Corporate Governance

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Basic Policy Regarding Corporate Governance

The Basic Management Policy of the Company is that we shall continuously strive to enhance both our economic value and our value to society while making ongoing, active contributions to the development of a sustainable society, with Our Philosophy serving as the basis for our every decision and as the impetus for our every action. In keeping with this policy, the Company considers the enhancement of overall corporate governance to be a key management objective.

Corporate Governance Structure

(as of March 29, 2023)

Corporate Governance Structure

Evaluation of the Effectiveness of the Board of Directors

In analyzing and assessing the effectiveness of the Board of Directors, said Board prepared a survey questionnaire for all Members of the Board of Directors and Members of the Audit & Supervisory Board with regard to the composition of the Board of Directors and its management situation, among other matters. Having conducted this survey between September and October of 2020, the Board of Directors in January 2021 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.
The Company also confirmed that the provision of fuller information to outside officers contributed to more lively discussions at meetings of the Board of Directors.
The Company 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 ¥466 million
Audit & Supervisory Board Member 6 ¥76 million

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.

Tax Policy

As a global enterprise that is dedicated to observing and respecting all applicable laws and regulations, engaging in fair and transparent business activities, contributing extensively to our communities and society and earning the trust and respect of our stakeholders, the Sumitomo Rubber Group (hereinafter, “our Group”) has made it our basic management policy to continue producing new value for more pleasant and attractive lifestyles for our customers while continually enhancing our corporate value for our stakeholders. One aspect of this basic management policy is our Group’s dedication to fulfilling our tax obligations in an appropriate and ethical manner so that we may contribute to the development of the local and regional communities in which we operate.

Our Management of Tax Risks

By a resolution of our Board of Directors, our Group has established and fully implemented the necessary framework to ensure the proper execution of business of our Group. Management risks that may adversely and materially affect the business activities of the Group shall be addressed by the relevant division and/or subsidiary in advance through analysis of those risks and the planning of countermeasures in accordance with company regulations concerning risk control, which stipulate risk management rules for the entire Group. Further, we have also established and implemented a system of checks to ensure that our business activities are fair and honest while striving to minimize our Group’s tax risks. If necessary, advice and guidance may be sought from professionals, including our tax advisors, in analyzing and planning countermeasures against such risks.

Our Approach to Tax Planning

Our Group engages in tax planning activities that appropriately reflect economic entities and are in full accordance with OECD Guidelines as well as the relevant laws and regulations of the various countries in which we operate. Further, our Group has pledged that we will neither exploit tax havens as a means of avoiding taxation nor engage in either business dealings whose primary aim is the reduction of our tax burden.

Our Relationship with Tax authorities

Our Group considers daily communication with every stakeholder to be an essential aspect of remaining conscious of the responsibilities of our Group. Our Group hopes to build a trust-based relationship with Tax authorities through the appropriate disclosure of all pertinent information in a timely manner and fully intends to enhance the transparency of our operations. We will also file tax returns and pay taxes on time in accordance with all relevant laws and regulations while working with Tax authorities to cooperate with official requests by promptly providing all requested information while.