Corporate Governance

Why SUMCO Tackles Corporate Governance

SUMCO recognizes that it is a critical management challenge to fulfill its mandate from shareholders by achieving sustainable growth and improving corporate value in the medium-to-long-term, while building and maintaining positive relationships with other stakeholders. Based on this recognition, SUMCO pursues a range of measures related to corporate governance, such as reinforcing the auditing and supervisory functions of the Board of Directors, ensuring efficiency in how directors execute their duties and improving internal controls within the SUMCO Group, in order to achieve swift management decision-making and to ensure transparency and fairness in the execution of business.

Basic Stance on Corporate Governance Structure

SUMCO is organized as a company with an Audit and Supervisory Committee. By adopting this system, the effectiveness of supervision and auditing has been enhanced through audits conducted by Directors who are Audit and Supervisory Committee Members and have voting rights at Board of Directors meetings. In addition, the effectiveness of internal controls has been enhanced through audits conducted with the support of the Internal Audit Department.

Corporate Governance Structure

Corporate Governance Structure

Board of Directors

SUMCO's Board of Directors comprises internal Directors with a proven record of performance in their respective areas of responsibility and outstanding management abilities, along with Outside Directors with expert knowledge and extensive experience, based on the basic stance of the Company to ensure an overall balance and diversity in knowledge, experience and capabilities of the directors. The Board of Directors comprises five directors (except for directors who are Audit & Supervisory Committee Members)(one of whom is an Independent Outside Director) and six directors who are members of the Audit & Supervisory Committee (four of whom are Independent Outside Directors).
In accordance with legal statutes, the Articles of Incorporation and the Rules of the Board of Directors, the Board of Directors makes decisions on management strategy, management plans, and other such important matters relating to business. It receives reports from every Director on the status of the execution of duties and it exercises supervision of compliance, internal controls, risk management, and important business execution at affiliated companies. With the participation of Independent Outside Directors, the Board of Directors also engages in the free exchange of opinions regarding the appropriate evaluation of company performance and related matters, and reflects that evaluation in the personnel administration of senior management members.
It is also our basic company policy that matters relating to financial results and so on, matters relating to management plans, and the execution of other such important operations should be decided after adequate discussion by the Board of Directors, including the Independent Outside Directors. For this reason, the Articles of Incorporation do not stipulate that decisions on the execution of important business can be delegated to each Director.
The effectiveness of the Board of Directors is evaluated each year in order to continually enhance the effectiveness of corporate governance.



As of March 26, 2020

Directors

Representative Director
Chairman of the Board
Mayuki Hashimoto
Representative Director Michiharu Takii
Representative Director Hisashi Furuya
Representative Director Kazuo Hiramoto
Director(※) Akane Kato
Director,
Full-time Audit and Supervisory
Committee member
Hiroshi Yoshikawa
Director,
Full-time Audit and Supervisory
Committee member
Atsuro Fujii
Director(※),
Audit and Supervisory Committee member
Hitoshi Tanaka
Director(※),
Audit and Supervisory Committee member
Masahiro Mitomi
Director(※),
Audit and Supervisory Committee member
Shinichiro Ota
Director(※),
Audit and Supervisory Committee member
Akio Fuwa

  • (※)Independent Outside Director

Independent Outside Directors

SUMCO has appointed five Independent Outside Directors. One is a person with expert knowledge on human resources development and organizational operation as well as experiences in corporate management; one is an attorney; one is a certified public accountant and management consultant who has considerable knowledge and experience in finance and accounting; one is a person with wide experience and knowledge cultivated through experience in the public sector as well as many years of experience in corporate management; one is a person with knowledge as an expert in the field of metallic materials research and experience cultivated through years of working as a university professor.
Each Outside director satisfies SUMCO's "Criteria of Independence" established in accordance with Tokyo Stock Exchange standards on the independence of independent directors, and has been verified to be free of potential conflicts of interest with general shareholders.
In an effort to ensure the sustained growth of the SUMCO Group and increase its corporate value over the medium-to-long-term, the Independent Outside Directors provide advice on important matters related to management based on their own individual knowledge and take the perspective of minority shareholders and other stakeholders in supervising management. They participate in the appointment of candidates for Director and other important decision-making by the Board of Directors, and supervise business execution by the Board of Directors, senior management and others as well as conflicts of interest between the Company and senior management and others.

