Basic stance on corporate governance

AISIN Group builds strong relationships with all of our stakeholders and achieves steady long-term growth and expansion to maximize our value as a company. In order to accomplish this, we believe that it is important to conduct our business activities in a fair and transparent way in order to be a trusted corporate citizen in the international community. We carry out corporate governance according to our Basic Policy on Corporate Governance. We are also endeavoring to achieve sustainable growth and increase our value as a company in the medium to long term through ongoing effectiveness reviews and enhancements of our corporate governance based on factors such as changes in our business environment.

Basic Policy

  1. AISIN Group respects the rights of shareholders, ensures shareholder equality and endeavors to create a suitable environment for ensuring the appropriate exercise and protection of rights.
  2. AISIN Group endeavors to cooperate with other stakeholders aside from shareholders (i.e., customers, suppliers, employees and members of local communities), with sincerity and integrity, based on common sense and social values.
  3. AISIN Group discloses information appropriately in accordance with applicable laws, and endeavors to proactively communicate information other than that disclosed in accordance with such laws, and to ensure transparency in its activities.
  4. In order to ensure transparency, fairness and agility in its decision making, AISIN Group endeavors to ensure appropriate execution of the roles and responsibilities of its Board of Directors.
  5. AISIN Group endeavors to hold constructive dialogs with its shareholders, based on a shared directionality for stable long-term growth.

Corporate governance structure

AISIN Group uses an audit and supervisory board system to strengthen the management and supervision of the Board of Directors and enable more efficient management by our operating officers system. To enable more accurate, faster and fairer decision making, we established a framework from June 2019 in which at least one third of our directors are independent external directors. To enable more independent, objective decision-making about appointing and compensating directors and operating officers, decisions of this nature are reviewed and discussed by the Officers Personnel Committee and Compensation Committee, with external directors accounting for the majority of members, before being raised at the Board of Directors meeting.

Corporate governance structure
Corporate governance structure

Initiatives to improve corporate governance

From April 1, 2020, we appointed a new president and operating officer for our operating officers system to enable more flexible changes to the system when an officer is transferred. On June 16, 2020, a partial change to our articles of articles of incorporation was approved at the General Meeting of Shareholders, allowing the president to be selected from our operating officers. The position of executive vice president has also been eliminated to clarify roles in decisionmaking and business operations within the director system. These changes, among others, will further strengthen our corporate governance.

Board of Directors

Members of our Board of Directors, Audit & Supervisory Board, Officers Personnel Committee and Compensation Committee

(◎ Chair 〇 Members)

Board of Directors Audit & Supervisory Board Officers Personnel Committee Compensation Committee
Directors Chairman Kanshiro Toyoda      
President Kiyotaka Ise  
Director Makoto Mitsuya  
Director Toshiyuki Mizushima      
Director Kazuhisa Ozaki      
Director Tetsuya Otake      
Director Toshio Kobayashi
EI
 
Director Tsunekazu Haraguchi
EI
 
Director Michiyo Hamada
EIF
 
Audit and supervisory board members Standing auditor Toshikazu Nagura    
Standing auditor Masayoshi Hotta    
Auditor Mitsuhisa Kato
E
   
Auditor Ryo Kobayashi
EI
   
Auditor Hikaru Takasu
EI
   
ExternalIndependent directorFemale

Ratio of external directors

Board of Directors
Board of Directors
Audit & Supervisory Board
Audit & Supervisory Board
Officers Personnel Committee
Officers Personnel Committee
Compensation Committee
Compensation Committee

1Board of Directors

The Board of Directors is responsible for overseeing the execution of business operations and passing resolutions on important management matters of Aisin Seiki and AISIN Group.

Number of meetings: 15 per year

2Audit & Supervisory Board

Together with monitoring the execution of duties by directors, Audit & Supervisory Board members conduct hearings of the state of affairs in their respective business divisions to verify that management and the execution of business operations are being carried out properly.

Number of meetings: 14 per year

3Officers Personnel Committee

This committee reviews and establishes basic policies regarding our director system and framework. The appointment and dismissal of directors and auditors is proposed and discussed at Board of Directors meetings according to our basic policies.

Number of meetings: 3 per year

4Compensation Committee

This committee reviews and establishes basic policies regarding our remuneration system and decisions. Proposals for the remuneration system and standards for each role are also discussed according to our basic policies.

