Governance

Corporate Governance

Corporate Governance System

The Company transitioned to a "Company with Nominating Committee, etc." (then called "Company with Committees") as early as 16 years ago in June 2004. Even now, there are only 77 companies in Japan with this type of committee system (as of August 31, 2020).

The purposes for adopting the system are as follows: (1) Strengthen the governance of the Group as a whole; (2) Improve the transparency of management for shareholders and investors; (3) Clarify the business execution roles of each Group company and the Group's management, and improve the efficiency and quality of the Group's strategy; and (4) Implement strategies with a broader perspective by making active use of the abilities of outside directors while increasing the speed of change.
The Nominating Committee considers and makes decisions on the appointment and dismissal of director and executive officer candidates in light of the standards for appointment with the aim of contributing to the establishment of appropriate management systems for the Group. The Remuneration Committee considers and decides the basic remuneration and incentives and evaluation items on the remuneration of directors and executive officers with the aim of making the Group's management more transparent. The Nominating Committee and the Remuneration Committee are composed of the Chief Executive Officer (Chairperson) and four outside directors.

The Audit Committee has been established to secure legitimate, appropriate and efficient operations of the Group, which means operations based on the annual policy and medium- to long-term management policy. The Audit Committee is composed of four outside directors.

Fuji Seal Group: Corporate Governance Structure

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Structure of the Board of Directors

The Board of Directors is composed of six Directors including four Independent Outside Directors, giving consideration to diversity. The Internal Directors have extensive and diversified experience such as management in general including management strategy, responsibility for Group companies, and operation of overseas businesses.

Meanwhile, the Outside Directors have abundant experience and insights as: a manager of a holding company, an education-related professional, an attorney-at-law, a certified public accountant, a person responsible for safety and disaster prevention as well as manufacturing centered on the field of technology and development, and a top manager of a listed company. Of the six Directors, one is female. While the nationality of all Directors is Japanese, the Board of Directors comprises Directors with abundant and extensive knowledge, and a broad range of experience and capabilities, such as business experience in foreign countries.

Evaluation of the Effectiveness of the Board of Directors

The Board of Directors holds four regular meetings annually and additional extraordinary meetings when needed. In FY2019, five meetings were held, and all Directors attended every meeting of the Board of Directors.

One Board of Directors' meeting of the Company takes two days, in principle, for intensive and thorough deliberations. In FY2019, the meetings took nine days in total, and over 51 hours were spent on discussions and deliberations. Additionally, 19 written resolutions were made, which are deemed to have been resolved by the Board of Directors in accordance with the provisions of Article 370 of the Companies Act and Article 22 of the Articles of Incorporation of the Company. Furthermore, a meeting of the Board of Directors was held in September 2019 in the United States, including a visit to two plants and conducting market research.

In order to assess the effectiveness of the Board of Directors, the Company also conducts a self-evaluation survey by an external organization and discussions at the Board of Directors. After discussions at the Board of Directors in March 2020, the Company conducted a survey of all directors in March and April. In the survey, open opinions on seven issues such as strategy, implementation, risk and crisis management and open general comments were gathered.

As a result, while it was assessed that a certain level of effectiveness had been secured, several issues were pointed out and proposals for improvement were made in terms of the frequency and methods of performance monitoring; tireless deliberations and dissemination to the various workplaces concerning corporate ethics, corporate culture and compliance; quality and methods regarding "Dialogues with stakeholders"; and the methods of operation of Board of Directors' meetings. Based on these assessments and indications, the Company will continue its efforts for further improvement of the effectiveness of the Board of Directors.

Remuneration of Directors and Executive Officers

The remuneration of directors and executive officers are deliberated and decided by the Remuneration Committee.
The remunerations of directors and executive officers are decided based on each individual's personal history, career, duties and job responsibilities, taking into consideration the Company's business performance and management environment.

The remuneration of directors is composed of fixed remuneration only, and the amount to be paid is decided based on the basic policy, and dependent on whether the position is full-time or part-time, and the content of the person's job responsibility as a director. The remuneration of executive officers comprises the basic remuneration and performance-linked remuneration.

The basic remuneration is fixed according to duties and job responsibilities whereas performance-linked remuneration is determined depending on the performance of the section for which each executive officer is responsible. The ratio of performance-linked remuneration to the total amount of remuneration varies from 0% to approximately 30%.

In 2004, the Company introduced invariable items such as infiltration of philosophy and variable items such as performance-linked indices to the remuneration, which also includes qualitative items such as environmental response and human development in addition to quantitative items. Furthermore, in FY2017, remuneration involving restricted stock was introduced as a medium- to long-term incentive with the aim of sharing the same sense of value with our shareholders and improving corporate value on a sustainable basis.

Concept of remuneration

Risk Management

The Fuji Seal Group has established the "Group Risk Management Regulations."
These Regulations require the entire Group and each business regional section to formulate action plans and continue its efforts by establishing its own risk management system and preparing a "Risk Map" every year.

At the same time, an emergency contact network has been also prepared by the entire Group in case of the occurrence of an unexpected event likely to have a serious impact on management.

Diagram of Risk Management and Compliance System

Compliance

The Company has established the Fuji Seal Group (FSG) Code of Ethics, and delivers Compliance Cards to all officers and employees as part of their training. Through these initiatives, the Company makes it clear that it expects officers and employees to not only abide by laws and ordinances as well as internal rules but also this code of ethics in accordance with the Company's corporate ethics.

Furthermore, the Company holds "Group Compliance Committee Meetings" periodically to determine themes concerning compliance and nitiatives, implements awareness-raising activities, and planning and reporting. The officers of the Group are signatories to the Compliance Declaration.

Whistle-blower System

The Fuji Seal Group has a whistle-blowing system in place which allows employees to lodge a direct internal report (Consultation Hotline) of doubtful conduct in order to detect human rights, harassment, bribery and other misconduct, and other compliance-related problems at an early stage and respond appropriately. As a consultation and reporting desk, not only internal windows (including the Group Internal Audit Office) but also external lawyers and external specialist companies are available for reporting.

The Consultation Hotline ensures strict confidentiality and prohibits any disadvantageous treatment and the anonymity of whistle-blowers will be protected.
The status of reporting is regularly reported to the Compliance Committee, the Board of Directors, and the Audit Committee to improve the compliance and risk management of the Group.

Compliance Card
English

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Germany

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France

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Italy

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Netherlands

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Poland

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Compliance posters used in Europe
Family Festival

The Company believes that the philosophy of corporate governance must penetrate not only the management team but also each employee. Awareness-raising activities are held by making the most of every possible opportunity so that employees will be able to understand the mission statement and the basic policy, and take appropriate action.
One example of such activities is the "Family Festival," which the Fuji Seal Group holds on the anniversary of the Company's foundation at each business location in Japan and abroad by inviting employees and their families.
This Family Festival dates back to 1985, when a party was held concurrently with the establishment of the "Fuji Seal Employees Shareholding Association." This festival serves as an opportunity for the employees' families to know and understand the Company's concept, history, products, workplaces and colleagues, not just to deepen friendships.

Furthermore, the Compliance Card that employees always carry contains this phrase: "Can you explain that judgment (action) of yours to your family (loved ones)?" This phrase means that the Company believes it is important to continue a style of open management that can be explained to one's family and supported by one's family.

Family Festival at SxS Center in May 2019
Family Festival in France in May 2019
Family Festival in Poland in May 2019