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For Investors

Summary of Corporate Governance

Basic Concept

As of June 2025, we have transition to a company with an Audit & Supervisory Committee. By expanding the delegation of authority from the Board of Directors to the executive management, the Company aims to speed up decision-making at Board of Directors meetings and further enhance discussions at Board of Directors meetings on important management issues, such as medium- to long-term business strategies. Additionally, the Company will further enhance its corporate governance system by strengthening the supervisory function of the Board of Directors, such as by having the Audit & Supervisory Committee members responsible for audits, etc. hold voting rights at Board of Directors meetings as Directors.Furthermore, the Group has established and published the Teijin Group Corporate Governance Guide , which serves as its guidelines for corporate governance.

Status of Compliance with the Japan's Corporate Governance Code

The Company complies all Principles of the Corporate Governance Code. Please refer to Corporate Governance Report for details.

Basic Policy Concerning Cross-Shareholdings

(1) Policy Concerning Cross-Shareholdings

The Company holds shares of issuing companies that it has determined to be instrumental in increasing its corporate value over the medium- to long-term, with the objective of maintaining and strengthening transactions with them and promoting business alliances with them. The Board of Directors annually reviews whether or not it is appropriate to hold shares based on an examination of the purpose of holding the shares and the rationale for holding each individual stock from a medium- to long-term perspective. In these reviews, the Board of Directors takes into account a comprehensive range of factors, including the significance from a strategic standpoint and in terms of business relationship, in addition to weighing dividends, transaction amounts, and other quantitative impacts against the capital cost. Based on these reviews, the Company takes steps to sell shares for which the purpose of holding has diminished. In the fiscal year under review, the Company sold shares in a total of 11 companies (all shares in five companies, some shares in six companies) for a total of ¥24.1 billion.
In principle, the Company aims to sell all shares of listed companies with which it currently cross-holds shares while coordinating with these listed companies.
If another company with which Teijin has cross-held shareholdings decides to sell cross-held shares, Teijin will appropriately cooperate and will not try to prevent their sale.

  1. Note:The amount sold is the amount of listed shares on Teijin Limited's non-consolidated basis.

(2) Standards for Exercising Voting Rights in Cross-Shareholdings

Regarding the exercise of voting rights related to shares held, the Company decides to vote for or against each proposal on its merits from the perspective of improving its own medium- to long-term corporate value and the shareholder value of the company in which it has invested. For proposals that could have a significant impact on the corporate value of the company in which it has invested, Teijin takes care to gather and scrutinize the necessary information before making a decision.

Major Initiatives for Strengthening Governance

1999
  • Reduced the number of directors from 24 to 9
  • Introduced the corporate officer system
    →Accelerating decision-making for execution of business and clarifying system of responsibility
  • Established Advisory Board
  • Appointed three independent outside statutory auditors (comprising the majority of the Board of Statutory Auditors)
2003
  • Appointed three independent outside directors
2012
  • Appointed four independent outside directors
2015
  • Established Nomination Advisory Committee and Compensation Advisory Committee
2021
  • Ensured that an outside director will always chair the Board of Directors
  • Shortened the term of Chairperson (internal regulation)
  • Revised the composition of the Nomination Advisory Committee and the Compensation Advisory Committee (now all outside directors participate in these committees)
  • Created a general rule that the role of Senior Advisor will only be established when there is a vacancy in the Chairperson post
  • Abolished the honorary advisor system *
  • Abolished the advisor/special advisor system
  • Revised officer compensation system, introducing "restricted stock" and "performance share units" compensation
2022
  • Revised the structure and functions of the Advisory Board (the role of chair is now held by the outside director who chairs the Board of Directors while the nomination and compensation advisory functions of all directors, including the CEO and Chairperson, were consolidated into a single function in the form of the Nomination Advisory Committee or the Compensation Advisory Committee)
2023
  • Revised the composition of the Board of Directors (raised the ratio of independent outside directors on the Board to 50%)
2024
  • Reduced the number of Board members from eight to seven (increasing the ratio of independent outside directors to a majority on the Board)
  1. *Applicable from the current Senior Advisor

Organization Structure: Company with an Audit & Supervisory Committee

(As of June 2025)

Officer Compensation

Teijin's policy for determining the individual compensation of its directors is reviewed annually for its appropriateness by the Compensation Advisory Committee, which consists of a majority of independent outside directors, and approved by resolution of the Board of Directors. These deliberations by the Compensation Advisory Committee take into consideration changes in the business environment as well as the opinions of shareholders and investors, while being informed by third-party organizations with extensive global experience and expertise.

