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    4062   JP3148800000

IBIDEN CO.,LTD.

(4062)
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Corporate Governance Report (PDF/1.1 MB)

10/29/2021 | 05:09am EDT

Corporate Governance Report

[TRANSLATION]

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Last Update: October 29, 2021

IBIDEN Co, Ltd.

Takeshi Aoki, President & CEO

Contact: Yasuhito Hirose

Division Manager

Corporate Planning Division

(0584) 81-7973 Securities Code: 4062 https://www.ibiden.com/

The corporate governance of IBIDEN Co., Ltd., ("the Company") is described below.

  1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information
    1. Basic Views

Our Group (hereinafter, collectively referred to as "the Group") considers corporate governance to be a key management mechanism for transparent, fair, prompt and resolute decision-making, and all Group companies are thus actively committed to improving corporate governance. As part of the Group's corporate governance, we are enhancing internal controls by proactively undertaking activities to advance compliance and risk management. Furthermore, we are enhancing and strengthening the management oversight functions of the Board of Directors and the audit functions of our Audit and Supervisory Committee. These steps will enable us to construct a transparent corporate governance system worthy of the trust of shareholders and other stakeholders and fulfill our corporate social responsibilities, and will help us improve our corporate value through sustained growth.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

The Company implements each of the Corporate Governance Code's principles. (Full Compliance)

[Disclosure Based on the Principles of the Corporate Governance Code]

We disclose in accordance with the Corporate Governance Code as revised on June 11, 2021.

[Supplementary Principle 1.2.4 Exercise of Shareholder Rights at General Meeting of Shareholders]

The Company recognizes the need to create an environment that facilitates the smooth exercise of voting rights by institutional investors and overseas investors based on the composition of our own shareholders. The Company participates in a voting rights electronic exercise platform and promptly discloses English- language versions of Convocation Notices on TDnet and the Company's website at the same time as the Japanese-language versions.

[Principle 1.4 Cross-Shareholdings]

1. Policy on Cross-Shareholding

Our basic policy when engaging in investment for purposes other than pure investment is to verify the need for holding each individual stock from the perspective of its importance in implementing our business strategy

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and strengthening business alliances for the sake of improving our corporate value over the medium-to-long term. Meanwhile, the Company is aiming to reduce cross-shareholdings by appropriately selling those shares deemed unnecessary. Furthermore, the Company verifies the benefits and risks of holding listed shares for cross-shareholding purposes along with profitability in light of capital costs and other factors at the Board of Directors on an annual basis. Regarding the shares that are deemed necessary to be held by the Company, we disclose the purpose of such holding in Securities Reports.

2. Standards for Exercising Voting Rights

We exercise voting rights for these shares based on careful examination of individual agenda items from a corporate governance and social responsibility perspective as well as our approach to medium-to-long term improvement of the corporate value of the companies whose shares we hold and shareholder returns.

[Principle 1.7 Related Party Transactions]

When the Company engages in transactions with its Directors, the Company submits material facts relating

to such transactions to the Board of Directors for resolution, in accordance with standards for the submission of agenda items to the Board of Directors stipulated under the Rules of the Board of Directors. The Company provides all of its officers and the presidents of its major subsidiaries with a questionnaire concerning the existence of related-party transactions annually, thereby establishing a system to manage related-party transactions. In the case of important transactions between the Company and a major shareholder, we also require a resolution at the Board of Directors in accordance with standards for the submission of agenda items to the Board of Directors.

[Supplementary Principle 2.4.1 Ensuring Diversity, Including Active Participation of Women]

The Company is proceeding with the establishment of a system for fostering human resources focused on the development of human resources who can contribute to strengthening competitiveness and who are capable of conducting cross-cultural management for continuous growth and development. We are also creating a work environment and corporate culture in which diverse human resources can exercise their individual abilities amidst a trend of advancing globalization and diversification of values. In particular, in Japan, we consider it important to further promote female employees to managerial positions and are continuously implementing initiatives for the active participation of women in the workplace. We disclose the Company's views and targets on the promotion of core human resources, including the promotion of female, non- Japanese and midcareer employees, as well as our policies for human resources development and the progress on the development of internal environment in the Company's Integrated Reports and on our website.

Human Resources Management: https://www.ibiden.com/esg/social/talent-management/Promotion of the Active Participation of Women (Action Plan): https://www.ibiden.co.jp/esg/items/jyosei_katsuyaku_plan2021_2026.pdf (Japanese only)Social Data: https://www.ibiden.com/esg/data/social/

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]

The Company is not subject to this principle as it does not adopt a defined benefit corporate pension plan. The Company has adopted an optional defined contribution pension plan as a means of forming assets after the retirement of employees. Under the defined contribution pension plan system, the Company is not responsible for retirement benefits as participants manage their contributions by themselves, so the Company has no investment risk.

[Principle 3.1 Full Disclosure]

(i) Company Objectives (e.g., business principles), Business Strategies and Business Plans

We have posted the Company's corporate philosophy, spirit, and our mid-term management plan on the Company's website.

