Governance

List of Directors and Auditors

Toshinori Yamamoto
Representative Director and President

Toshinori Yamamoto has worked in accounting, sales, purchasing and logistics, overseas business, and business planning and management. He was appointed to Tosoh’s board of directors in June 2009 and to its presidency in March 2016. He has a wealth of knowledge about the Tosoh Group and its management and is therefore eminently qualified to make essential executive-level decisions and to supervise Tosoh Group’s global operations toward maintaining sustainable growth and increasing corporate value.

Katsushi Tashiro
Representative Director and Senior Executive Vice President

Katsushi Tashiro worked in manufacturing, production engineering, and construction before becoming deputy general manager of the Yokkaichi Complex, among other posts. He was appointed a director in June 2013. He possesses a comprehensive understanding of the Tosoh Group’s operations and management. As such, he contributes considerably to crucial decisions and the supervision of the Tosoh Group’s operations toward sustainable growth and enhanced corporate value.

Mamoru Kuwada
Director and Executive Vice President

Mamoru Kuwada is experienced in manufacturing, production engineering, construction projects, and business and facilities management. He served as senior general manager of the Yokkaichi Complex prior to his appointment as a director in June 2020. His extensive knowledge of the Tosoh Group’s operations and management serve him well in adding to important corporate decisions and in supervising the Tosoh Group’s activities toward maintaining sustainable growth and increasing corporate value.

Toru Adachi
Director and Executive Vice President

Toru Adachi worked in accounting, finance, corporate planning, and business management. He was appointed to the Tosoh Group’s board of directors in June 2020 following service as the general manager of Corporate Strategy. His wide-ranging knowledge of diverse aspects of Tosoh Group operations and insights into corporate management make his inclusion in vital decision-making as essential as his involvement in the supervision of Tosoh Group efforts toward achieving sustainable growth and increasing corporate value.

Toru Doi
Director and Executive Vice President

Toru Doi was involved in research before becoming the general manager of the Functional Polymers Research Laboratory and being named a director in June 2021. His wide-ranging experience in the area of research enables him to contribute significantly to the Tosoh Group’s R&D efforts. He is therefore well equipped to contribute to important, executive-level decisions and the supervision of the Tosoh Group’s activities toward achieving sustained growth and increased corporate value.

Tsutomu Abe
External Director

Tsutomu Abe was representative director and vice president of Mizuho Bank, Ltd., and president and CEO of IBJ Leasing Co., Ltd. (now Mizuho Leasing Co., Ltd.). He became a Tosoh Group external director in June 2015. Abe has a wealth of knowledge in finance, corporate management, and other fields which he brings to the table in helping to make decisions on matters of importance to the Tosoh Group. He also brings an objective perspective to his role as supervisor and adviser to management.

Keiichi Miura
External Director

Keiichi Miura was a director and senior executive officer of Taiheiyo Cement Corporation before becoming a Tosoh Group external director in June 2020. His knowledge of research and planning, corporate management, and other areas, along with his objective perspective, make him an ideal contributor to the Tosoh Group’s decision-making and managerial oversight toward maintaining sustainable growth and increasing corporate value.

Yoshihiro Hombo
External Director

Yoshihiro Hombo’s positions prior to being named a Tosoh Group external director in June 2020 included those of executive vice president and representative director of Mitsui & Co. Today, he is the president and chief operating officer of Valqua, Ltd. With his broad knowledge of sales, overseas operations, business management, corporate management, and other areas, he is well suited to advise and supervise Tosoh Group management from an objective perspective. As such, he greatly contributes to decisions toward sustaining growth and increasing corporate value.

Mariko Hidaka
External Director

Mariko Hidaka is a certified public accountant and former senior partner at EY Ernst & Young ShinNihon LLC. She became a Tosoh Group external director in June 2020. She is widely knowledgeable in matters of accounting, auditing, corporate management, and other fields. With her objective perspective, she is an asset in advising and supervising Tosoh Group management in a manner that contributes to sustainable growth and increased corporate value.

Auditors

Kouji Kawamoto
Internal Auditor

Kouji Kawamoto possesses experience in finance, accounting, information systems, and purchasing and logistics. He sat on the board of directors and served as an executive vice president of the Tosoh Group before being appointed to the Audit & Supervisory Board in June 2019. He is fully versed in finance and accounting and corporate management and is thus a major asset in ensuring the smooth functioning of the Tosoh Group from an objective standpoint.

