Basic stance on corporate governance

Aisin 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.

Reform of corporate governance structure

(FY)

  2014 2015 2016 2017 2018 2019 2020 2021
Number of Executives (persons) 51 53 50 51 50 32 29 31
Number of Directors (persons) 13 14 13 14 14 9 9 9
Outside Directors (persons) 2 2 3 3 3 3 3 4
Women (persons) - - 1 1 1 1 1 1
Number of Auditors (persons) 5 5 5 5 5 5 5 4
Outside Auditors (persons 3 3 3 3 3 3 3 2
Women (persons) - - - - - - - 2
Basic policy of
corporate governance
 
June 2015
・Established
Separation of
management and
execution
June 2005
・Appointed Corporate Officers to slim down the Board of Directors and thereby speed up decision-making, as well as strengthening and speeding up the execution of operations.
April 2012
・To enable agile changes to our frameworks, the time for appointing Corporate Officers was changed to April, when our business year starts.
June 2014
・「Outside Directors were appointed
 
January 2016
・Executives Personnel Committee established
 
March 2016
・Compensation Committee established
 
June 2019
・Number of appointed directors reduced
 
April 2020
・Appointed a new president and Corporate Officer to enable more flexible changes to the system when an officer is transferred.
Improvement of
effectiveness
 
March 2015
・Round-table conferences between Outside Directors/Auditors and our top management/auditors
・Interviews are held with Outside Directors and Auditors to ask about the effectiveness of the Board of Directors.
(For details on our evaluation at the end of fiscal year 2021, our issues and how we plan to resolve them and our future initiatives, see “Effectiveness evaluation of Board of Directors“ on p.59.)
 
June 2019
・Directors‘ compensation amended: 1. Total range revised; 2. Remuneration in the form of stock options introduced

Corporate governance structure

Aisin 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 Corporate 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 outside directors. To enable more independent, objective decision-making about appointing and compensating directors and Corporate Officers, decisions of this nature are reviewed and discussed by the Executives Personnel Committee and Compensation Committee, with independent outside directors accounting for the majority of members, before being raised at the Board of Directors meeting.

Corporate governance structure
Corporate governance structure

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 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 status of affairs in respective business divisions to verify that management and the execution of business operations are being carried out properly.

Number of meetings: 14 per year

3Executives 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, payment standards for each role and the amounts for each individual are also discussed according to our basic policies.

Number of meetings: 4 per year

*The number of meetings is for fiscal year 2021.

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.

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

(◎ Chair 〇 Members)

Board of Directors Audit & Supervisory Board Executives Personnel Committee Compensation Committee
Directors Chairman
Kanshiro Toyoda
     
Vice Chairman
Kiyotaka Ise
     
President
Moritaka Yoshida
 
Director
Kenji Suzuki
     
Director
Shintarou Itou
 
Director
Tsunekazu Haraguchi
EI
 
Director
Michiyo Hamada
EIF
 
Director
Seiichi Shin
EI
 
Director
Koji Kobayashi
E
     
Audit & Supervisory Board Members Standing Auditor
Makoto Mitsuya
   
Standing Auditor
Kiyomi Kato
F
   
Outside Auditor
Hikaru Takasu
EI
   
Outside Auditor
Junko Ueda
EIF
   
ExternalIndependent directorFemale

Ratio of outside directors

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

Main reports and proposals at Board of Directors meetings

(July 2020 - June 2021)

  Proposals Reports Total Ratio
Business strategies, sustainability and governance 15 4 19 23%
Settlement, dividends and other financial matters 13 2 15 18%
Internal control, risk management and compliance 1 2 3 4%
HR, appointment and remuneration 27 1 28 35%
Individual matters 2 14 16 20%
Total 58 23 81 100%

Directors and Audit & Supervisory Board Members

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 Outside 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 Outside 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 meetings
  • Holding opinion exchange meetings, round-table conferences, training, etc.
  • Observation of domestic and overseas subsidiaries, etc. by Outside Directors

Sharing of information with outside executives

Aisin believes that the management of our business depends on Outside Directors and auditors carrying out their roles and duties effectively from an independent, objective standpoint. Outside 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 Outside Directors and Outside Audit & Supervisory Board Members 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 executives and managers in each company, 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 Outside Directors and Outside Audit & Supervisory Board Members and ensure that the information required by outside directors and auditors is provided accurately.