Starting in fiscal 2021, Teijin introduced a direct stock-based compensation system (restricted stock compensation and performance-linked stock compensation) as a medium- to long-term incentive to further enhance the creation of corporate value from a medium- to long-term perspective, including sustainability and ESG, from a corporate governance and stakeholder perspective. Additionally, in fiscal 2024 the Company revised this stock-based compensation system to enhance its practicality by introducing a mechanism to address tax obligations associated with stock compensation, with the aim of further encouraging contributions to maximizing the share price.

Basic Policy on Compensation Systems
  • The system should motivate employees to achieve short-, medium-, and long-term management targets, as well as enhance awareness of contributing to medium- to long-term increases in profits and corporate value.
  • The system should be closely linked to the Company's performance and highly transparent and objective.
  • The system should be primarily focused on sharing value with stakeholders and enhancing management's awareness of the interests of shareholders.
  • The system should maintain sufficient compensation levels and content to act as incentives to secure high-quality global management personnel.

Officer Compensation System

The compensation ratio for internal directors who also serve as corporate officers is as follows.

Position Fixed compensation Variable compensation Total
Basic compensation Performance-linked compensation Restricted stock compensation Performance-linked stock compensation
President & Representative Director, CEO 45% 20% 10% 25% 100%
Other directors 50% 25% 10% 15% 100%

Fixed compensation

Basic compensation A fixed amount is paid in the form of basic compensation to directors according to their position/job grade.

Variable compensation

Performance-linked compensation Performance-linked compensation is provided based on the performance targets of individual directors, including adjusted operating income, ROIC based on after-tax adjusted operating income and non-financial indicators (safety), with an eye on recovering fundamental profitability and business portfolio transformation.
Restricted stock compensation Restricted stock and performance share units equivalent to the standard amount determined based on position/job grade are provided.
Performance-linked stock compensation In order to enhance corporate value and shareholder value over the medium- to long -term, restricted stock and performance share units are provided in accordance with the rate of achievement of targets, based on the performance indicators of ROE, Total Shareholder Return, and sustainability.
  1. Notes:1.A stock unit indicates that the Company will pay an amount equivalent to the price of one ordinary share per unit.
  2. Notes:2.Internal directors who do not serve as executive officers are not eligible to receive restricted stock compensation and performance-linked stock compensation and only receive monetary compensation in accordance with their assigned duties.
  3. Notes:3.Outside directors and statutory auditors are not eligible to receive restricted stock compensation and performance-linked stock compensation and only receive basic compensation.

(As of September 2024)

Officer Compensation Amounts (Fiscal 2023)

Position Total compensation amount (millions of yen) Total compensation amount by type (millions of yen) Number of officers receiving compensation
Basic compensation Performance-linked compensation Restricted stock Performance share units
Directors (excluding outside directors) 248 184 28 35 - 7
Statutory auditors (excluding outside statutory auditors) 76 76 - - - 2
Outside directors 72 72 - - - 5
Outside statutory auditors 41 41 - - - 4
  1. Notes:1.All four internal directors appointed at the 157th Ordinary General Meeting of Shareholders held on June 21, 2023, offered to decline some of the performance-linked compensation (¥24 million in total for the four directors) out of consideration of the business situation in fiscal 2023. Following deliberations by the Compensation Advisory Committee, a decision was made to reduce the amount of performance-linked compensation by the offered amount. The total amount of compensation of ¥248 million and performance-linked compensation of ¥28 million shown above do not include the reduced amount of compensation.
  2. Notes:2.Since the targets for the fiscal year under review were not achieved, the portion of performance share unit compensation for directors (excluding outside directors) corresponding with business execution was not granted.