Makoto Okayama
External Auditor

Makoto Okayama served as deputy president and executive officer of Mizuho Trust & Banking Co., Ltd. and representative director of Japan Investor Solutions & Technologies Co., Ltd. prior to being named a Tosoh Group external auditor in June 2021. He brings with him an abundance of experience in various fields including finance and corporate management, which he puts to appropriate use in conducting neutral and fair audits of the execution of duties by directors.

Tetsuya Teramoto
External Auditor

Tetsuya Teramoto was a director and then president and chief executive officer and finally chairman of the board of Eiken Chemical Co., Ltd. He became a Tosoh Group corporate auditor in June 2014. His insightful knowledge of corporate management and other matters enables him to fully and objectively audit all aspects of the performance of duties by Tosoh Group directors.

Tsuneyasu Ozaki
External Auditor

Tsuneyasu Ozaki served as a public prosecutor before joining the Special Investigations Department of the Tokyo District Public Prosecutors Office in 1996. He registered as an attorney in 2005 and today heads the Fukuoka branch of the law firm Nishimura & Asahi LPC. His appointment to the Tosoh Group’s Audit & Supervisory Board was made in June 2014. His extensive legal background makes him an astute auditor of all aspects of Tosoh Group directors’ execution of their duties.

  • Corporate Governance

    Corporate Governance Structure

    Board of Directors

    Met 15 times in fiscal 2021

    As of June 30, 2021, Tosoh’s board of directors consists of nine directors, including four external directors. In principle, the Board meets at least once a month.

    Based on laws and regulations, the articles of incorporation, and the Board of Directors Regulations, the board of directors makes decisions on business planning, strategy, and other important management matters. It also oversees the performance of duties by each director and executive officer. In addition, the board makes decisions concerning appointments, dismissals, and division of duties for executive officers.

    Audit & Supervisory Board

    Met 15 times in fiscal 2021

    As of June 30, 2021, Tosoh’s Audit & Supervisory Board consists of four auditors, three of whom are external auditors. In principle, the Audit & Supervisory Board meets once a month. Members are familiar with corporate management or have considerable knowledge of legal affairs, finance and accounting, and meet to audit the execution of duties by directors.

    The auditors attend meetings of the board of directors and other important meetings in accordance with the audit policy and division of duties determined by the Audit & Supervisory Board. They also receive reports from directors and employees on the status of the execution of their duties, request explanations when necessary, review documents relating to important decisions, and investigate the status of operations and assets at headquarters and major manufacturing complexes.

    With regard to subsidiaries, we communicate and exchange information with directors and auditors of Tosoh Group companies, and receive reports on their operations as necessary. In addition, Tosoh has established a secretariat for the Audit & Supervisory Board, which has a complement of personnel dedicated to assisting and thereby enhancing the performance of the auditors.

    Executive Board Meeting

    Met 30 times in fiscal 2021

    As of June 30, 2021, Tosoh’s Executive Board Meeting comprised four executive officers of the rank of managing director and above. In principle, the committee meets once a week to deliberate on matters to be discussed at board of directors meetings and important matters related to the overall management of the Group. Tosoh’s holding of a Executive Board Meeting ensures appropriate and efficient management decision-making.

    Nomination and Compensation Advisory Committee

    Met 9 times in fiscal 2021

    To strengthen corporate governance, Tosoh established the Nomination and Compensation Advisory Committee in June 2019 as an advisory body to the board of directors. The committee serves to ensure fair and transparent procedures regarding the nomination and compensation of directors, auditors, and executive officers. The ratio of external directors on the fiscal 2021 committee was 80%. The committee consists of the president and four external directors and is chaired by an external director.

    Tosoh's activities for determining the amount of remuneration and other payments to directors during fiscal 2021 included five meetings of the board of directors and six meetings of the Nomination and Compensation Advisory Committee. The board of directors reviews the remuneration system for directors, revises remuneration and other amounts for directors, introduces remuneration for restricted stock, and decides on the policy for determining individual remuneration for directors based on the report of the Nomination and Compensation Advisory Committee.

    External directors and auditors

    Tosoh appoints independent external officers with exceptional experience and insight to oversee corporate governance. These external officers monitor the execution of company business from a neutral and objective point of view. Tosoh has established its proprietary Criteria for the Independence of External Directors and Corporate Auditors, and refers to these criteria when determining whether independence is ensured.

    External officers attend meetings of the board of directors and other bodies and receive regular explanations and reports to carry out supervision and auditing.

    Executive officer system

    Tosoh introduced the Executive Officer System with the aim of separating management decision-making from supervisory and executive functions, thereby accelerating and streamlining decision-making. Clarification of the roles and responsibilities of business execution has made possible a management structure that can respond to rapid changes in the business environment.

