Corporate Governance

SUMITOMO RUBBER INDUSTRIES TOP > Company > Corporate Governance

Basic Policy Regarding Corporate Governance

The Sumitomo Rubber Group’s basic management policy is to enhance its corporate value as a promising and reliable global company for the benefit of all stakeholders, including shareholders.
Under this policy, the Group considers the enhancement of corporate governance as a key management objective in its efforts to better fulfill its social responsibility and enhance its transparency.
This policy will help to strengthen Group management and establish deep relationships of trust with society, while ensuring Group-wide business efficiency.

Corporate Governance Structure

(as of March 26, 2020)

Corporate Governance Structure

Corporate Governance System Overview

(as of March 26, 2020)

Corporate Governance System Overview

Evaluation of the Effectiveness of the Board of Directors

Sumitomo Rubber Industries conducts regular survey questionnaires for all Directors and Audit & Supervisory Board Members regarding various aspects of the Board of Directors, including its composition and operation, and then the Board of Directors conducts
deliberations based on the results of the survey in order to increase the effectiveness of the Board of Directors.
Having conducted this survey between September and October of 2019, the Board of Directors in December 2019 held discussions in order to deliberate on the results obtained therefrom.
As a result of these deliberations, the Board of Directors was able to verify that said Board has, by and large, attained effectiveness in terms of its number of members and member composition, frequency of meetings, time spent deliberating and other management matters, as well as its deliberations, oversight of the business and affairs of the Company and all other aspects of its conduct.
As for the previous suggestions, namely, expanding information provision to outside officers, the Company confirmed that information-sharing regarding the Management Meeting, the Corporate Ethics Committee, and the Risk Management Committee was strengthened from 2019 and has led to invigorating discussion at the Board of Directors.
We will work on maintaining its environment and, as necessary, execute measures to enhance its effectiveness.

Remuneration of Directors and Audit & Supervisory Board Members

◆Remuneration Amount and the Company’s Policies for Determining Its Calculation Method

Sumitomo Rubber Industries’ remuneration for Directors and Executive Officers consists of basic remuneration and bonuses. The basic remuneration is determined based comprehensively on each individual’s position, duties and responsibilities as well as the
Company’s business results. Directors’ remuneration is paid within the framework approved at the Company’s general meeting of shareholders. The amount of each bonus is determined in accordance with an evaluation of the Company’s business results
as well as each Director’s business execution. The amount of remuneration for Audit & Supervisory Board Members is determined in discussions among Audit & Supervisory Board Members and paid within the framework approved at the Company’s general meeting of shareholders. Although stock-based incentives are not paid, the Company encourages the purchase of its stock through a stockholding association scheme
for Directors and Executive Officers. When determining the amount of bonuses, the Company also takes into account the contributions made by each individual to the progress of medium- and long-term business plans. In these ways, the Company is providing Directors and Executive Officers with incentives to achieve sustainable
business growth. As for performance-based remuneration and stock options linked to medium- and long-term business results, the Company will engage in ongoing in-house discussions as well as dialogue with its shareholders to assess the optimal timing for
the introduction and determine the form of remuneration. The Company determines the amount of remuneration for Directors and Executive Officers based on a resolution of the Board of Directors after examining proposals submitted by the “Nomination and Remuneration Committee,” which discusses the matter from objective and unbiased viewpoints, with independent Outside Directors comprising the majority of members.

◆Remuneration for Directors and Audit & Supervisory Board Members

Type Number of Persons paid Amount paid
Director 13 ¥526 million
Audit & Supervisory Board Member 6 ¥76 million

Notes.
1. In accordance with a resolution at the 123rd Ordinary General Meeting of Shareholders held on March 26, 2015, the maximum total amount of remuneration for Directors and Audit & Supervisory Board Members was set at ¥800 million
per year (of which ¥70 million per year is for Outside Directors) and ¥100 million per year, respectively.
2. The number of persons paid above includes a Director and a Audit & Supervisory Board Member who resigned as of March 26, 2020.

Training the next-generation managers

The Group is focusing on training next-generation managers and overseas base managers.
A Management School was established so that candidates can acquire skills related to perspective (viewing things as a manager), knowledge (basic knowledge required of management), and thinking (critical thinking). Starting in 2003, approximately 20
people have been selected each year, and classes are offered throughout the year. Management attends the last meeting, and reports on issues such as future business expansion are provided. This is the training of next-generation managers.

Implementation and Status of the Internal Control System

Based on “compliance with social norms,” which is stipulated in the Company’s “Corporate Code of Conduct,” Sumitomo Rubber Industries maintains the guideline that “corporate activities must adhere to laws and ordinances, social norms and standards of
public decency.” Moreover, the Company has established “systems to ensure that in the execution of their duties, Directors comply with laws and the Company’s Articles of Incorporation and that Group operations undertaken by the Company and its subsidiaries
are always appropriate,” thereby securing strict legal compliance. In addition to complying with laws and its Articles of Incorporation, Sumitomo Rubber Industries aims to fulfill its corporate social responsibilities and, to this end, has established a strict code of corporate ethics while pursuing sound business operations. To that end, the Company formulated “Regulations on Corporate Ethics Activities” in February 2003. Simultaneously and in line with these regulations, the Company established the “Corporate Ethics Committee,” which meets on a quarterly basis and is chaired by the President, with the aim of strengthening its Group-wide compliance system. Furthermore, Sumitomo Rubber
Industries set up a “Corporate Ethics Helpline (Compliance Consultation office)” directly controlled by the President as a corporate ethics helpline for employees. This enables the
Corporate Ethics Committee to investigate any problems that arise within the Group and give sufficient attention to ensuring that those employees who come forward are not penalized. With a close eye on legal issues, the Company also takes such measures as seeking advice from corporate attorneys as circumstances demand.