Audit and Supervisory Committee

The Company's Audit and Supervisory Committee is made up of six directors who are Audit and Supervisory Committee members (four, a majority, of whom are Independent Outside Directors). In order to ensure the effectiveness of Audit and Supervisory Committee activities, permanent Audit and Supervisory Committee Members are put in place by mutual voting among Audit and Supervisory Committee members. In addition, it is the Company's basic policy to take steps to ensure that at least one Audit and Supervisory Committee Member has considerable knowledge and experience pertaining to finance and accounting. Currently, this is Mr. Masahiro Mitomi, who is also a certified public accountant. Additionally, the Company has established the Audit and Supervisory Committee Office and assigns staff to support the activities of the Committee and facilitate the smooth performance of its audit and supervisory functions.
The Audit and Supervisory Committee exercises its statutory right of investigation and audits the Directors' execution of their duties from the viewpoints of appropriateness and conformance with laws and regulations and the Articles of Incorporation by inspecting and confirming the status of compliance with laws and regulations, Articles of Incorporation, and so on, and by monitoring and otherwise supervising the development of and operational status of the system of internal controls, including the internal control of financial reporting.

Nomination and Remuneration Committee

In an effort to further enhance its corporate governance,SUMCO has established a Nomination and Compensation Committee composed of two Representative Directors (Directors Mayuki Hashimoto and Michiharu Takii) and two Independent Outside Directors (Directors Hitoshi Tanaka and Masahiro Mitomi) to serve as a discretionary advisory body for the Board of Directors. The Nomination and Compensation Committee receives requests from the Board of Directors for advice on the process for selection of candidate Directors of the Company, their qualifications, the reasons for their designation as candidates, the structure of remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members) and Executive Officers, and related matters. The committee deliberates on the appropriateness and other aspects of the matter referred and, also taking evaluations of the company performance into account, delivers its advice. The Board of Directors, receiving the findings of the Nomination and Compensation Committee, designates candidate Directors and decides on the remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members) and related matters.
The Nomination and Compensation Committee convened twice in fiscal year 2019, with full attendance each time.

Message from an Outside Director

PhotoPhoto

Masahiro Mitomi,
Outside Director (Audit and Supervisory Committee Member)

  • October 1987 Joined the Tokyo Office of Arthur Andersen
  • March 1991 Registered as a Certified Public Accountant
  • September 1991 Senior Staff of San Francisco Office, Arthur Andersen
  • September 1994 Manager of Seattle Office, Arthur Andersen
  • March 1996 Senior Manager of Atlanta Office, Arthur Andersen
  • May 2001 Representative Director of Value Create Inc. (present post)
  • April 2009 Part-time Lecturer of Keio Business School (present post)
  • March 2014 Outside Director of the Company
  • March 2016 Outside Director (Audit and Supervisory Committee Member) of the Company (present post)
  • March 2017 Outside Director (Audit and Supervisory Committee Member) of OTSUKA KAGU, LTD.

Q1. From your standpoint as an Outside Director, moving forward, how do you expect SUMCO to pursue the promotion and development of its business in the medium-to-long-term, and how do you envisage your involvement?

To promote and develop its business activities going forward in the medium-to-long term, I think it is important for SUMCO to continually implement initiatives aimed at achieving the SUMCO Vision. I also think that to respond flexibly to changes in the industry, SUMCO should withdraw from fields in which it lacks strengths and opportunities, and venture farther into fields in which it enjoys strengths and opportunities. This is the perspective from which I will be involved as an Outside Director going forward.

Q2. Please describe the strengths, characteristics and other qualities of SUMCO's governance system.

To start with, the strength of SUMCO's governance system lies in the fact that human resources with long involvement and familiarity with the silicon wafer industry are tasked with management. Combined with the fact that four of the Outside Directors enjoy an environment in which they can openly express their views to senior management based on their respective areas of expertise, I believe that the robust discussions that take place in the Board of Directors are characteristic of SUMCO's governance system.

Q3. In recent years we have seen heightened interest and expectations pertaining to ESG (environment, social and governance). How do you feel SUMCO, for its part, needs to respond to this trend?

I believe SUMCO has incorporated ESG perspectives in the course of efforts to achieve the SUMCO Vision and its CSR policy. Accordingly, I think it will be important to push forward in a thoroughly honest fashion to achieve the vision and policy, and develop the human resources capable of doing so at multiple levels within the organizational hierarchy.

(This interview was made in July, 2019)

Board of Directors/Audit & Supervisory Committee Meetings in Fiscal Year 2019

Board of Directors
Name Times Attended/
Times Held
Attendance
Mayuki Hashimoto 16/16 100%
Michiharu Takii 16/16 100%
Hisashi Furuya 15/16 94%
Kazuo Hiramoto 16/16 100%
Hiroshi Yoshikawa 16/16 100%
Hitoshi Tanaka(*1) 16/16 100%
Masahiro Mitomi(*1) 16/16 100%
Shinichiro Ota(*1) 16/16 100%
Akio Fuwa(*1) 16/16 100%
Fumio Inoue(*2) 3/3 100%
Toshihiro Awa(*2) 3/3 100%
Hisashi Katahama(*2) 3/3 100%
Audit & Supervisory Committee
Name Times Attended/
Times Held
Attendance
Hiroshi Yoshikawa 13/13 100%
Hitoshi Tanaka(*1) 13/13 100%
Masahiro Mitomi(*1) 13/13 100%
Shinichiro Ota(*1) 13/13 100%
Akio Fuwa(*1) 13/13 100%
Hisashi Katahama(*2) 3/3 100%

