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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

JTEKT holds, Board of Directors meetings every month where, in addition to items stipulated by law and the Articles of Incorporation, deliberations take place and decisions are made pertaining to the Medium-term Business Plan aimed at realizing our corporate philosophy and the JTEKT GROUP VISION. This includes management strategies (business plan, personnel, organizational, capital and investment measures) aimed at achieving the Medium-term Business Plan, as well as oversight of the execution of duties by directors. 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 senior executive officer meetings, management meetings, and companywide registered meetings, are held to fulfill deliberations on individual matters and supervise the performance of duties by senior executive officers. To ensure a transparent, fair, prompt and efficient management, JTEKT has opted for a company with an Audit & Supervisory Board to inspect directors' execution of duties, which consists of five auditors, three of whom are outside auditors (of which two are independent outside auditors). Additionally, two full-time staff members in Corporate Auditors Department assist Audit & Supervisory Board members.
Regarding internal auditing, Audit Department, which reports directly to senior management, inspects the business execution of each function and business division and the effectiveness of internal controls, reporting the results to representative directors and the Audit & Supervisory Board to ensure auditing independence. In accounting audits, Audit & Supervisory Board members receive reports and explanations from accounting auditors, confirming the appropriateness of auditing methods and results as well as the independence of accounting auditors.
In addition, in order to enhance the efficacy of these audits, Audit & Supervisory Board members, the accounting auditor and Audit Department regularly hold discussions to exchange information and engage in mutual cooperation.

Corporate Governance System

Corporate governance system

Board of directors 12 times Makes decisions about important matters within management, and supervises directors’ performance of duties.
Senior Executive Officer Meetings 24 times Supplements the Board of Directors, deliberates important matters within management, and determines fundamental policies.
Management meetings 12 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 12 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 -
Intensive deliberation on important management theme, and implement the PDCA cycle.
Companywide Registered Meetings
Corporate strategy meetings Delegated authority from Board of directors, Senior Executive Officer Meetings and Management meetings, and consider policies and directions through professional and sufficient discussion from the perspective of business execution.

Progress toward Enhanced Governance

JTEKT recognizes that corporate governance enhancements are an important management issue, thus we are engaged in efforts to reform and strengthen our corporate structure including the formulation of guidelines in response to the Corporate Governance Code and annual implementation of the PDCA cycle.
In November 2019, we reviewed matters to be referred to the Board of Directors and delegated decision-making authority with regard to items of low importance to the executive directors meeting, revising the Board of Directors regulations for the purpose of setting aside more time for Board of Director deliberation of management strategy and other, more important items.
In April 2020, the existing “managing officer system” was abolished and a new “senior management system” was introduced. As a result, this has enabled the promotion of talented young employees and the flexible assignment or withdrawal of human resources in important posts, which has significantly reduced the number of directors.
In Jan. 2021 Reform of officer system(①Abolition of director roles such as deputy president, senior managing director, and managing director, ②Name integration to Senior Executive Officer, ③Expansion of Senior management system) contributed to the slimming and flattening executive system, the speeding up management decisions, the promoting delegation of authority, further speeding up decisions on replacement, flexible promotion and withdrawal (expansion). As a result, the number of officers has also been significantly reduced.

Main Governance Reform Initiatives

Date Measures Purpose
June 2005 Introduction of executive officer system Separation of management supervision and executive function
May 2006 Publication of Corporate Governance Report Summarize, organize and disclose the key information on corporate governance
Jan. 2008 Establishment of Global Internal Audit Department Audit of general tasks such as adequacy and legal compliance of management and procedures
Feb. 2009 Establishment of CSR Promotion Committee To regularly assess the status of CSR activity promotion
June 2013 Appointment of foreign executive officer To ensure executive officers diversity
June 2015 Appointment of two outside directors Strengthening management oversight function
Feb. 2016 Establishment of Executive Officer Personnel Appointment Review Meeting (consisting of President and Independent outside directors) To ensure the adequacy of personnel of executive officers
June 2016 Establishment of Executive Remuneration Meeting (consisting of President and Independent outside directors) To ensure fairness and appropriateness in determining executive compensation
Mar. 2017 Establishment of Council for Enhancement of Corporate Value Discussion on new value creation for improving sustainability
Oct. 2017 Establishment of Risk Management Department Manage risks systematically to avoid or reduce them
June 2018 Increased number of outside directors by one, to a total of three Further strengthening management oversight function
June 2019 Appointment of a female outside member of the Audit & Supervisory Board To ensure greater executive officers diversity
Nov. 2019 Revision of Board of Directors Rules Narrow down the agenda and devote the deliberation time of the Board of directors to the consideraton of more important matters
Apr. 2020 Introduction of Senior management system Enables the selection of young employees to important posts and the flexible appointment and withdrawal of human resources to important posts
Jan. 2021 Review of officer system ①Abolition of director roles such as deputy president, senior managing director, and managing director ②Name integration to Senior Executive Officer, ③Expansion of Senior management system

Group Governance

In order to engage in fair, transparent and efficient Group management, JTEKT is engaged in the following initiatives at our domestic and overseas subsidiaries.

