For Investors

Summary of Corporate Governance

Basic Concept

Based on the basic mission of the sustainable improvement of shareholder value, the Teijin Group has been strengthening its governance to fulfill its responsibilities to various stakeholders. The basics of corporate governance are improving transparency, ensuring fairness, accelerating decision-making, and ensuring the independence of monitoring and supervision, and we are working to establish and strengthen an effective corporate governance system through items such as a "Board of Directors including Independent Outside Directors and a Corporate Officer System," a "Board of Statutory Auditors System including Independent Outside Statutory Auditors," and a "Nomination Advisory Committee and Compensation Advisory Committee in which Independent Outside Directors constitute the majority." 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 Board of Statutory Auditors

The current Companies Act requires the Board of Directors to appropriately carry out two roles: engaging in important business judgment and decision-making, and monitoring and supervising management. To properly fulfill these roles, the Company deems that a corporate governance system based on two core functions-(1) the execution of business led by the internal directors who are corporate officers and (2) management oversight and supervision focused on by outside directors and the Chairperson of the Board of Directors as well as monitoring and auditing carried out by statutory auditors and the Board of Statutory Auditors-is appropriate. Therefore, the Company has decided to continue to be a company with a Board of Statutory Auditors, for the time being.

(As of September 2024)

Board of Directors

(As of September 2024)

The Board of Directors meets once a month, in principle, and deliberates and determines/approves important matters, such as Groupwide management policies and plans, as well as any other items required by laws, regulations, and the Company's Articles of Incorporation, in addition to supervising the execution of duties by directors.

In accordance with the Regulations of the Board of Directors, matters on the agenda before the Board of Directors are clearly defined. To expedite decision-making and clarify responsibility for business execution, important matters related to the business execution of the Teijin Group (including individual medium- and short-term plans and critical matters for each business and function) are appropriately delegated to respective corporate officers. The Board of Directors is limited to a maximum of 10 members as stipulated in the Articles of Incorporation, for the purpose of streamlining decision-making and clarifying responsibilities for business execution. Under this framework, Teijin has introduced a corporate officer system with significant delegation of authority. Currently, the Board of Directors comprises seven members, including two women, and four of these members are outside directors who meet the requirements of independent directors as defined by the Company. The Articles of Incorporation stipulates that the term of office for directors is one year.

Candidates for director are selected by the Board of Directors based on their character and insights, as well as their abilities and past achievements, ensuring they are suitable for top management. These candidates are then recommended to the General Meeting of Shareholders for approval.

The chair of the Board of Directors' meetings is selected from the outside directors as part of the Board's efforts to separate monitoring and supervision from business execution.

Board of Directors' Meetings in Fiscal 2023

Number of Meetings Held

13

Main Agenda Items and Discussion Topics

Management and Business Strategies
  • Long-term vision revision and ideal future business portfolio
  • New Medium-Term Management Plan 2024-2025
  • Initiatives related to human capital and intellectual properties
  • Promotion of DX activities
  • Rationale behind the public listing of both parent and subsidiary companies
  • Important investment projects for business strategies
  • Monitoring progress of important investment projects, etc.
  • Near-term management plans for fiscal 2024

    etc.

Corporate Governance
  • Evaluation of the Board of Directors' effectiveness
  • Reports on the results of the effectiveness evaluation of internal control system and basic policy for internal control system
  • Submission of the Corporate Governance Report
  • Status of cross-shareholdings
  • Basic plans and annual plan for TRM
  • BCP response, including supply chain
  • Audit plans of the statutory auditors

    etc.

Financial Results, IR, and General Meeting of Shareholders
  • Financial results and performance forecasts
  • Dividends from surplus
  • Status of stakeholder communication initiatives
  • Summary of the Ordinary General Meeting of Shareholders

    etc.

Appointment and Compensation of Directors and Officers
  • Appointment and retirement of and commission work related to Teijin Group corporate officers
  • Personnel systems and compensation systems and amounts for directors and Teijin Group corporate officers

    etc.

Evaluation of Board of Directors' Effectiveness

In order to further ensure the effectiveness and enhance the functions of the Board of Directors, the Company conducts analysis and evaluation of the effectiveness of the entire Board of Directors once a year. The method of the Company's Board of Directors' effectiveness evaluation for fiscal 2023 and an overview of the results are as follows.