Number of meetings: 3 per year

5Accounting Auditor

PricewaterhouseCoopers Aarata LLC is retained for accounting audits under the Companies Act and the Financial Instruments and Exchange Act.

6Sustainability Conference

The Sustainability Conference is used to discuss and decide on the direction of activities based on the SDGs and other ESG strategies with the aim of earning the trust and support of all of our stakeholders, contributing to the sustainable development of society as AISIN builds a global presence. Led by the President, the council comprises the executive vice president, the operating officer in charge and the presidents of five core companies in AISIN Group.

Number of meetings: 1 per year

*The number of meetings is for fiscal year 2020.

Policies and procedures on the appointment and dismissal of directors and auditors

When appointing and dismissing members of our Board of Directors, we seek the optimum balance of knowledge, experience and skills to ensure the suitable, swift and fair decision-making that is needed to achieve sustainable growth and increase our value as a company in the medium and long term. We take a comprehensive approach, including appointing multiple external directors with advanced expertise inside and outside the industry. We are conscious of the need for efficient consolidated management and appoint directors of key subsidiaries as directors of Aisin Seiki.

Nomination, appointment and dismissal is reviewed and discussed by our Officers Personnel Committee, in which the majority of members are external directors, to select candidates for director and auditor positions. Decisions for directors are made on discussion at the General Meeting of Shareholders based on internal decisions made by the Board of Directors. Decisions for auditors are made on discussion at the General Meeting of Shareholders based on internal decisions made by the Board of Directors and agreed upon by our auditors.

Specialties and experience of directors and auditors

  Company management Industry knowledge Technology development Production technology and manufacturing Sales and procurement Finance and accounts Legal affairs and CSRs Overseas experience
Chairman Kanshiro Toyoda        
President Kiyotaka Ise        
Director Makoto Mitsuya      
Director Toshiyuki Mizushima          
Director Kazuhisa Ozaki          
Director Tetsuya Otake        
Director Toshio Kobayashi          
Director Tsunekazu Haraguchi            
Director Michiyo Hamada            
Standing auditor Toshikazu Nagura      
Standing auditor Masayoshi Hotta        
Auditor Mitsuhisa Kato          
Auditor Ryo Kobayashi              
Auditor Hikaru Takasu              

Main reports and proposals at Board of Directors meetings

(July 2019 - June 2020)

  Proposals Reports Total Ratio
Business strategies, sustainability and governance 16 11 27 35%
Settlement, dividends and other financial matters 13 2 15 19%
Internal control, risk management and compliance 0 2 2 2%
HR, appointment, remuneration and organizational changes 20 0 20 26%
Individual matters 0 14 14 18%
Total 49 29 78 100%

Initiatives for a more active Board of Directors

We believe that it is important that every member of our Board of Directors brings their own knowledge and experience to their management activities, and we endeavor to facilitate active discussion between our directors, including external directors.

Separation of supervision and execution

  • Slimmed down management framework
  • Diverse balance of knowledge, experience and skills

Sufficient time for discussion

  • Review of standards for discussions by Board of Directors
  • Prior explanation of proposed topics for discussion, etc. for external directors
  • Creation of annual schedule for Board of Directors meetings

Sharing of information and strengthening of framework for collaboration

  • Sharing of details of decisions at important meetings such as management committee meetings
  • Holding opinion exchange meetings, round-table conferences, training, etc.
  • Observation of domestic and overseas subsidiaries, etc. by external directors

Effectiveness evaluation of Board of Directors

Our Board of Directors includes multiple external directors to guarantee that functions performed by the Board of Directors, such as decision-making and the running of meetings, are executed effectively. Interviews are held with all external directors and auditors to ask about the effectiveness of the Board of Directors as a whole and improvements are made based on their answers.

Evaluation and issues for fiscal year 2020

In our interviews at the end of fiscal year 2020, our external directors expressed that the overall effectiveness of our Board of Directors had improved. Positive points included more active discussion on important issues and a sufficient support framework. Issues included the need for further enhancement of on-site observations and opinion exchanges about strategies and risks.

Improvements and future initiatives

We are creating venues for free discussion between external directors and operating officers to provide more opportunities for exchanges of opinion where necessary, an issue that was raised. Attendees discuss and provide advice on a wide range of topics, such as energy business strategies for building a zero carbon society and visions for a research company in AISIN Group. On-site observations are also done when there are no severe outbreaks of COVID-19.