  • 1. We share items including the “JTEKT GROUP VISION,” “JTEKT WAY” and the Medium-term Business Plan, with the business plan progress confirmed at meetings at top meetings.
  • 2. We require prior consultation or post-reports on important matters based on the “Prior Consultation and Reporting System Standards.” Important matters concerning Group management are deliberated and decided by the Company committees.
    Also, regarding major subsidiaries, we confirm that the decision-making process is functioning properly within the subsidiary.
  • 3. We developed the “JTEKT Group Business Management Guidelines” and require the establishment of internal control systems.
    We also require the prompt reporting of serious financial, safety, quality, environment and disaster risks.
  • 4. We require the establishment of compliance systems based on the “Global Conduct Guidelines.”
    We also conduct regular compliance inspections based on checklists provided by JTEKT.

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.

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 FY2020 (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 14/14 -
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 14/14 -
Director Takeshi Uchiyamada Rich experience and deep insight relating to monozukuri as a manufacturing business executive - 14/14 -
Member of the Audit & Supervisory Board Takashi Yoshida Considerable knowledge relating to financial and accounting matters as a certified public accountant 14/14 16/16
Member of the Audit & Supervisory Board Hiroyuki Wakabayashi Rich experience and broad insight relating to corporate governance as a manufacturing business executive - 13/14 14/16
Member of the Audit & Supervisory Board Yumiko Sakurai Considerable knowledge relating to financial and accounting matters as a certified public accountant 14/14
(Appointed in
June 2019)
16/16
(Appointed in
June 2019)

Provision of Information to Outside Directors

JTEKT explains details regarding Board of Directors meeting agenda items to outside directors on the day before the Board of Directors meeting in order to further enhance deliberations by the Board of Directors. And a Liaison Meeting for Outside Directors and Members of the Audit & Supervisory Board is held in order to share information against outside directors and auditors on the day of the Board of Directors meeting. In addition, regarding M&A and other important items, a Management Review Meeting is held in principle one month before the Board of Directors meeting, which is attended by the same participants as the Board of Directors including outside directors in order to ensure a sufficient amount of time to review all agenda items.

Nomination of Director and Audit & Supervisory Board Member Candidates

Concerning the nomination director and Audit & Supervisory Board member candidates, the “Executive Officer Personnel Appointment Review Meeting,” comprising the President and independent outside directors, nominate candidates with various areas of expertise and experience in consideration of maintaining the overall balance and diversity of the Board of Directors.

Directors and Auditor Remuneration

The remuneration of directors (excluding outside directors) is shown in the figure below.

Payment method Cash compensation Stock compensation(Restricted Stock)
Types of Compensation Fixed (Monthly)compensation Variable(Performance-linked) compensation Variable(Performance-linked) compensation
Rough Ratios 70% 20% 10%
Yearly limit on compensation 800million yen 100million yen
Paid on Monthly Yearly Yearly
Policy and Indicators Set the base amount for each position Calculate from the compensation table based on the following indicators
①Business profit
②Achievement of safety and quality goals
Half of performance-linked compensation based on business profit is granted as stock compensation
Process ①Formulated a compensation draft based on the above policy and indicators
②At the Executive Compensation Meeting consisting the president and two independent outside directors, the validity of the above formulated compensation based on company performance and comparison with social conditions and trends at other companies, etc. and consistency with the decision policy are confirmed and approved
③The Board of Directors has resolved to give the president discretion in determining the compensation of each director, and the president determines the compensation of each director based on that resolution.
④The allocation of stock compensation (number of shares) is decided by a resolution of the Board of Directors

Audit & Supervisory Board members receive only monthly remuneration, no bonuses are paid. Independence from management is ensured by establishing a remuneration system that is unlikely to be affected by corporate performance. The amount of remuneration for each Audit & Supervisory Board member is determined through discussions among Audit & Supervisory Board Members.

Total Amount of Corporate Officer Remuneration (Fiscal 2020)

:Position Total
compensation
Total compensation by Type Directors/Audit&Supervisory
Board Members
Fixed
compensation
Variable
(Performance-linked)
compensation
Directors
(Outside directors)
480million yen
(32million yen)
363million yen
(33million yen)
116million yen
(-million yen)
14'(3)
Audit&Supervisory Board Members
(Outside Audit&
Supervisory Board Members)
102million yen
(30million yen)
102million yen
(30million yen)
‐million yen
(-million yen)
5'(3)
Total 582million yen 465million yen 116million yen 19

※1. The above amounts include those for a director, who retired from the post of director at the conclusion of the 120th Annual General Meeting of Shareholders held on June 25, 2020.

※2. The above amount of performance-linked compensation includes the unpaid amount which was booked as bonus provision for directors in the previous fiscal year.

(10 Directors, 116million yen)

Evaluating the Efficacy of the Board of Directors

JTEKT's Board of Directors, in which outside directors participate, strives to engages in lively discussions based on diverse array of knowledge and abundant experience, conducting meetings that enable us to make timely and appropriate business decisions.
The effectiveness of the Board of Directors is analyzed and evaluated as follows.

Analysis and Evaluation Process/Overview of Evaluation Results