Corporate Philosophy, Spirit: https://www.ibiden.com/company/philosophy/

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Mid-Term Management Plan: https://www.ibiden.com/company/plan/

(ii) Basic Views and Guidelines on Corporate Governance Based on Each of the Principles of the Code

We have set forth our basic policy on Corporate Governance as described in "1. Basic Views" above, and publish our basic views on the Company's website and in Securities Reports.

Basic Views on Corporate Governance: https://www.ibiden.com/esg/governance/corporate-governance/

  1. Board Policies and Procedures in Determining the Remuneration of the Senior Management and Directors

The policy on determining the amount and the calculation method of remuneration for the Company's Senior Management and Directors, as described below, was resolved at the 947th meeting of the Company's Board of Directors held on February 26, 2021, taking into account the deliberations and reports by the Nomination/Remuneration Committee.

a. Policy on determining the amount and the calculation method of remuneration of the Senior Management and Directors and the method of determination

The Group upholds the corporate philosophy that "We contribute to the progression of society through innovative technology, with respect for both individuals and the global environment." Based on this philosophy, the Company has designed its Senior Management and Directors' remuneration system in a way that clarifies management responsibilities while also providing an incentive toward improving our corporate value over the medium-to-long term through sustained growth.

The remuneration for Inside Directors who are not Audit and Supervisory Committee Members and Senior Executive Officers is comprised of (1) a fixed monthly remuneration, (2) bonuses, as performance-linked remuneration, and (3) stock remuneration, at a ratio of roughly 50%, 35%, and 15%, respectively. The monthly remuneration for Inside Directors who are not Audit and Supervisory Committee Members is calculated within the limits approved by the general meeting of shareholders, based on the remuneration table provided in the internal regulations according to their job positions, with comprehensive consideration given to their responsibilities and other reference points such as external remuneration survey data. The Board of Directors has resolved to delegate the determination of individual remuneration to the President & CEO (Takeshi Aoki, mainly in charge of overseeing overall business execution), who is best qualified to make a comprehensive assessment of each recipient including their job performance, taking account of the deliberations and reports by the Nomination/Remuneration Committee on individual payment amounts. In addition, bonuses are paid in cash once a year after the end of each fiscal year within the total amount that is calculated based on a prescribed formula approved by the general meeting of shareholders. The amount allocated to each individual is determined based on the degree of contribution by each Inside Director who is not an Audit and Supervisory Committee Member to the Company's operations. The Board of Directors has resolved to delegate the determination of individual bonuses to the President & CEO, who is best qualified to make a final assessment on the degree of contribution by each recipient to the Company's operating results, taking account of the deliberations and reports by the Nomination/Remuneration Committee on individual payment amounts.

The monthly remuneration for Senior Executive Officers is calculated based on the remuneration table provided in internal regulations according to their job positions, with comprehensive consideration given to the appropriate balance with Inside Directors who are not Audit and Supervisory Committee Members, evaluation of their individual job performance, and other reference points such as external remuneration survey data. The Board of Directors has resolved to delegate the determination of such remuneration to the President & CEO, taking account of the deliberations and reports by the Nomination/Remuneration Committee. In addition, bonuses are calculated based on the degree of contribution by each Senior Executive Officer to the Company's operating results. The Board of Directors has resolved to delegate the determination of such bonuses to the President & CEO, taking account of the deliberations and reports by the Nomination/Remuneration Committee.

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Outside Directors who are not Audit and Supervisory Committee Members and Members of the Audit and Supervisory Committee, being in positions independent of business execution, are only paid fixed remuneration of a certain amount within the limits approved by the general meeting of shareholders.

b. Summary of the resolutions of the general meeting of shareholders regarding remuneration of the Senior Management and Directors

  1. At the 164th Ordinary General Meeting of Shareholders held on June 16, 2017, the amount of monthly remuneration for Directors who are not Audit and Supervisory Committee Members was resolved to be 30 million yen (not more than 5 million yen for Outside Directors (of whom there were three (3) at the time of the resolution), and not more than 25 million yen for other Directors (of whom there were four (4) at the time of the resolution)).
  2. At the 164th Ordinary General Meeting of Shareholders held on June 16, 2017, the total amount of bonuses to be paid to Inside Directors who are not Audit and Supervisory Committee Members (of whom there were four (4) at the time of the resolution) was resolved to be the sum of 0.5% of profit attributable to owners of parent for each fiscal year and 1.6% of the total amount of annual dividends for such fiscal year (provided, however, that the sum shall not exceed 440 million yen annually, with any amount less than 1 million yen resulting from the calculation to be rounded down). Profit attributable to owners of parent and the total amount of annual dividends have been adopted as performance indicators for the calculation of the total amount of bonuses, as an indicator that functions as incentive toward the Group's sustained growth and the enhancement of corporate value, while also being linked to the interests of the shareholders.
  3. With regard to stock remuneration for Inside Directors who are not Audit and Supervisory Committee Members, a resolution was passed at the 164th Ordinary General Meeting of Shareholders held on June 16, 2017, to introduce a stock remuneration plan using a trust for a period of three (3) years, with the amount of cash contribution during the trust period of up to 270 million yen, for Inside Directors who are not Audit and Supervisory Committee Members (of whom there were four (4) at the time of the resolution), to clarify the link between the Company's stock value and the remuneration for Directors, and thereby elevate their awareness of contributing to improving operating results and increasing corporate value over the medium-to- long term. Under the plan, points are granted according to the amount of payment calculated using a formula provided in internal regulations on the basis of the recipients' position and the amount of monthly remuneration and bonus for the previous fiscal year, converted at one point to one share (provided, however, that the total number of points to be granted is limited to 100,000 points per fiscal year), and shares are accordingly granted to the recipients at the time of their retirement.
  4. At the 164th Ordinary General Meeting of Shareholders held on June 16, 2017, the amount of remuneration for Directors who are Audit and Supervisory Committee Members (of whom there were five (5) at the time of the resolution) was resolved to be not more than 13 million yen per month.
  1. Board Policies and Procedures in the Appointment/Dismissal of the Senior Management and the Nomination of Directors and Audit and Supervisory Committee Member Candidates