Analysis and Evaluation Method

A self-evaluation questionnaire of all directors and statutory auditors (13, including outside directors and outside statutory auditors) where the respondents gave their name was conducted based on the advice of external experts. The evaluation points in the questionnaire were compiled from the following 10 fields. Respondents evaluated the questionnaire's 66 questions based on a five-step scale and made comments. In addition, external experts conducted interviews with a total of seven directors and statutory auditors based on the questionnaire, aiming to deepen understanding of the management issues to be discussed at the Board of Directors' meetings and to formulate a concrete action plan to address the issues. Based on the results of these questionnaires and interviews, deliberations were held by the Board of Directors regarding the Board's effectiveness as well as issues to be addressed and improvement measures to be implemented.

  1. 1.Board of Directors
  2. 2.Composition
  3. 3.Pre-meeting preparations, etc.
  4. 4.Operations
  5. 5.Deliberation
  6. 6.Nomination Advisory Committee
  7. 7.Compensation Advisory Committee
  8. 8.Statutory auditors
  9. 9.Self-evaluation
  10. 10.Other

Evaluation Results

The results of the Board of Directors' effectiveness evaluation conducted via the aforementioned process found that there was no issue with the current corporate governance system and its implementation, and that the Company's Board of Directors was generally functioning properly and its effectiveness was verified.

Status of Response to Issues Recognized in the Fiscal 2023 Evaluation

  1. (1)Discussion on the Business Portfolio

    At the Board of Directors' meetings held in fiscal 2023, during discussions about the new medium-term management plan, which was unveiled in May 2024, we confirmed the importance of thoroughly managing the business portfolio and reviewing existing businesses. Teijin's objective is to tap into growth, particularly in key industrial sectors. In the medium- to longterm, the Company aims to transform its business model from a conventional focus on material and product to one that emphasizes value-driven businesses development centered on the functional Materials Business, processing/solution-based businesses, and the service platform developed in the home healthcare business. By honing our ability to integrate different technologies and functions and to align with customer needs, we will be able to respond to increasingly complex customer demands. The Board also committed to continuing discussions about these topics, while monitoring progress on the new medium-term management plan.

  2. (2)Discussion on Allocation of Management Resources to Human Capital Based on (1) Above

    In fiscal 2023, the Board of Directors received reports on the direction and initiatives related to investments in human capital. During discussions about the new medium-term management plan, the Board formulated a human resources strategy with two main pillars: "assigning the right people to the right positions to implement strategies" and "taking measures to empower human resources." Concrete action plans were set in motion. The Board committed to continuing these discussions in the context of the new medium-term management plan.

  3. (3)Discussion on Initiatives and Utilization of Data and Digital Technologies in Business Based on (1) Above

    In fiscal 2023, the Board of Directors received reports on the training of DX talent as part of discussing the new mediumterm management plan. The Board reiterated that the Company will actively engage in DX promotion activities utilizing digital technologies and IT as key initiatives for fostering innovation. The Board also agreed to continue these discussions in the future.

  4. (4)Discussions on Business Continuity Plans Including the Supply Chain

    At the Board of Directors' meetings held in fiscal 2023, amid regular reports to the Board by the TRM Committee, which is chaired by the CEO, concerning strategic risk and operational risk, there was a report that the maintenance of customeroriented BCPs and business continuity management by business was being conducted. The Company plans to continue discussions to further promote its BCP response.

  5. (5)Discussions on the Rationale behind the Public Listing of Both Parent and Subsidiary Companies

    At the Board of Directors' meetings held in fiscal 2023, in the context of the new medium-term management plan, the Company discussed the rationality of maintaining the listing of Infocom Corporation and Japan Tissue Engineering Co., Ltd. (J-TEC), which are listed subsidiaries of the Company. From the standpoint of optimizing the corporate value of J-TEC, and not just the Group itself, the Company decided it was rational to maintain its listing. It is necessary to regularly confirm the listing of the parent and its subsidiaries. At the Board of Directors' meetings in fiscal 2024, the Company plans to continue to discuss the rationality of maintaining listings on the stock exchange.

    The Company has considered all options regarding Infocom while exploring further Group synergies, and decided that to improve the corporate value of the Teijin Group and Infocom, and in the best interests of their shareholders, the optimal course of action is to sell Infocom shares to the best owner possible. Accordingly, at the Board of Directors' meeting held on June 18, 2024, Teijin decided to sell all of its Infocom shares. Although Infocom will no longer be a consolidated subsidiary after the share sale, Teijin and Infocom will continue their business relationship in the IT field as before. The Company will maintain IT-related governance following the completion of this transaction.

