Governance

The Group will establish effective governance frameworks to ensure the transparency, objectivity, and fairness of the management of the companies and earn society’s trust everywhere it operates. The Board of Directors recognizes fiduciary responsibilities to all stakeholders, including shareholders and investors, and supervises the Group’s overall management by taking responsibility for the Company’s sustainable growth and maximization of mid- to long-term shareholder value (MSV) through the appropriate exercise its authority.

Effectiveness evaluation (for previous years)

To bolster the efficacy of our Board of Directors and pursue the sustainable Maximization of Shareholder Value, we conduct a comprehensive evaluation of the Board’s performance. In 2023, under the leadership of the Board Chair and the Nomination Committee Chairperson, we facilitated discussions during Board meetings, evaluating effectiveness through surveys distributed to all Directors and Executive Officers. Additionally, we remain committed to ongoing improvement, actively addressing any issues surfaced during the evaluation process throughout the year. Moving forward, we remain open to third-party evaluations should they be deemed necessary.

Effectiveness evaluation 2020-2024

FY2020	Issues to strengthen efforts on Strengthen functions of nomination and remuneration including supervision of succession planning and establishment of a transparent, objective and competitive remuneration structure Leverage investor feedback Strengthen delegation of authority to establish a monitoring model Reinforce supervision and deepen discussion on the Medium-Term Plan Broaden and deepen discussions on important agendas such as strategy and capital policy Enhance the audit function	Main initiatives Formulate Remuneration Philosophy and strengthen the monitoring of the Representative Executive Officer and communication with the business execution Deepen discussions including those from the perspective of investors, based on information obtained from the business execution Delegate a substantial authority to the business execution Expand and enhance supervision and discussion on the progress in the formulation of the Medium-Term Plan Broaden and deepen strategic discussions and achieve the acquisition of 100% ownership of the Asian JVs Strengthen the Audit on Audit system based on the characteristics of our operating regions
FY2021	Issues to strengthen efforts on Upgrading the monitoring model Enhancement of discussion of important agenda items Further reinforcement of audit Reinforcement of nominating function	Main initiatives Increased separation of execution and supervision and established a system that enables the fulfillment of both roles For M&A projects, supported the implementation of growth strategies through appropriate risk-taking by executive departments Established the auditing system for each partner company that seeks to grow autonomously under the Co-President structure Transitioned to the Co-President structure through a speedy and smooth Presidential succession
FY2022	Issues to strengthen efforts on Enrichment of discussion on growth strategy Improvement of the operational efficiency of Board meetings Further contribution of Independent Directors Enhancement of the functions of The Secretariat of Board of Directors	Main initiatives Spent more time discussing medium to long-term management strategies from a broad perspective Created and improved an environment for concentrating on growth strategy discussions, such as brainstorming Through implementation of the Board of Directors operations based on the monitoring model Early preparation of annual plans and reexaminations of standards for agenda items at Board meetings Addition of two non-Japanese Independent Directors to the Board members helped incorporate different viewpoints in the Board discussions Enhanced efficiency and accuracy of information sharing by distributing Board materials early, changing the format, and providing versions in both Japanese and English
FY2023	Issues to strengthen efforts on Upgrading operation of the Board of Directors Contribution of Independent Directors Engagement in succession planning	Main initiatives Establishing an annual plan with carefully selected agenda items for improved quality of Board of Directors’ discussions, enabling increased focus on medium- and long-term strategy along with other priority topics Improving the quality of the Board of Directors’ discussions and decision-making by regularly convening the Meeting of the Independent Directors, thus fostering increased information sharing and exchanges of opinions among Directors even outside of meetings. Regular monitoring of the Group’s human capital enhancement by the Co-Presidents
FY2024	Issues to strengthen efforts on Enrichment of discussion on growth strategy Improvement of the operational efficiency of Board meetings Thorough engagement in succession planning Further fine-tuning of the “Audit on Audit” framework	Main initiatives To enable comprehensive discussions on growth strategies — one of the key focus areas of the Board of Directors — we developed an annual schedule of brainstorming sessions at the beginning of the fiscal year, ensuring sufficient opportunities for meaningful dialogue. Furthermore, we leveraged platforms such as the Meeting of the Independent Directors to promote effective communication among Directors, thereby enhancing the quality of discussions. We created and disseminated the annual Board of Directors meeting schedule well in advance while minimizing regular agenda items. In January 2024, we established the Board of Directors Operations Guidelines to ensure the timely submission of materials by the executive team, fostering an environment where Directors can focus more effectively on discussions. Through reports from the Co-Presidents on the status and evaluation of human capital within the Group, the Board gained a comprehensive understanding of the updated situation and maintained consistent communication with key executives. Additionally, we appointed a new Independent Director bringing extensive global corporate management experience and expertise in the chemical and paint industries, along with expertise in M&A and other strategic initiatives. To establish an “Audit on Audit” framework suited to the Company’s role as a pure holding company in the Asset Assembler model, the Board engaged in in-depth discussions on the optimal approach to audits in its capacity as a monitoring board.

