Achieving Transparent and Sound Governance

Eiken Chemical Co., Ltd. recognizes that corporate governance with a strong focus on the shareholders’ perspective is one of its most vital management issues for the purposes of enhancing management soundness, speed and transparency and improving enterprise value, and carries out activities on that basis. For this reason, the Company is organized as a “company with nomination committee,” maintaining separation of the executive and supervisory functions of management. Important matters related to basic management policy are decided through the deliberations of the Board of Directors, while execution of business is conducted swiftly and smoothly based on in-house rules and regulations and through an appropriate chain of instruction and command.

In accordance with its code of corporate governance, Eiken Chemical discloses governance-related matters through the publication of a Corporate Governance Report.

Eiken Chemical is organized as a company with nomination committee. The Company determines remuneration for directors and executive officers on an individual basis in accordance with the resolutions of the Remuneration Committee, a majority of whose members are outside directors. To incentivize executives to bolster the Company’s business results and contribute to shareholder value, the criteria for determining remuneration are decided in consideration of each executive’s responsibilities based on factors such as rank and executive duties, the Company’s business results, the management environment and industry norms.

Remuneration for directors and executive officers is composed of fixed pay, performance-based pay and remuneration through transfer-restricted shares. In the model case for these types of remuneration, their ratio is 55% fixed pay, 30% performance-based pay and 15% remuneration through transfer-restricted shares. However, the ratio of actual amounts paid may differ from individual to individual. For outside directors, whose position is independent of business performance, pay is not lined to performance and consists of fixed pay only.

The composition of the Board of Directors of Eiken Chemical is well balanced in terms of knowledge, skills and experience in global business and sustainability, as required to achieve the Company’s management policy and management plans based on the management vision.  Its members were selected with an emphasis on diversity, including diversity of gender, nationality, professional background and age. Nominees for in-house director are chosen for their ability to fulfill the roles of deciding important matters of corporate management and supervision of executive officers in the execution of their duties.  Outside directors are nominated for highly specialized knowledge, skills and abundance of experience that cannot be obtained from in-house directors alone. Each director is expected to leverage his or her capabilities born of experience to maximum effect to decide important matters of basic management policy and supervise the execution of duties.

The Board of Directors appoints executive officers in consideration of executive-officer selection criteria, following consultation with the Nomination Committee regarding each candidate.