    As of June 30, 2021, there were 27 executive officers, five of whom were also serving as directors.

    Overview of committees

    Details Frequency (FY21)

      CSR Committee

    		 Chaired by the president of Tosoh Corporation, the committee consists of members of the Executive Board Meeting, the general managers of the management departments at Tosoh’s headquarters, and the chairpersons of company-wide committees. The CSR Committee is responsible for formulating CSR activity policies and managing the progress of key CSR issues.  2 times

      Internal Control Committee

    		 Chaired by an executive vice president of Tosoh Corporation, the Internal Control Committee works to respond to the internal control reporting system for financial reporting under the Financial Instruments and Exchange Act and the internal control system required by the Companies Act. In addition, the committee regularly evaluates and amends the status of the development and operation of internal controls.  4 times

      Compliance Committee

    Chaired by an executive vice president of Tosoh Corporation, the Compliance Committee is responsible for establishing the compliance system, formulating various measures such as education, and operating the internal reporting system. The committee also periodically evaluates and amends the status of the compliance promotion plan and the operation of the internal reporting system.

     2 times
      RC Committee The RC Committee is chaired by the director in charge of the Environment, Safety & Quality Control department, and works to establish a system for promoting RC and formulate RC annual policies. The committee also conducts RC audits on a regular basis to understand the activities of each division.

     1 time

      Export Supervision Committee

    		 Chaired by an executive vice president of Tosoh Corporation, the Export Supervision Committee is responsible for formulating various measures for compliance with the Foreign Exchange and Foreign Trade Act, the basic policy stipulated in security export control regulations. The head of the export department is assigned to also serve as the head of the operational business unit.  1 time

      Fair Trade Compliance Committee

    		Chaired by an executive vice president of Tosoh Corporation, the Fair Trade Compliance Committee is responsible for establishing internal regulations and manuals regarding compliance with the Antimonopoly Act and the Act Against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors, and formulating measures for implementation. The committee also reports and deliberates on specific cases related to compliance with the law and measures to deal with them.  1 time

      CO2 Reduction and Effective Use Promotion Committee

    Chaired by an executive vice president of Tosoh Corporation, the CO2 Reduction and Effective Use Promotion Committee is responsible for planning and formulating policies on important issues related to CO2 reduction and effective use from the perspectives of both technology and cost. In addition, the committee regularly reports and deliberates on specific issues related to planning and measures to deal with them.

    		  2 times

    Corporate Governance

    Basic concept

    In order to continuously enhance corporate value, Tosoh strives to build an efficient organizational structure that can respond quickly to changes in the business environment and to conduct sound corporate management that is fair and highly transparent. While respecting the purpose and spirit of the Corporate Governance Code, we continuously seek the optimal form of corporate governance for Tosoh.

    Analysis and evaluation of the effectiveness of the board of directors

    To improve the effectiveness of the board of directors as a whole, Tosoh conducts an analysis and evaluation every year and discloses a summary of the results.

    1. Evaluation method

    The evaluation is conducted by requesting all directors and auditors to complete a questionnaire and provide opinions. The questionnaire consists of eight categories, including a new category concerning the discussion and exchange of opinions at board of directors meetings. Other items include composition and operation of the board of directors, materials and information provided, monitoring and supervision, status of response to issues, others, and overall evaluation. The questionnaire comprises more than 12 questions, along with a five-point self-assessment system.

    In addition, respondents can write their thoughts and opinions regarding the questions in the free opinion section. These, as well as suggestions for improvement, are used as elements for future efforts to improve effectiveness.

     2. Summary of analysis and evaluation results

    The overall result of the analysis and evaluation is that the board of directors as a whole is currently fulfilling its roles and responsibilities in an effective manner. The primary reasons the board of directors is evaluated as generally fulfilling its roles and responsibilities effectively are as follows:

    • The composition of the board of directors has been strengthened, including expertise by increasing the number of external directors and diversity by appointing female directors
    • Risk management, based on necessary and sufficient reporting and continued monitoring and supervision of business execution, has been appropriate
    • Management of the board of directors, including the frequency of meetings, scope of agenda, deliberation time, volume of materials, timing of distribution, and related matters, has been optimal

    In addition, questions in the new category concerning discussion and exchange of opinions at board of directors meetings asked whether such discussion and exchange of opinions are effectively conducted with regard to management strategy, business theory, and management plans, design and determination of the compensation system, and the status of dialogue with investors and analysts. While the responses indicate that a certain amount of discussion is taking place, there are also comments that call for further efforts for improvement, which will be reflected in future meetings of the board of directors.