Initiatives to strengthen internal control

Aisin Seiki is strengthening measures based on the Basic Policy Concerning the Establishment of Internal Control, which was approved by a resolution of the Board of Directors.

The core group companies in AISIN belong to consolidated committees such as the Consolidated Business Ethics Committee, the Consolidated Risk Management Committee, the Consolidated Environmental Committee and the Consolidated Safety and Health Committee, which carry out comprehensive notification and executive activities such as establishing and enacting basic policies to optimize operations and minimize risk, creating guides and carrying out training. The committees also monitor operations throughout the company to ensure that all sites are operating effectively. With regard to auditing activities conducted by internal auditing departments, as of January 2018, the group has sought to enhance its auditing structure by consolidating the auditing functions of its 13 core group companies within group headquarters. Moving forward, we plan to audit all of the group’s consolidated subsidiaries on a regular basis using the genchi genbutsu (go and see) approach.

Additionally, a summary of all activities geared toward improving and strengthening internal controls is reported at a meeting of the Board of Directors, held during April of each year, to verify the adequacy of these initiatives.

Criteria and characteristics of independent external directors

All independent external directors appointed by Aisin Seiki are expected to fulfill the following duties and obligations.

  • Apply specialized knowledge, wide-ranging experience and other assets gained from previous roles to their management at Aisin Seiki.
  • Provide warnings and advice about risks from an impartial and fair perspective in important decision-making settings such as meetings of the Board of Directors.
  • Preside over conflicts of interest between the company and parties such as its management or controlling shareholders
  • Appropriately represent outside views at meetings of the Board of Directors. When selecting candidates for external director positions, we focus on specialized expertise and a wide range of experience that will enable the candidate to provide frank and constructive advice about our management, in addition to the requirements for independence set by the Companies Act and the Tokyo Stock Exchange.

Sharing of information with external officers

external directors and auditors carrying out their roles and duties effectively from an independent, objective standpoint. External directors attend monthly round-table conferences with top management and auditors in an initiative to facilitate meaningful discussion at venues such as our Board of Directors meetings.

To promote understanding among external directors and auditors about the businesses and functions of our company, we endeavor to facilitate exchanges of information and boost awareness through venues such as observations of plants, test courses and relevant companies and discussions with the relevant officers and managers in each headquarters and division.

We have also appointed specific staff in our Corporate Planning Dept. and Audit & Supervisory Board Office to facilitate communication and coordination with external directors and auditors and ensure that the information required by external directors and auditors is provided accurately.

Remuneration of officers

Basic stance on remuneration of officers

  • (1) Remuneration shall motivate our officers to work toward achieving AISIN Group’s corporate principles and following its management policies.
  • (2) Remuneration shall reflect the responsibilities, results, etc. of each officer.
  • (3) Remuneration shall reflect the business environment and short- to medium-term results of AISIN Group and encourage officers to improve our corporate value and manage from the perspective of our shareholders.

Remuneration structure for officers

As officers oversee the operations of the company, the remuneration structure for directors (other than external directors) comprises a fixed monthly salary along with bonuses and stock options tied to results.

In recognition of their position as officers responsible for providing supervision and advice or audits of our management from an independent standpoint, external directors and auditors receive only a monthly salary with no bonuses or stock options.

System and configuration of remuneration for directors and auditors

Type of remuneration Directors
(excluding external directors)
External directors Auditors Payment policy
Fixed remuneration Monthly salary 50% 100% 100% Directors’ remuneration reflects factors such as the director’s duties and experience, along with trends among other companies. Auditors’ remuneration reflects factors such as the auditor’s duties and trends among other companies.
Performancelinked remuneration Bonuses 35% Bonuses are based on the consolidated operating profit achieved through our operations in each period, and are decided through a comprehensive assessment of dividends, the size of the bonuses given to our employees, trends among other companies and bonuses that were paid in the past. Bonuses for the period ended March 2020 were set based on our consolidated operating profit of ¥56.1 billion (results).
Stock options 15% Shares with restriction on transfer are given as an incentive to boost the value of our stock by continuously improving our value as a company.