Issues Identified in Fiscal 2023 and Measures Going Forward

We identified the following issues as a result of discussions held at Board of Directors' meetings based on the evaluation of effectiveness conducted in fiscal 2023 and will further promote efforts to address them.

  1. i.Confirmation of progress on medium- and long-term business plans and reevaluations of strategies as necessary
  2. ii.Discussions about sustainability strategies
  3. iii.Discussions about DX strategies
  4. iv.Discussions about human capital
  5. v.Measures to further improve effectiveness of the Board of Directors
  6. vi.Discussions on the rationale behind the public listing of both parent and subsidiary companies

The Company aims to increase the effectiveness of the Board of Directors and further strengthen corporate governance through these measures.

Board of Statutory Auditors / Committee of Teijin Group Statutory Auditors

(As of September 2024)

The Company's statutory auditors possess a high level of expertise and experience in fields such as law, finance, and accounting. These statutory auditors oversee the execution of duties by the directors based on their abundance of expert insight. Furthermore, the Committee of Teijin Group Statutory Auditors, which comprises statutory auditors of Group companies and other members, meets regularly to enhance the effectiveness of Groupwide monitoring and audits.

Board of Statutory Auditors in Fiscal 2023

Basic Policy

  • Conduct audits with a focus on the soundness of the Company's business activities
  • Assess the situation of increasingly important core overseas businesses
  • Emphasize preventative audits through an appropriate approach toward risks
  • Collaborate appropriately with the accounting auditors and the Corporate Audit Department

Number of Meetings Held

12

Key Audit Matters

Auditing Perspective Key Audit Matters
Governance
  • Situation concerning business management and internal controls at important overseas subsidiaries
  • Governance structure at listed subsidiaries
  • Response to Japan's Corporate Governance Code
Corporate Ethics and Compliance
  • Response to social issues such as climate change and respect for human rights
  • Establishment and operation of compliance structure (including internal whistleblowing system)
  • Establishment and operation of internal control systems
Preparation for Operational Risk
  • Response to human resource management (human capital)
  • Production-related: Mitigation measures for ESH-related accidents, establishment and operation of production facilities and their management systems
  • Response to information security risk
  • Effectiveness of head office functions, including second line of defense
  • Monitoring of preparations to voluntarily adopt IFRS (in fiscal 2024)
Preparation for Strategic Risk
  • Medium- to long-term business portfolio (establishment of targets and realization process)
  • Monitoring of the implementation status of response measures to underperforming businesses/companies

Skills Matrix

Directors

Directors Independent Outside
Directors
Akimoto
Uchikawa
Naohiko
Moriyama
Noboru
Yamanishi
Masaru
Onishi
Masaaki
Tsuya
Tamie
Minami
Reiko
Kusunose
Management/
Reform
Management of a
(listed) company
Restructuring of
business/
Internal reforms
Business Business of
the Company/
Related fields

Materials

Healthcare

Materials

Aerospace
industry

Automobile
industry

Healthcare

Automobile
industry
Functions/
Foundation
Production/
Technology/
Quality/IP/DX
Management of
global
organizations
Human capital/
DE&I
Finances/
Accounting/IR
Risk
management/
Legal affairs
Environment/
Society
Environment

(As of September 2024)

Auditors

Auditors Independent Outside Statutory
Auditors
Masanori Shimai Tomoko Torii Hitomi Nakayama Jun Arima Koichi Tsuji
Management/
Reform
Management of a
(listed) company
- - - - -
Restructuring of business/
Internal reforms
- - - - -
Business Business of the Company/
Related fields
- - - - -
Functions/
Foundation
Production/Technology/
Quality/IP/DX
Management of
global organizations
Human capital/DE&I
Finances/
Accounting/IR
Risk management/
Legal affairs
Environment/
Society
Environment

(As of September 2024)

  1. Note:This table lists skills that members are expected to contribute in fulfilling their roles and responsibilities on the Board of Directors and the Board of Statutory Auditors. It does not list all of their skills. Functions/Foundation show around two items.

Status of Activities of Directors, Statutory Auditors, and Non-Japanese Experts

We aim to build a well-balanced Board of Directors and Board of Statutory Auditors by ensuring that each member contributes specific skills deemed particularly valuable in fulfilling the roles and responsibilities of the Board of Directors and the Board of Statutory Auditors, drawing from their diverse knowledge, experience, and abilities. Additionally, we are committed to enhancing diversity, including gender diversity, with over 30% of our Board members being women (Tamie Minami, Reiko Kusunose, Tomoko Torii, and Hitomi Nakayama). Notably, Tamie Minami is a foreign national.