  • (*1) Independent Outside Director
  • (*2) Retired from the position of Director as of March 28, 2019

Executive Remuneration

Policy regarding amounts of remuneration and other payments to officers and determination of calculation method

Remuneration policy

The Company employs a system where the remuneration of Directors (excluding Directors who are Audit and Supervisory Committee members) are determined with a view to encouraging them to contribute to the improvement of business results and the enhancement of corporate value. Remuneration for the Directors are within the total amount determined by resolution of the General Meeting of Shareholders, and comprises a fixed remuneration level based on their office and rank, and a factor linked to the Company’s most recent business results. The Company regularly reviews the remuneration level to reflect the long-term performance. The Company has not adopted a system of using its stock as a payment of remuneration for directors, but pursues management that seeks to urge the directors to contribute to the improvement of business results and enhancement of the corporate value over the medium- to long-term by encouraging the acquisition and holding of the Company’s stocks through the Officers Shareholding Association.
SUMCO has judged that it is appropriate to use the semi-annual profit attributable to owners of parent as an index for remuneration linked to the Company’s business results and finalizes the amount in accordance with the calculation method and taking into account the individual assessment.
The results of the index pertaining to results-linked remuneration of Directors (excluding Directors who are Audit and Supervisory Committee members) for the current fiscal year are 22,979 million yen in total for the first and second quarters and 10,133 million yen for the third and fourth quarters.
The Directors who are Audit and Supervisory Committee members receive only a fixed remuneration from the perspective of ensuring the appropriate conduct of their duties such as auditing and the supervision of the execution of business operations. The remuneration is determined through deliberations of the Audit and Supervisory Committee members within the total amount determined by resolution of the General Meeting of Shareholders, and takes into account the role and duties of each such Director and whether he or she is a full-time or part-time member.

Remuneration determination process

The amounts of remuneration and other payments to Directors (excluding Directors who are Audit and Supervisory Committee members) and their calculation methods are discussed by the Nomination and Compensation Committee consisting of two Representative Directors and two Independent Outside Directors and finalized with the resolution by the Board of Directors. The Nomination and Compensation Committee, in response to the consultations by the Board of Directors, discusses the appropriateness of the compensation structure, etc. of the Company’s Directors and submits a report to the Board of Directors also taking into consideration the Company’s business results. Upon receiving the report from the Nomination and Compensation Committee, the Board of Directors determine remuneration and other payments to Directors (excluding Directors who are Audit and Supervisory Committee members).
For the current fiscal year, the Board of Directors’ Meeting held on April 23, 2019, after discussions and considerations by the two Nomination and Compensation Committee meetings in accordance with the above procedure, resolved on the policy and determination method of remunerations and other payments to Directors as recommended by the Nomination and Compensation Committee and the Board of Directors’ Meetings held on June 29 and December 24 approved the individual amounts taking into consideration the semi-annual business results.

Amount of remuneration in the recent fiscal year (disclosure by officer category)

Remuneration for Directors for the current fiscal year
Officer category Number of
officers
Total amount of remuneration and other
payments by type (thousands of yen)
Total amount of remuneration and other payments
(thousands of yen)
Basic remuneration Results-linked remuneration
Directors (excluding Audit and Supervisory Committee members) 6 253,634 73,800 327,434
Directors who are Audit and Supervisory Committee members
(of which, Outside Directors)
6
(4)
72,780
(38,400)
-
(-)
72,780
(38,400)
Total
(of which, Outside Directors)
12
(4)
326,414
(38,400)
73,800
(-)
400,214
(38,400)
(Notes)
  1. The upper limit of the total remuneration for all Directors (excluding Directors who are Audit and Supervisory Committee Members) is 460 million yen annually (excluding employee salary) pursuant to the resolution at the 17th Ordinary General Meeting of Shareholders held on March 29, 2016.
  2. We have received an opinion from the Audit and Supervisory Committee that the remuneration and other payments to Directors (excluding Directors who are Audit and Supervisory Committee Members) are appropriate in terms of the basic policy on the remuneration system, specific calculation method, etc., and that its decision process is appropriate as well, as the remuneration and other payments have been determined at a meeting of the Board of Directors after being deliberated by the Nomination and Compensation Committee which includes Independent Outside Directors who are Audit and Supervisory Committee Members as its members.
  3. The upper limit of the total remuneration for all Directors who are Audit and Supervisory Committee Members is 110 million yen annually pursuant to the resolution at the 17th Ordinary General Meeting of Shareholders held on March 29, 2016.
  4. As of the end of the business year under review, there were four (4) Directors (excluding Directors who are Audit and Supervisory Committee Members) and five (5) Directors who are Audit and Supervisory Committee Members.