Audit & Supervisory Board Members

Our four Audit & Supervisory Board Members (two Standing Auditors and two Outside Auditors) audit the work of our directors and the operations of Aisin and its subsidiaries to verify legal compliance and the reliability of our financial reports. Audits are conducted based on auditing policies and audit plans established at Audit & Supervisory Board Meetings and take the form of attendance at Board of Directors‘ meetings and other critical meetings, interviews with directors and departments, and visits to domestic and overseas subsidiaries.

When appointing auditors, we make sure that half are women to provide more diverse perspectives.

Our Audit & Supervisory Board discusses the status of establishment and operation of internal governance systems, the appropriateness of accounting auditors‘ auditing methods and results, and topics to be raised at the Annual General Meeting of Shareholders.

They also communicate and exchange information with our internal auditing department and accounting auditors when necessary.

Policies and procedures on the appointment and dismissal of directors and Audit & Supervisory Board Members

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 Outside Directors with advanced expertise inside and outside the industry. We focus on group management, and appoint members of domestic and overseas subsidiaries who bring a wealth of experience and a wide range of insights.

Nomination, appointment and dismissal is reviewed and discussed by our Executives Personnel Committee, in which the majority of members are independent Outside Directors, to select candidates for Director and Audit & Supervisory Board Members 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 Audit & Supervisory Board Members 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 Audit & Supervisory Board Members.

Specialties and experience of Directors and Audit & Supervisory Board Members

  Company management Industry knowledge Technology development Production technology and manufacturing DX Sales and procurement Finance and accounts Legal affairs and CSRs Overseas experience
Chairman
Kanshiro Toyoda
         
Director and Vice Chairman
Kiyotaka Ise
         
President
Moritaka Yoshida
         
Director
Kenji Suzuki
       
Director
Shintarou Itou
       
Director
Tsunekazu Haraguchi
             
Director
Michiyo Hamada
             
Director
Seiichi Shin
           
Director
Koji Kobayashi
       
Standing Auditor
Makoto Mitsuya
       
Standing Auditor
Kiyomi Kato
           
Outside Auditor
Hikaru Takasu
               
Outside Auditor
Junko Ueda
             

Effectiveness evaluation of Board of Directors

Our Board of Directors includes multiple Outside 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 Outside Directors and Outside Audit & Supervisory Board Members 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 2021

In our interviews at the end of fiscal year 2021, our Outside Directors expressed that the overall effectiveness of our Board of Directors had improved. Positive points included the fact that meetings provided a venue for discussion of the most critical topics, the fact that active exchanges of opinion were taking place and the fact that there was a sufficient support framework. Areas for improvement included enhancement of on-site observations, although the reason why it had not been possible to have enough face-to-face discussions and site visits was because meetings were held remotely due to COVID-19.

Improvements and future initiatives

Areas for improvement included expansion of venues for faceto- face discussion, ongoing setting of on-site observations and further enhancement of exchanges of opinion about points such as strategies and risks, governance and critical issues that need to be resolved after the management merger. These will be improved on as the COVID-19 situation improves.

Criteria and characteristics of independent Outside Directors

All independent Outside Directors appointed by Aisin are expected to fulfill the following duties and obligations.

  • Supervise management by providing warnings and advice about risks from a standpoint independent from management in important decision-making settings such as meetings of the Board of Directors.
  • Apply specialized knowledge, wide-ranging experience and other assets gained from previous roles to their management at Aisin.
  • 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 Outside 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.

Remuneration of executives

Basic stance on remuneration of executives

Our system for remuneration of our executive is designed according to the following principles.

  • Remuneration shall motivate our executives to work toward achieving AISIN Group‘s corporate principles and following its management policies.
  • Remuneration shall reflect the responsibilities, results, etc. of each executive.
  • Remuneration shall reflect the business environment and short- to medium-term results of AISIN Group and encourage executives to improve our corporate value and manage from the perspective of our shareholders.