    Moreover, in light of changes in the environment surrounding companies and social demands on the board of directors, Tosoh asks respondents to write comments on themes that should be discussed at future board of directors meetings in the free opinion column.

    With regard to operation, the Board reviewed the method of seating briefers and question-and-answer session participants, such as the executive officer in charge, in order to further enhance deliberations. While the view is that this initiative has produced results to a certain extent, it was also noted that there is room for further improvement.

    Tosoh will continue to work tirelessly to implement initiatives based on the results of our analysis and evaluation so as to contribute to sustainable growth and the enhancement of corporate value.

    Changes in corporate governance

    2000~ 2010~ 2015~ 2020~
    • June 2002
      Appointment of external auditors (2)
    • May 2003
      Establishment of Compliance Committee
    • June 2006
       Amendment of term of office of directors from two years to one year
    • June 2009
      Establishment of Internal Control Committee

    • June 2014
      Appointment of external director (1)
    • June 2015
      Increase in number of external directors from one to two
    • June 2016
      -Launch of evaluation of effectiveness of board of directors
      -Introduction of Executive Officer System
    • June 2018
      Establishment of CSR Committee
    • June 2019
      Establishment of Nomination and Compensation Advisory Committee
    • June 2020
      - Increase in number of external directors from two to four
      - Appointment of female external director (1)
    • June 2021
       Increase in number of external auditors from two to three

    Officer compensation

    1. Policy for determining the method for calculating the amount of remuneration

    The Tosoh Group’s basic policy is to have a remuneration system that aims to continuously improve corporate performance and corporate value, and to secure excellent human resources.

    The remuneration of directors is determined within the scope of the total amount of remuneration resolved at the General Meeting of Shareholders.

    The date of the resolution of the General Meeting of Shareholders regarding remuneration and other amounts for directors of the company was June 25, 2021.

    It was determined that the total amount of remuneration and other compensation for directors shall not exceed ¥670 million per year (this amount shall be (1) ¥620 million for cash remuneration, including ¥60 million or less for external directors, and (2) ¥50 million in stock-based compensation, not including employee salaries and bonuses for directors who also serve as employees). The number of directors at the time of the resolution was 12 or less.

    Total executive compensation in fiscal 2020

    Total amount of remuneration and other compensation (millions of yen) Total amount of remuneration and other compensation by type (millions of yen) Number of eligible officers

    Basic compensation

    		 Performance-based compensation Non-monetary compensation

    Directors (external directors in parentheses)

    		 352
    (42)    		 220
    (42)

    108
    (-)

    23 (-)

    12 (5)

      Auditors (external auditors in parentheses)

    		 69
    (21)    		 69
    (21)

    -

    -

    4
    (2)

    * The above figures include three directors who retired at the conclusion of the General Meeting of Shareholders held on June 25, 2021.

    Policy for determining individual compensation for directors

    The specific details related to the basic policy are as follows:

    1. Policy for determining the calculation method for the amount of fixed compensation

    Fixed compensation shall be considered as compensation for the position and shall be determined for each position, taking into consideration the remuneration level in the results of the survey on management compensation compiled by an external organization.

    2. Details of performance indicators pertaining to and policy for determining the calculation method for the amount of performance-based compensation

    The amount of performance-based compensation shall be determined for each position based on the ratio between the fixed compensation and the performance-based range, taking into consideration the remuneration level in the results of the survey on management compensation compiled by an external organization.

    3. Policy for determining the details and method for calculating the amount of non-monetary compensation (stock-based compensation)

    Allocation of non-monetary compensation in the form of restricted stock shall be determined on a position-by-position basis, taking into account various factors such as the degree of contribution.

    4. Policy on determining the ratio of the amount of fixed compensation, performance-based compensation, and non-monetary compensation to the amount of individual compensation and other compensation of directors

    The ratio of fixed compensation, performance-based compensation, and non-monetary compensation (stock-based compensation) to the amount of individual compensation shall be determined for each position, taking into consideration the level of remuneration and other compensation in the results of the evaluation of management remuneration compiled by an external organization. In addition, from the perspective of their role and independence, external directors shall receive only fixed compensation.

    5. Policy on determining time and conditions for granting remuneration and other compensation to directors

    Fixed compensation and performance-based compensation shall be paid monthly. Fixed compensation shall be paid monthly based on the current year's position, and performance-based compensation shall be paid monthly based on the previous year's performance as remuneration for the current year. As for non-monetary compensation in the form of stock-based compensation with restrictions on transfer, restricted shares shall be allocated annually in accordance with the allocation agreement. The restrictions on transfer shall be removed upon retirement.

