We carry out evaluations of effectiveness on the basis of Article 31 of our
Corporate Governance Guidelines, which states, “The Board of Directors will,
to evaluate its effectiveness, conduct self-evaluation at the end of each
fiscal year with a focus on whether the execution of duties by the Board of
Directors was performed in accordance with these Guidelines, and will analyze
and evaluate the results. An outline of the results of the analysis and
evaluation will also be disclosed as appropriate.” We disclose the results in
our Corporate Governance Report and Annual Securities Report.
In response to the issues identified in the 92nd term (fiscal 2022, ended in March 2023), we undertook the following
initiatives aimed at establishing an agenda for addressing long-standing issues and providing relevant information,
as specific measures for implementation during the 93rd term (fiscal 2023, ended in March 2024). Specifically,
we conducted a preliminary review of the upcoming medium-term business plan to be launched in fiscal 2024,
reviewed the reporting format for our quarterly business reports, and enhanced the process for briefing outside
directors on investment projects.
We also held inspection visits to our core plants in Nasu and Sano to help our outside directors better understand
our business. Furthermore, we facilitated an exchange of views between local executives and our outside directors
concerning the Defense & Communications Equipment Business, where orders for defense equipment are rapidly
increasing, and the Hydraulics and Pneumatics Business,
which is currently in the process of restructuring due to a downturn in performance. Following this discussion, the
Board of Directors convened a meeting to discuss our business performance.
We conducted a questionnaire survey aimed at all directors,
including Audit and Supervisory Committee Members, to evaluate the effectiveness of the Board of Directors in the
93rd term. Preparation, distribution, tabulation, and analysis of the anonymous response sheets were conducted by
the Legal Governance Affairs Office, which serves as the secretariat for evaluation of effectiveness. The answer sheet
consists of 17 questions covering areas of the Board of Directors’ composition, operation, deliberation, support
structure, relationships with stakeholders, and the degree of contribution of individual directors.
At the Board of Directors meeting held in May 2024, the Chief Legal Governance Officer reported on the
aggregation of responses and the findings of analysis, and members discussed current circumstances and recognition of issues.
On the basis of the results, it was determined that the Board of Directors of the company has shown some
improvement with respect to the issues that were identified and that, in general, the Board of Directors is appropriately
fulfilling its responsibilities and its effectiveness is being ensured. However, we confirmed an issue that there was
still room for improvement in discussion related to non-financial information. These issues are shared with the
Board of Directors. These issues are shared with the Board of Directors. Looking ahead, we will establish a concrete
action plan for these issues and reconfirm progress and results in the next effectiveness evaluation.
The Company will endeavor to improve the effectiveness of the Board of Directors by conducting appropriate
evaluations every year, through resolution of issues recognized in effectiveness evaluations and continuous review of implementation methods for evaluation.
In accordance with guidelines outlining seven requirements, the Company
appoints Internal Directors who are not Audit and Supervisory Committee
Members from among Executive Officers and employees, etc. who have the strong
will, abundant experience, high level of insight, and high level of expertise
needed to carry out the duties of a director.
In accordance with guidelines outlining six requirements, the Company appoints
Internal Directors who are Audit and Supervisory Committee Members from among
current (or incumbent) Audit and Supervisory Committee Members, Executive
Officers, and employees, etc. who have the strong will, abundant experience,
high level of insight, and high level of expertise needed to carry out the
duties of a director. We particularly emphasize a deep understanding of
matters such as finance, accounting, and internal control, as well as
sufficient experience and expert knowledge.
In accordance with guidelines outlining seven requirements, the Company
appoints Outside Directors from among persons who possess abundant experience,
a high level of insight, and a high level of expertise; persons who possess a
practical perspective as an outside company manager or other position; and
persons who possess an objective and expert perspective based on a high level
of knowledge of global conditions and socio-economic trends.
In order to verify whether the TOKYO KEIKI Group is furnished with the
management capabilities needed to resolve the Group’s challenges, we have
outlined in the following table the knowledge and expertise (skills) possessed
by all of our Directors in various fields based on two perspectives: items
required for the management of a listed company, and matters required per our
business activities. The determination of each Director’s skills took into
consideration their accomplishments as Directors and Executive Officers in
each field as well as their past professional experience.
Skills matrix
As of June 26, 2024
Note: Directors who possess relevant national qualifications: Sayoko IZUMOTO (Certified Public Accountant)
* Independent:Independent officer under the securities listing regulations of the Tokyo Stock Exchange
* Outside:Outside director
Compensation for directors who are not Audit and Supervisory Committee Members
is composed of monthly fixed compensation (basic compensation),
performance-linked compensation, and transfer-restricted stock compensation,
with the aim of reflecting business performance and sharing the values of
shareholders. However, Outside Directors who are not Audit and Supervisory
Committee Members receive only monthly fixed compensation. For all
compensation amounts, proposals prepared by the Representative Director,
President & CEO are submitted to the Nomination and Compensation Committee.
The Representative Director, President & CEO then receives a Memorandum on
Director Compensation from the Committee and, based on this, finally
determines and proposes compensation amounts that are resolved by the Board of
Directors.
Compensation for Audit & Supervisory Committee Members, consisting
of only basic compensation in the form of monthly fixed compensation, is
determined through deliberation by Audit and Supervisory Committee Members on
the basis of members’ roles, duties, and categorization of standing or
non-standing status, within the total amount determined at the General Meeting
of Shareholders.
The Representative Director, President & CEO will set a monthly fixed
compensation proposal for each director who is not an Audit and Supervisory
Committee Member, making reference to necessary information on director
compensation allowing comparison with our Company, obtained through sources
including surveys on trends in director compensation. After monthly fixed
compensation is determined, amounts may be reduced in consideration of matters
including the Company’s business situation.
The Representative Director, President & CEO will determine whether
performance-linked compensation will be paid, through discussions with the
Representative Director in accordance with criteria for the payment of
performance- linked compensation as set forth in the Rules for Directors’
Compensation. Criteria for the payment of performance- linked compensation
include positive operating profit, a given level of profit attributable to
owners of parent, payment of dividends not below initial projections, and ROE
that does not fall below initial projections by a given percentage.
The Company sets and pays monetary compensation credits in an amount equal to
an individual’s monthly fixed compensation converted to a yearly amount,
multiplied by a coefficient based on position. Each eligible director receives
an allocation of transfer-restricted stock through the granting of all
monetary compensation credits as in-kind contribution. The paid-in amount of
the transfer-restricted stock is determined by the Company’s Board of
Directors within an extent that is not overly advantageous to the receiving
directors, based on the closing price of the Company’s common shares on the
Tokyo Stock Exchange on the business day prior to resolution by the Board of
Directors concerning issuance or disposal of the stock (or, if no transactions
took place on said business day, the closing price on the most recent trading
day).
Similar transfer-restricted stock is also allocated to the Executive
Officers of the Company and Representative Directors of subsidiaries of the
Company.
Amount of compensation by officer category
Notes 1. The total amount of compensation, etc. for Outside Directors is the amount of compensation for Outside Audit and
Supervisory Committee Members.
2. The total amount of compensation, etc. is the amount of monetary compensation credits paid under the transfer-restricted
stock compensation system.
3. The total amount of the above compensation, etc. for Directors does not include amounts equivalent to the employee
salaries of Directors who serve concurrently as employees.