Remuneration structure for executives

As executives oversee the operations of the company, the remuneration structure for Diredctors (other than Outside Directors) comprises a fixed monthly salary along with bonuses and stock options tied to results

In recognition of their position as executives responsible for providing supervision and advice or audits of our management from an independent standpoint, Outside Directors and Audit & Supervisory Board Members 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 outside directors)
Outside 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. Audit & Supervisory Board Members’ remuneration reflects factors such as the their duties and trends among other companies.
・Monthly salary is paid every month throughout directors‘ and Audit & Supervisory Board Members’ terms.
Performancelinked remuneration Bonuses 35%
・Bonuses are based on the consolidated operating profit achieved through our operations in each business year, 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 2021 were set based on our consolidated operating profit of ¥145.3 billion (results).
・The compensation for each director is decided based on the company‘s results for each business year and the status of each director‘s work.
・Bonuses are paid once a year, after the Annual General Meeting of Shareholders for each business year.
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.
・Stock options for eligible directors are decided based on factors such as the directors‘ duties.
・Stock options are paid once a year, after the Annual General Meeting of Shareholders for each business year.
・For details on this system, see “Securities Report“ on p.45.

Method for deciding remuneration of executives

To ensure that the company‘s systems operate in a way that is suited to the status of the company‘s management and operations and that agile decisions about executive compensation are made, the authority to decide standards for each level of director, assess each executive and decide on compensation for each director is given to the Chairman and Vice Chairman of the Board of Directors, the President and the Vice President in charge of human resources management.

As a measure to ensure that this authority is exercised appropriately, executive compensation is deliberated and discussed by the Compensation Committee, where the majority of members are independent Outside Directors, before being put to the Board of Directors.

The Compensation Committee is chaired by the President and includes the Vice President in charge of human resources management and three independent Outside Directors. The committee discusses compensation systems and decision policies and methods to ensure appropriate executive compensation, along with compensation standards for each level of executive and the compensation for each executive.

Compensation for each level of director is decided each year, referring to the baselines at manufacturing companies whose size, industry and operations are similar to ours according to an investigation on executive compensation by an external research institute to verify the objectivity and validity of our standards.

Once a director is appointed, their compensation is decided based on details approved by the Compensation Committee. If this decision differs from that of the Compensation Committee, the reason must be explained to the Compensation Committee in advance.

The Board of Directors then decides on the director‘s pay within the total compensation range decided at the General Meeting of Shareholders.

The monthly salary for each Audit & Supervisory Board Member is decided upon discussion between the auditors within the compensation range decided at the General Meeting of Shareholders.

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 (Outside Directors) 440 (43) 276 (43) 119 (-) 45 (-) 9 (3)
Audit & Supervisory Board Members (Ourside Auditors) 139 (36) 139 (36) - (-) - (-) 5 (3)
Total 579 415 119 45 14
  • Bonuses indicate the amount posted at the Board of Directors meeting on April 28, 2021.
  • Stock options indicate the amount expensed in this business year for shares with restriction on transfer given to directors (excluding Outside 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 outside 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-Outside 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 Audit & Supervisory Board Members collectively must be no greater than 15 million yen per month.

Equity

Basic policy regarding cross-shareholdings

To survive the intense competition and continue to grow in the automotive parts and energy solutions 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. To accomplish this, our basic policy is to hold the minimum stock deemed necessary to maintain and improve our corporate value in our areas of business from a medium- and long-term perspective.

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. To verify that it is reasonable to hold the shares that we do, we regularly monitor situations such as the financial situation and management results of the companies in which we own shares and carry out rigorous quantitative reviews (dividend yield and average ROE for the past three years must exceed the weighted average cost to the company (5.6%) and qualitative reviews (state of business trades, prospects for future collaborations, etc.) at Board of Directors‘ meetings each year to determine whether it is appropriate to hold the shares. Verifications for this year were made at the Board of Directors‘ meeting held in May 2020.

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. Individual reviews are conducted based on internal rules and factors such as the outcome of discussions with the company are taken into account when deciding whether to agree to a proposal.

Initiatives to reduce shareholding

We are continuously working to reduce shareholding through dialog with the companies about brands in which it is no longer worth holding shares.

Initiatives to reduce shareholding

*The above figures do not include Shiroki Corporation and Art Metal Mfg. Co., Ltd., which are now subsidiaries of ours.

Shareholding (at the end of this fiscal year)

  Brands
Amount posted in balance sheet
(March 31, 2021)
Brands for which we
increased our shares in FY2021
Brands for which we
decreased our shares in FY2021
Unlisted shares 48 brands
¥17,493 million
1 brands
¥499 million
3 brands
¥1,800 million
Other shares 25 brands
¥182,171 million
1 brand
¥750 million
-

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