External Directors and External Auditors

Directors

Management Advisory Committee

The Management Advisory Committee comprises of five (as of March 2018) selected from legal professionals, public accountants, academics, and business professionals. The Management Advisory Committee provides advice and recommendations to the Board of Directors on all aspects of management, including matters discussed by the Board of Directors, in order to ensure the independence of the Company and the interests of stakeholder are not damaged.

Policy for the Selection of Directors and External Directors

The Company has four External Directors and three External Auditors. The External Directors and External Auditors comment appropriately at the meetings of the Board of Directors from a position that is independent from that of the business and affairs of the corporation and fulfill the functions of monitoring and checks on the management.
External Directors and External Auditors are selected based on the guidelines on the independence of independent executive officer(s) set forth in Article 436-2 of the Securities Listing Regulations of the Tokyo Stock Exchange and the “Criteria for assessing the independence of independent external directors” set forth in Hulic's Corporate Governance Guidelines. These are considered to be appropriate in light of the important roles that the External Directors and External Auditors fulfill within Hulic's corporate governance system.

Expertise of External Directors and External Audit & Supervisory Board Members

We appointed the independent External Directors and independent External Audit & Supervisory Board Members, who have fulfilled Hulic's criteria for assessing the independence of independent external directors (disclosed in the company's Corporate Governance Guidelines) in accordance with the Securities Listing Regulations of the Tokyo Stock Exchange. The expertise and reasons for selection of the External Directors and External Audit & Supervisory Board Members are as follows.

Nominating Committee and Remuneration Committee

The following new “discretionary committees” were established with the enactment of the Corporate Governance Code, enforced on June 1, 2015. Each committee is chaired by an Independent External Director, with the majority composed of Independent External Directors.

Nominating Committee (meets annually)

The Nominating Committee serves the function of reporting to the Board of Directors on the nomination of executive officers, and deliberates on the following matters:
(1) Selection of Director and Auditor candidates and personnel changes of Directors (promotion, etc.)
(2) Other items concerning succession plans and the abovementioned items, as deemed necessary by the Board of Directors

Remuneration Committee (meets annually)

The Remuneration Committee is appointed by the Board of Directors, and deliberates on the following matters:
(1) Remuneration standards and other matters pertaining to the remuneration of Directors
(2) Matters concerning the remuneration of Directors, as deemed necessary by the Board of Directors

Policy for Determining Director Compensation

Compensation of directors consists of basic fixed compensation, which is based on job position and the weight of duties, and performance-based compensation, which is based on corporate per formance and contribution to corporate performance.
A portion of performance-based compensation is allocated to a share-based payment scheme designed to give incentives for performing duties, in order to achieve the sustainable growth of the Company and to enhance corporate value from the perspective of shareholders. Amounts of compensation are determined through discussions by the Nominating Committee, the majority of which is comprised of independent External Directors and is chaired by an independent External Director, within the limit approved at a general meeting of shareholders. Compensation of Audit & Supervisory Board members is determined through discussions by the Audit & Supervisory Board within the limit determined at a general meeting of shareholders. Compensation of External Directors and Audit & Supervisory Board members solely consists of basic compensation (fixed amount) in the light of their roles and responsibilities.

Amount of Remuneration for Executive Officers

Total amount of remuneration by the classification of executive officers, total amount by the type of remuneration, and number of target executive officers

Adoption of the Stock Remuneration System

The Company's Board of Directors has adopted a stock remuneration system with the aim of raising awareness about improving the medium-term business performance and contributing to the enhancement of corporate value. In addition to further clarifying the linkages between the remuneration of Directors, etc. with the Company's business performance and stock values, this system also allows Directors, etc. to share in the merits when stock prices increase as well as the risks when stock prices fall.
Under this system, stocks in the Company are acquired through trusts, funded by monetary contributions from the Company. It is a stock remuneration system that is tied in with the business performance, whereby actual stocks in the Company, as well as money equivalent to the market value of the Company's stocks, are paid out to the Directors, etc. through the trust, corresponding with the business performance, and in line with the regulations on the payment of stocks to executive officers set forth by the Board of Directors.

Internal Audit Structure

Internal audits are carried out independently from other business lines by the Corporate Audit Department, which is placed under the direct control of the President. The internal audit basic plan is finalized by the Board of Directors based on Corporate Audit Regulations and the internal audit is systematically carried out by the Corporate Audit Department. The results of the internal audit will be reported to the President and feedback to departments subject to the audit will also be provided. Internal audits are carried out by four employees (as of March 2018). In 2017, we implemented internal audits eleven times. Regarding matters for which significant risk management deficiencies were identified, we have provided feedback and appropriately confirmed the status of improvements. Meanwhile, the results of an external quality evaluation of the internal audits showed that Hulic's internal audit functions generally conform (GC) to the international standards for internal auditing defined by the Institute of Internal Auditors (IIA). Based on the evaluation results, we will continue to strive to further improve the quality of our internal audit functions.

Page Top