Name Position at the Company Term of appointment Expected role Nomination/
Compensation Advisory Committee
Advisory Board Attendance
(fiscal 2023)
Directors Akimoto Uchikawa President and CEO,
Representative Director of the Board
3 years Strong leadership for driving internal transformation and creating systems for enhancing execution capabilities, realization of medium-term management plan announced in May 2024 Board of Directors: 13/13 times
Naohiko Moriyama Senior Executive Officer,
Representative Director of the Board
3 years Leadership for transformation and creating and advancing growth strategies, strategic and proper addressing of various barriers and variable factors that arise when advancing the medium-term management plan Board of Directors: 13/13 times
Noboru Yamanishi Executive Officer,
Member of the Board
1 years Maintain and strengthen production and manufacturing foundation for maintaining and improving stability in production at manufacturing sites Board of Directors: 10/10 times
Independent Outside
Directors
Masaru Onishi Director 5 years Experience as president and chairman of a listed company, abundant business experience, decision-making based on exceptional insight, supervision of business execution, advice to management Board of Directors: 13/13 times
Masaaki Tsuya Director 2 years Experience as CEO and chairman of a listed company, abundant business experience, decision-making based on exceptional insight, supervision of business execution, advice to management Board of Directors: 13/13 times
Tamie Minami Director 1 years Experience as a global manager at a global company in the healthcare and industrial materials-related business, decision-making, supervision of business execution and advice to auditors and management, based on broad knowledge and strong insight from a DE&I perspective Board of Directors: 10/10 times
Reiko Kusunose Director - Experience in corporate reforms at automobilerelated companies, global organizational management, decision-making, supervision of business execution and advice to auditors and management, based on broad knowledge and strong insight from a DE&I perspective Appointed in June 2024
Auditors Masanori Shimai Full-Time Statutory
Auditor
5 years Extensive knowledge and experience in management and finance, supervision and advice for overall management based on deep understanding of businesses Board of Directors: 12/13 times
Board of Statutory Auditors: 12/12 times
Tomoko Torii Full-Time Statutory
Auditor
- Abundant business experience in healthcare based on knowledge in science and technology, improve effectiveness of business audits based on understanding of business activities and corporate culture Appointed in June 2024
Independent Outside Statutory
Auditors
Hitomi Nakayama Statutory
Auditor
7 years Based on knowledge and experience as an attorney, contribute to maintenance and improvement of compliance, supervise and advise management Board of Directors: 13/13 times
Board of Statutory Auditors: 12/12 times
Jun Arima Statutory
Auditor
4 years Based on extensive knowledge of government policy, etc., supervise and advise management on the environment and energy, and global organizational management Board of Directors: 13/13 times
Board of Statutory Auditors: 12/12 times
Koichi Tsuji Statutory
Auditor
1 years Based on knowledge and experience as a public certified accountant, contribute to maintenance and improvement of compliance, supervise and advise management Board of Directors: 10/10 times
Board of Statutory Auditors: 9/9 times
Non-Japanese
Experts
Thomas M. Connelly, Jr. *1 Advise on improving corporate value based on abundant global corporate experience and business experience -
Gerardus Johannes Wijers *2 Advise to management based on deep insight into the economy and management, backed by extensive global corporate experience -
  1. *1Former CEO of the American Chemical Society
  2. *2SEO Economisch Onderzoek, Chairman-Supervisory Board

(As of September 2024)

Reasons for Selecting Skill Items

Category Skill items Reason for selecting skill items
Management/Reform Management of a (listed) company It is important to identify risks and opportunities in managing listed companies in light of the business environment, make proper decisions from an overall perspective to improve corporate value, and supervise accordingly.
Restructuring of business/Internal reforms It is important to have experience and knowledge for leading change management, such as business restructuring and internal reforms, while transforming the business portfolio.
Business Business of the Company/Related fields It is important to have knowledge in respective fields when making major decisions and supervising business and taking on appropriate risks.
Functions/Foundation Production/Technology/Quality/IP/DX It is increasingly important to implement initiatives in production innovation, quality management, reliability assurance, R&D, IP, and DX in order to improve competitiveness and earnings capabilities.
Management of global organizations It is important to have knowledge of global organizational management, encompassing different value systems and challenges, in order to maximize organizational capabilities and manage risks.
Human capital/DE&I It is essential to "assign the right people to the right positions to implement strategies" and "take measures to empower human resources" as human capital initiatives and transform the corporate culture by instilling the Teijin Group's purpose in order to increase the effectiveness of business strategies.
Finances/Accounting/IR It is important to communicate with capital markets and have financial strategies and capital policies for a solid financial foundation that supports sustainable growth and portfolio transformation.
Risk management/Legal affairs It is essential to maintain and improve corporate value by appropriately dealing with increasingly complex and sophisticated risks by gathering and analyzing information.
Environment /Society Environment It is important to have knowledge and experience about the global environment in particular when taking steps to realize a sustainable society as "a company that supports the society of the future."