Remuneration amount for directors and auditors

Category Total remuneration, etc.
(Million yen)
Totals for each type of remuneration
(million yen)
Number of recipients
(Persons)
Fixed remuneration Performance-linked remuneration
Monthly salary Bonuses Stock options
Directors (external directors) 434(41) 309(41) 78(-) 45(-) 15(3)
Auditors (external auditors) 135(33) 135(33) -(-) -(-) 5(3)
Total 569 445 78 45 20
  • The above figures include six directors who left at the end of the 96th General Meeting of Shareholders held on June 18th, 2019.
  • Bonuses indicate the amount posted at the Board of Directors meeting on April 30, 2020.
  • Stock options indicate the amount expensed in this business year for shares with restriction on transfer given to directors (excluding external directors).
  • It was decided at the 96th General Meeting of Shareholders on June 18, 2019 that the total monthly salary and bonuses paid to all directors collectively must be no greater than 600 million yen per year (with no greater than 75 million yen paid to the external directors).
  • It was decided at the 96th General Meeting of Shareholders on June 18, 2019 that the total stock options to be given to all non-external directors collectively must be worth no greater than 100 million yen per year.
  • It was decided at the 87th General Meeting of Shareholders on June 23, 2010 that the total monthly salary paid to all auditors collectively must be no greater than 15 million yen per month.

Method for deciding remuneration of officers

Remuneration of directors is decided by the Compensation Committee, in which the majority of members are external directors. The remuneration system and decision method are deliberated on to ensure that officers are paid appropriately and the amount for each position is discussed before a final decision is made by the Board of Directors.

The monthly salary for each auditor is decided upon discussion between the auditors.

Equity

Basic policy regarding cross-shareholdings

To survive the intense competition and continue to grow in the automotive parts and home and energy businesses where we operate, we believe that it is essential to build a cooperative relationship with various companies throughout all processes including development, procurement, production, distribution and sales. For this reason, AISIN retains cross-shareholdings to maintain and improve our company’s value in the medium- to long-term, from an all-encompassing perspective including business strategies and business relationships with trading partners. AISIN does not hold investment shares for net investment for the purpose of receiving profit from changes in the value of our own shares or dividends generated by our shares.

Method for verifying whether to hold shares

Where necessary, AISIN communicates constructively with companies in which we hold shares from the perspective of maintaining and improving the value of the company and driving sustainable growth. These conversations take place with the aim of sharing business issues and solving problems. At each year’s Board of Directors meeting, we discuss all of our cross-shareholdings. Taking into account factors such as benefits and risks based on capital costs, we verify the economic viability and future prospects of the shares from a medium- to long-term perspective based on the return and risk and reflect this in specific explanations of the aims and viability of retaining the shares. If shares are not expected to contribute to maintaining and improving the medium- to long-term value of the company, we consider reducing them. We made a decision at the Board of Directors meeting in May 2020 about whether to hold shares in each individual brand, taking into account quantitative factors such as how much we have traded with them recently and the dividend yield and the company’s ROE compared to our weighted average capital cost, and qualitative factors such as the purpose of holding the shares and our future trading relationship and business development based on our business policies.

Cross-shareholdings held by AISIN

  Brands
Amount posted in balance sheet
(March 31, 2020)
Brands for which we
increased our shares in FY2020
Brands for which we
decreased our shares in FY2020
Unlisted shares 50 brands
¥17,095 million
1 brand
¥4 million
-
Other shares 24 brands
¥92,636 million
- 2 brands
¥1,795 million

*We increased our shares in some brands in fiscal year 2020 because the additional shares were necessary to maintain and improve the corporate value of AISIN Group in the medium to long term.

Standard for exercising voting rights

Voting at AISIN is not used to make uniform yes / no judgments according to regular-short-term standards. Rather, points such as the management policies and strategies of companies being invested in are given plenty of weight and decisions are made from the perspective of corporate value in the medium to long term and whether the decision will maintain or increase returns for shareholders.

When voting on each proposal, we confirm points such as whether the company focuses on growth and shareholder profits in its management and whether the company engages in any practices that are harmful to society. Points such as shareholder returns, expansion of authorized capital, measures to prevent takeovers and business restructuring are also evaluated individually as necessary and the outcomes of discussions with the company are taken into account when deciding whether to agree to a proposal.

In the event that a company holding shares in AISIN expresses the intent to sell its shares, AISIN does not prevent the sale.

Ensuring the rights and equality of our shareholders

We endeavor to provide sufficient time for our shareholders to discuss each item at the General Meeting of Shareholders and disclose information in a fair and appropriate manner so that all of our shareholders can make suitable judgments about how to vote. We also strive to create a voting environment that ensures the rights and equality of all of our shareholders, including shareholders with a small number of shares and overseas shareholders including practical shareholders.