Candidates for Senior Management and Directors who are not Audit and Supervisory Committee Members are appointed and nominated from the perspective of placing the right person in the right job, with due consideration given to the number of people that would enable precise and prompt decision-making and to a balance of knowledge, experience and skills among the Senior Management and the Board of Directors overall. Candidates for Audit and Supervisory Committee Members are also nominated from the perspective of placing the right person in the right job, while ensuring a balance of expertise in finance, accounting, and governance, knowledge about the Company's business, and other various perspectives pertinent to corporate management. Based on the above, the nomination of Audit and Supervisory Committee Member candidates is resolved by the Board of Directors with the agreement of the Audit and Supervisory Committee. Prior to the resolution at the Board of Directors, the nomination of Director candidates is deliberated by the

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Nomination/Remuneration Committee, which is chaired by an Outside Director who is not an Audit and Supervisory Committee Member and established as an advisory body to the Board of Directors, and the details of such deliberation are reported to the Board of Directors.

  1. Explanations with respect to the Individual Appointment/Dismissal and Nomination in the Appointment/Dismissal of the Senior Management and the Nomination of Director Candidates by the Board of Directors based on (iv)

We include the career histories of Director candidates and the reasons for appointment in the reference materials for the general meeting of shareholders. The nomination of Senior Executive Officers is resolved by the Board of Directors, taking account of the deliberations and reports from the Nomination/Remuneration Committee.

The standards for dismissal are set forth in Director Regulations for Directors and in Senior Executive Officer Regulations for Senior Executive Officers. We have put procedures in place to resolve at the general meeting of shareholders for Directors and at the Board of Directors for Senior Executive Officers, taking account of

such standards and the deliberations at the Nomination/Remuneration Committee.

[Supplementary Principle 3.1.2 Full Disclosure]

In light of our own shareholder composition, the Company has established an English-language version of the Company's website and provides English-language translations for information of Results Briefings, summaries of Financial Results, Notices of Ordinary General Meeting of Shareholders, Integrated Reports and important news releases. We also disclose these on the Company's website, and promote the provision of information to overseas shareholders in English.

[Supplementary Principle 3.1.3 Full Disclosure]

The Company widely discloses our initiatives on sustainability, including information on investments in human capital and intellectual properties on the Company's website. Concerning the status of climate change- related activities, we disclose governance, scenario analysis-based strategies, risk management, and metrics and targets in Integrated Reports and elsewhere based on the TCFD recommendations.

ESG Information (Sustainability Initiatives): https://www.ibiden.com/esg/

Integrated Reports: https://www.ibiden.com/ir/library/annual/

Harmony with Nature (Environmental Initiatives): https://www.ibiden.com/esg/environment/effort/

[Supplementary Principle 4.1.1 Roles and Responsibilities of the Board of Directors]

The Company has established Rules of the Board of Directors in accordance with laws, regulations, and the Articles of Incorporation to set and clarify agenda standards stipulating what the Board of Directors itself may consider and decide. We have established regulations governing organizations, job classifications and division of duties as well as rules on administration authority for other decision-making and business execution to clarify the scope of corporate management's ability to execute.

[Principle 4.8 Effective Use of Independent Outside Directors]

The Company has currently appointed six (6) independent Outside Directors (including three (3) who are Audit and Supervisory Committee Members), accounting for a half of 12 directors in total.

The six (6) independent Outside Directors are utilizing their specialist expertise and wide-ranging experience in corporate management cultivated through their careers in the management of the Company. This has been demonstrated by their actively expressed opinions concerning the oversight of management, management policies and management improvements based on their respective expertise. They are adequately fulfilling the roles and responsibilities expected by the Company for the sustained growth and improvement in corporate value over the medium-to-long term.

We will consider the proportion of Outside Directors as appropriate, giving comprehensive consideration to factors such as the size of the business, sector, organizational structure and the environment surrounding the Company.

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This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Ibiden Co. Ltd. published this content on 29 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 October 2021 09:08:10 UTC.


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