Corporate Governance

OPTEX GROUP is keenly aware that our greatest mission is to continuously enhance our corporate values while acquiring the trust of our shareholders, and investors as well as our customers and society. In order to realize this, OPTEX GROUP is committed to maintaining its management system and strengthening the management monitoring functions which enable the promotion of management transparency and fair and immediate decision making, positioning the fulfillment of corporate governance as one of our most significant challenges for management.

Sharholders Meeting

Sharholders Meeting

Organizational Composition and Operation

Organization Form

Company with Audit & Supervisory Committee

Directors

Maximum Number of Directors Stipulated in Articles of Incorporation

13

Term of Office Stipulated in Articles of Incorporation

One year

Chairperson of the Board

President

Number of Directors

11

Nomination of Outside Directors

Nominated

Number of Outside Directors

4

Number of Independent Outside Directors

4

Number of Independent Outside Directors

Name
Kazuhiro Yoshida
Membership of Supervisory Committee
-
Designation as Independent Director
Reasons for Appointment
Mr. Yoshida worked at a major Japanese electronics manufacturer as an engineer for many years. He was also head of the general affairs and human resources division and of the management planning division and an executive officer at the company and served as a director at an affiliate of the company. He has extensive experience and knowledge. The Company has determined that he is suitable as a Director of the Company and has appointed him as an Outside Director to continue to enhance the Group’s corporate value. The Company has designated him as an Independent Officer because he does not come under an executing person, etc. of the Company, the Group or major business partners and because it has been concluded that he is unlikely to cause any conflicts of interest with general shareholders.
Name
Nanako Aono
Membership of Supervisory Committee
-
Designation as Independent Director
Reasons for Appointment
Ms. Aono has been a certified public accountant for many years and worked as an auditor at listed companies. She has extensive practical experience and knowledge. The Company has determined that she is suitable as a Director of the Company and has appointed her as an Outside Director, expecting her to give the Company appropriate advice to strengthen the Group’s corporate governance and continue to enhance its corporate value. The Company has designated her as an Independent Officer because she does not come under an executing person, etc. of the Company, the Group or major business partners and because it has been concluded that she is unlikely to cause any conflicts of interest with general shareholders.
Name
Yasushi Sakemi
Membership of Supervisory Committee
Designation as Independent Director
Reasons for Appointment
Mr. Sakemi has worked over many years as a lawyer and has developed deep operational experience and insight and advanced legal knowledge. As he is expected to appropriately provide advice based on the above, the Company considers him to be suitable as an Outside Director who is a member of the Audit & Supervisory Committee, with an eye on the enhancement of the Group’s audit systems. In addition, the Company designates him as Independent Officer because he does not come under an executing person, etc. of the Company, its Group or major business partners and because it has been concluded that he is unlikely to cause any conflict of interest with general shareholders.
Name
Minoru Kida
Membership of Supervisory Committee
Designation as Independent Director
Reasons for Appointment
Mr. Kida has worked over many years as a certified public accountant and a certified tax accountant, is currently engaging in audit operations of listed companies and has developed broad insight and abundant knowledge and experience. As he is expected to appropriately provide advice based on the above, the Company considers him to be a suitable candidate to act as an Outside Director who is a member of the Audit & Supervisory Committee with an eye on the enhancement of the Group’s audit systems.
In addition, the Company designates him as Independent Officer because he does not come under an executing person, etc. of the Company, its Group or major business partners and because it has been concluded that he would not be likely to cause any conflict of interest with general shareholders.

Audit & Supervisory Committee

Committee’s Composition and Attributes of Chairperson


 
Audit & Supervisory Committee
All Committee Members
3
Full-time Members
1
Inside Directors
1
Outside Directors
2
Chairperson
Full-time
Directors

Voluntary Establishment of Nomination/Compensation Committee

Committee’s Name, Composition, and Attributes of Chairperson

Committee Corresponding to Nomination Committee
Committee’s Name
Nomination Advisory Committee
All Committee Members
3
Full-time Members
0
Inside Directors
1
Outside Directors
2
Outside Experts
0
Other
0
Chairperson
Outside Directors
Committee Corresponding to Compensation Committee
Committee’s Name
Compensation Advisory Committee
All Committee Members
3
Full-time Members
0
Inside Directors
1
Outside Directors
2
Outside Experts
0
Other
0
Chairperson
Outside Directors

Executive Compensation

(1) Matters related to the amounts of remuneration, etc. of officers or decision-making regarding methods for calculation
(i) Remuneration of Directors, excluding Directors who are members of the Audit & Supervisory Committee

Remuneration type Details of remuneration
Monthly remuneration The annual remuneration for each Director is determined by resolution of the Board of Directors in March every year based on the consideration of factors relating to the immediately preceding consolidated business year, such as each Director’s position and duties, the Company’s management environment and operating performance. This annual amount is divided into 12 equal amounts (excluding the portion for stock-based compensation with restrictions on transfer) and is paid in cash every month from the next April until March the following year.
Stock-based compensation Stock-based compensation with restrictions on transfer
(medium-term incentive)
For the purpose of promoting value sharing with shareholders, part of the base remuneration paid every month (ratios are determined by duty position) is granted in the form of stock-based compensation with restrictions on transfer (the period of restrictions on transfer is 3 years).
Stock options
(long-term incentive)
Stock acquisition rights as stock options are granted according to standards established by duty position, etc. for the purpose of providing the subject Directors incentives to contribute to the sustainable increase of the Company’s corporate value from long-term perspective, increase motivation and promote value sharing with shareholders.