Nomination Advisory Committee / Compensation Advisory Committee

The Nomination Advisory Committee and the Compensation Advisory Committee are established as consultative bodies of the Board of Directors to further enhance the transparency concerning the appointment of directors and officers. Each committee deliberates on the following matters and makes proposals and recommendations to the Board of Directors.

Nomination Advisory Committee

  • Deliberation on CEO succession and recommendation of successor
  • Selection and dismissal of candidates for representative directors
  • Selection and dismissal of candidates for directors (including Chairperson)
  • Selection and dismissal of candidates for statutory auditors
  • Promotion, demotion, selection, and dismissal of internal directors and senior management; appointment and dismissal of Senior Advisors
  • Deliberation on matters concerning the criteria for independence of outside directors and outside statutory auditors
  • Selection of candidates for CEO and review of the CEO's plan and progress thereof for developing potential successors

Compensation Advisory Committee

  • Deliberation on matters concerning the compensation system of corporate officers of the Teijin Group
  • Deliberation on matters concerning the level of compensation of corporate officers of the Teijin Group
  • Evaluation on the performance of and deliberation on matters concerning the amount of compensation for internal directors (including the CEO) and senior management

(As of September 2024)

Four independent outside directors, the Chairperson of the Board of Directors (currently, the Chairperson's post is vacant), and the CEO participate as members of the Company's advisory committees, which are chaired by an independent outside director. For matters concerning the current CEO, in principle, the CEO leaves the room and does not participate in the deliberations. For matters concerning the Chairperson, the Chairperson leaves the room and does not participate in the deliberations.

Board of Advisory Committees' Meetings in Fiscal 2023

Number of Meetings Held

Nomination Advisory Committee: 8
Compensation Advisory Committee: 8

Main Agenda Items and Discussion Topics

Nomination Advisory Committee
  • Review of CEO reappointment and CEO's succession plan and progress
  • Revision to the corporate officer system
  • Appointment of directors and officers in fiscal 2024
  • Independence of outside directors
Compensation Advisory Committee
  • Revision to corporate officer compensation system
  • Examine levels of compensation for corporate officers
  • Fiscal 2022 performance evaluation and calculation of compensation for senior management and internal directors, including the CEO

Advisory Board

(As of September 2024)

The Advisory Board has been established to improve management quality based on advice offered by external experts, and operates as a consultative body to the Board of Directors. The Advisory Board is made up of five to seven outside advisors (currently, it comprises four outside directors and two non- Japanese experts) as well as the Chairperson of the Board of Directors (currently, the Chairperson's post is vacant) and the CEO. The Advisory Board is chaired by the independent outside director who chairs the Board of Directors.

The Advisory Board discusses the following matters and provides relevant advice to the Board of Directors.

  1. (i)Items pertaining to the Company's strategies for addressing important issues (portfolio strategy, human capital strategy, etc.)
  2. (ii)Items related to corporate governance, CSR, and corporate ethics, etc.
  3. (iii)Items concerning the Company's performance
  4. (iv)Items pertaining to internal/external politics, the economy, and laws and legislation
  5. (v)Other items related to overall business management

Group Strategy Committee / Group Management Committee

Important matters related to business execution of the Company and the Teijin Group, for which authority has been delegated by the Board of Directors, are decided by the CEO through deliberation in the Group Strategy Committee, which meets at least twice a month in principle, and the Group Management Committee, which meets once a month in principle. The Group Strategy Committee consists of the CEO, chief officers, and other members designated by the CEO. The CEO convenes and chairs the committee meetings. The Group Management Committee comprises the CEO, chief officers, general managers of the Company's business units, and others designated by the CEO. The CEO convenes and chairs the meetings of this committee as well. In addition to these members, the committees are also attended by the internal fulltime statutory auditors.

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.