    6. Method for determining the details of individual remuneration and other compensation for directors other than the above

    Individual remuneration and other compensation for directors shall be determined by the board of directors based on the report of the Nomination and Compensation Advisory Committee, which mainly consists of independent external directors.

    Attendance rate at meetings of the board of directors and Audit & Supervisory Board in fiscal 2021

    Name Position Attendance at
    board of directors meetings
    Toshinori Yamamoto Representative Director and Senior Executive Vice President 100% (all 15 meetings)
    Masayuki Yamada1 Director and Executive Vice President 100% (all 15 meetings)
    Mamoru Kuwada Director and Executive Vice President 100% (all 12 meetings)
    Toru Adachi Director and Executive Vice President 100% (all 12 meetings)
    Tsutomu Abe External Director 100% (all 15 meetings)
    Keiichi Miura External Director 100% (all 12 meetings)
    Yoshihiro Hombo External Director 92% (11 of 12 meetings)
    Mariko Hidaka External Director 91% (10 of 11 meetings)

    Attendance rate at meetings of the Audit & Supervisory Board in fiscal 2021

    Name Position Attendance at Audit & Supervisory
    Board meetings in fiscal 2021
    Sukehiro Itoh1 External Auditor 100% (all 15 meetings)
    Kouji Kawamoto Internal Auditor 100% (all 15 meetings)
    Tetsuya Teramoto External Auditor 100% (all 15 meetings)
    Tsuneyasu Ozaki External Auditor 100% (all 12 meetings)

    1 Retired on June 25, 2021.

  • Compliance and Cybersecurity

    Basic concept

    The basic policy of the Tosoh Group is to ensure compliance, pursue profits through fair competition, and continue to be a useful entity for society at large.

    The basis of the Group's compliance activities is for all employees and each and every officer to practice compliance sincerely, fairly, and ethically.

    Tosoh Group Code of Conduct

    The Tosoh Group Code of Conduct prohibits all forms of corruption, respects human rights, and describes how to deal with important matters that must be observed in conducting business activities. Based on the acknowledgment by top management that compliance is the foundation of the Tosoh Group's management and should take precedence over all other interests, all employees and officers of the Tosoh Group are obliged to comply with the Tosoh Group Code of Conduct, which was revised in October 2018 to include additional CSR initiatives.

    In addition to the Japanese, English, Chinese, and Korean versions, the Tosoh Group Code of Conduct has been translated into the languages of the respective regions in which the Group's overseas businesses are located. Pamphlets explaining the Tosoh Group Code of Conduct are distributed to all employees and officers of domestic Group companies.

    Compliance promotion system

    We believe that practicing compliance, which means following the established rules, not only protects employees from accidents and other disasters, but also strengthens the management structure of the entire Tosoh Group. To this end, we have established a promotion system to ensure that employees are aware of the importance of compliance and are able to practice it. The Compliance Committee reports the content of its deliberations to the board of directors.

    Compliance consultation desks

    Tosoh has established compliance consultation desks to promptly recognize and respond to violations or potential violations and prevent or quickly correct compliance-related issues. Employees of Tosoh and its domestic Group companies, temporary employees, and employees of subcontractors can choose to report or consult with the internal, external, and corporate auditor consultation desks.

    The desks provide consultations regarding violations of laws and regulations, harassment, human rights violations, bribery, and other incidences of corruption. The details of each consultation are reported to the corporate auditors on a case-by-case basis for guidance and supervision.

    Wallet size cards listing the contact information for each consultation desk are available to employees so as to ensure they can contact a desk at any time when needed. Tosoh’s internal regulations stipulate the protection of confidentiality and the prohibition of the disadvantageous treatment of persons seeking consultation.

    Cybersecurity

    In response to the growing importance of security in our business activities, Tosoh is working to further strengthen cybersecurity in addition to bolstering conventional measures.

    To prevent damage to public trust and competitiveness resulting from the leak, loss, or damage of plant control systems, mission-critical systems, confidential information, and personal information, we are using the Cybersecurity Management Guidelines issued by Japan’s Ministry of Economy, Trade and Industry and various other cybersecurity frameworks to formulate response policies and strengthen risk management throughout the organization.

    As part of our employee education activities, we hold regular briefings at the Nanyo and Yokkaichi Complexes on compliance using the Information Security Management Guidelines. The briefings further serve to alert employees on warning and protection measures through case studies of incidents. We also conduct attack e-mail drills to let employees experience firsthand the threat of cyberattacks.

    Given the constant changes in the environment surrounding information security, we source the latest information from industry associations and government agencies and apply it to our own cybersecurity measures.