(ii) Remuneration of Directors who are Members of the Audit & Supervisory Committee
Directors who are Members of the Audit & Supervisory Committee are granted only fixed remuneration and are not eligible for performance-linked remuneration, stock options as stock-based compensation and stock-based compensation with restrictions on transfer, for the purpose of ensuring the neutrality and independence of auditing.
(iii) Process for deliberation and decision-making regarding officers’ remuneration
Remuneration for Directors, excluding Directors who are Members of the Audit & Supervisory Committee, is determined based on consideration of factors such as each Director’s position and duties, the Company’s management environment and operating performance. Specifically, Directors with special titles discuss the amount of remuneration for each officer, followed by the Compensation Advisory Committee's deliberation on the results of these discussions. Results of the deliberation are reported to the Board of Directors for final decision-making. Each Director’s monthly remuneration (base remuneration) is determined by the President/CEO, who has been delegated this duty by the Board of Directors, based on the content of the report, while each Director’s stock-based compensation is determined at the Board of Directors meeting.
Remuneration for Directors who are members of the Audit & Supervisory Committee is determined according to each such Director’s position and duties based on discussions among the Directors who are members of the Audit & Supervisory Committee.
(iv) Activities of the Board of Directors in the determination of officers’ remuneration, etc. for the consolidated business year under review were as described below.
・Board of Directors
Based on the report of the Compensation Advisory Committee dated March 16, 2020, the Board of Directors adopted a resolution at its meeting held on March 26, 2020 on monetary remuneration and medium- to long-term incentive compensation over the period between April 2020 and March 2021.
・Compensation Advisory Committee
The Compensation Advisory Committee deliberated on monetary remuneration and medium- to long-term incentive compensation over the period between April 2020 and March 2021 at its meeting held on March 16, 2020 and reported the results of the deliberation to the Board of Directors.
(2) Total remuneration by officer type, remuneration type and number of eligible officers

Category of officer
Category of officer Director
(excluding Member of Audit & Supervisory Committee)
Total amount of remuneration, etc. (¥million)
140
Total amount of remuneration, etc. by type (¥million)
Base remuneration
Stock option
Shares with restrictions on transfer
98
32
10
Number of subject officers
6
Category of officer Director (Member of Audit & Supervisory Committee)
(excluding Outside Director)
Total amount of remuneration, etc. (¥million)
14
Total amount of remuneration, etc. by type (¥million)
Base remuneration
Stock option
Shares with restrictions on transfer
Retirement benefits
14
-
-
Number of subject officers
1
Category of officer Outside Officer
Total amount of remuneration, etc. (¥million)
19
Total amount of remuneration, etc. by type (¥million)
Base remuneration
Stock option
Shares with restrictions on transfer
Retirement benefits
19
-
-
Number of subject officers
7

(Notes) 1. The number of eligible officers in the above included one Director (excluding Members of the Audit & Supervisory Committee) and two Directors (Members of the Audit & Supervisory Committee) who retired during the business year under review.
2. The annual remuneration limit for Directors (excluding Members of the Audit & Supervisory Committee) is 300 million yen (provided, however, this shall include officers’ bonuses and not include the employee salaries of Directors who concurrently serve as employees), pursuant to the resolution at the extraordinary general meeting of shareholders held on June 7, 2016.  At the 38th Ordinary General Meeting of Shareholders held on March 25, 2017, a resolution to limit the annual amount of remuneration to 25 million yen for granting Directors (excluding Members of the Audit & Supervisory Committee and Outside Directors) as stock-based compensation with restrictions on transfer, which is within the amount of the remuneration limit described in above.
Apart from this, the annual remuneration limit for Directors (excluding Outside Directors and Members of the Audit & Supervisory Committee) is 50 million yen for the granting Directors stock option as stock-based compensation, pursuant to the resolution at the extraordinary general meeting of shareholders held on September 30, 2016.
3. The annual remuneration limit for Directors (Members of the Audit & Supervisory Committee) is 43 million yen, pursuant to the resolution at the extraordinary general meeting of shareholders held on June 7, 2016.

Evaluation of the effectiveness of the Board of Directors

To further enhance the effectiveness of the Board of Directors, the Company conducts a questionnaire once a year targeting all Directors, and the Board analyzes and evaluates the results through constructive discussions. The results of the questionnaire show that the Board of Directors of the Company is generally evaluated as efficiently fulfilling its roles and responsibilities.
The results also show that the Board of Directors has made an improvement in the appropriateness of the allocation of time to agenda items and the role of the Board of Directors in determining the direction of management strategies, issues pointed out by certain Directors last year. Meanwhile, the members of the Board of Directors share the recognition of the need for improving the environment for exchanging opinions among Outside Directors and the need for increasing time for discussing, as the Board of Directors of the holding company, medium- to long-term strategies on policies at each operating company under the Group’s management strategies and areas of focus consistent with the management strategies. We will work to make improvements in those matters and continue to ensure and strengthen the effectiveness of the Board of Directors.

OPTEX