Transition of growth strategy discussions

Fiscal Year^*1	2020	2021	2022	2023	2024
Types of growth strategies discussed at Board of Directors meetings (ratio of agenda items)	■Strategies for existing businesses…57% ■Medium to long-term management strategy…11% ■M&A…32%	■Strategies for existing businesses…13% ■Medium to long-term management strategy…9% ■M&A…78%	■Strategies for existing businesses…10% ■Medium to long-term management strategy…40% ■M&A…50%	■Strategies for existing businesses…13% ■Medium to long-term management strategy…31% ■M&A…56%	■Strategies for existing businesses…29% ■Medium to long-term management strategy…14% ■M&A…57%
Ratio of meetings, including Board of Directors meetings, meetings of the Independent Directors, and offsite meetings (ratio of meetings held)	■Board of Directors meeting…62% ■Meeting of the Independent Directors…33% ■Offsite meetings, Training session and others…5%	■Board of Directors meeting…81% ■Meeting of the Independent Directors…9% ■Offsite meetings, Training session and others…10%	■Board of Directors meeting…44% ■Meeting of the Independent Directors…34% ■Offsite meetings, Training session and others…22%	■Board of Directors meeting…38% ■Meeting of the Independent Directors…33% ■Offsite meetings, Training session and others…29%	■Board of Directors meeting…27% ■Meeting of the Independent Directors…23% ■Offsite meetings, Training session and others…50%
Growth strategy discussions	Focus on strategies for the growth of existing businesses The Board of Directors mainly discussed strategies for the growth of existing businesses to lay the groundwork for formulating Medium-Term Plan (FY2021-2023)	Laser-focus on discussions about important agenda items, such as M&A Following the shift to autonomous and decentralized management, the number of M&A deals conducted mainly by Partner Company Groups (PCG^*2) increased.	More thorough growth strategy discussions More and better offsite meetings and other occasions for discussions and more thorough discussions using a broad perspective about medium and long-term management strategies at Board of Directors meetings.	Enhanced focus on medium to long-term strategy Developed our Medium-Term Strategy and deepened discussions focused on future growth opportunities, including M&A. Offsite meetings and study sessions are now well-integrated into our planning process.	Expanded Use of Offsite Meetings and Study Sessions The proportion of offsite meetings and study sessions aimed at fostering deeper discussions has increased significantly, resulting in more active dialogue across a wide range of forums beyond the Board of Directors.

*1 The fiscal year runs from April of each year to March of the following year (e.g., Fiscal Year 2020: April 2020 to March 2021) *2 PCG: Group of partner companies organized by region or business

Links to related pages

Independent Directors Discussion about Corporate Governance

Discussions by the Board of Directors

Reasons for Selection as Independent Directors