directors.
  • JTEKT holds social gatherings with the heads of major domestic affiliated companies, domestic affiliated company meetings, and global management meetings, confirms the medium-term management plans of subsidiaries and other management issues, and provides appropriate guidance.
  • Prior consultation and reporting system criteria for subsidiaries to obtain prior approval and provide reports to the Company on important matters are revised as necessary to reflect improvements.
  • Important individual management issues concerning subsidiaries are deliberated and reported to management meetings by business and functional headquarters.
  • JTEKT is working to further strengthen subsidiary management by accelerating initiatives targeting management issues at those subsidiaries.