Corporate Governance

One of our most important management tasks is to consistently increase enterprise value by means of highly efficient and transparent management, while fulfilling our social responsibility and contributing to the welfare of the community based not only on compliance with laws, regulations, and our articles of incorporation, but also on corporate ethics. Achieving this will enable the azbil Group to live up to the trust placed in us by shareholders and all other stakeholders.

Azbil Corporation's report on corporate governance (full text) is available here.

Basic Policy for Corporate Governance

(1) Ensuring shareholder rights and neutrality
So as to substantively ensure the rights of our shareholders, Azbil Corporation will adopt appropriate measures in accordance with the law and other regulations, and give due consideration to foreign and minority shareholders, thus creating an environment in which all shareholders can properly exercise their rights equally.

(2) Cooperation of stakeholders other than shareholders
In order to achieve sustainable growth and increase corporate value over the medium to long term, we believe that the Company must be strongly aware of its corporate social responsibility and conduct management that is appropriate for our various stakeholders. In order to achieve this, we have adopted the corporate philosophy of “human-centered automation” to realize safety, comfort and fulfillment in people's lives and contribute to the global environment. To this end, we have instituted a Business Conduct Policy and established a Code of Conduct to provide specific guidelines for all officers and employees of the Company and the azbil Group. Also, we set our SDGs (basic goals and targets) toward achieving the UN’s SDGs. With the SDGs as our new guidepost, we aim to connect the philosophy, Guiding Principles, code of conduct, and management strategy “in series” leading to a sustainable society and to realize a balance between resolving social issues and sustainable growth. As regards achieving diversity in human resources, we are actively working to promote the advancement of female employees based on the recognition that having diverse values within a company is essential when it comes to achieving sustainable growth.
With regard to the internal reporting system, we believe it is important to (a) encourage employees to use this system by dispelling any concerns that in so doing they might be put at a disadvantage, and (b) ensure that the information thus conveyed is used appropriately. We have therefore established a user-friendly reporting & consultation system—the CSR Hotline—which ensures that the information received is reported to the president & CEO, Audit & Supervisory Board members, and outside directors.

(3) Ensuring appropriate disclosure of information and transparency
We are committed to disclosing information that will ensure transparency and fairness in decision-making and result in effective corporate governance. Specifically, we believe it is important that all stakeholders have a clear idea of financial information (the company’s financial condition, business results, etc.), non-financial information (management strategy, management plans, key issues, etc.), and other information (risks, governance, etc.). Therefore, in addition to the information that we are legally obligated to disclose, we strive to publish additional information. For example, we disclose such information as the way in which candidates for the Board are elected and the policy for deciding the directors’ remuneration. Going forwards, we will continually strive to provide more information to stakeholders and to ensure transparency. And, so as to ensure correct auditing by accounting auditors, the company provides adequate time for audits, and conducts regular interviews between accounting auditors and the president and director in charge of financial affairs. We also take such measures as implementing a quarterly report meeting attended by the accounting auditors, the Audit & Supervisory Board and the internal audit department.

(4) Responsibilities of the Board of Directors
The fundamental mission of the Board of Directors is to realize sustainable corporate growth while enhancing enterprise value over the medium to long term. As set forth in the Board Rules, important items for deliberation include our basic management strategy and plans; we reach appropriate management decisions through free, open-minded and constructive discussions. In addition, to ensure transparency and fairness in management, we implement timely disclosure, an internal control system and a risk management system. At the same time, there is a regular exchange of opinions between the Audit & Supervisory Board and the internal auditing department, allowing audits to be conducted properly and facilitating the expression of views on management.
We recognize the important role played by independent outside directors in ensuring that the Board of Directors fulfills its role and responsibilities. We have therefore appointed five independent outside directors with extensive experience and professional knowledge regarding corporate management and supervision. Drawing on their various fields of expertise and experience, these independent outside directors are fulfilling their responsibilities in a broad range of matters, advising on how to enhance enterprise value and overseeing management. In addition, so that the Board of Directors may effectively fulfill its role, as well as ensuring transparency and objectivity, we see it as important to promote diversity when appointing directors and Audit & Supervisory Board members; we thus take into consideration the overall balance of expertise and experience within the Board.
At a Board of Directors meeting held on May 14, 2021, we established the skills expected of the Directors with respect to the realization of the Company’s medium-term plan and other management strategies, and confirmed the independence, diversity, and expected skills of the current entire Board of Directors.
Regarding the planning for future appointments to management, the Nomination and Compensation Committee – the majority of whose members are independent outside directors – serves in an advisory role to the Board of Directors. The Committee deliberates matters relating to the preparation and selection of candidates, and keeps records of the course of these deliberations and the results. This ensures that the planning process for new appointments is impartial and objective. The Chairperson of the Nomination and Remuneration Committee, who is an independent outside director, duly reports on these deliberations to the Board of Directors. This systematic approach ensures that the Board is actively involved in the planning for new appointments, and that sufficient time and resources are allotted to the preparation of candidates.
As of June 24, 2021, there are eleven members of the Board, with outside directors making up more than one third of the total. Women and non-Japanese nationalities are represented, making the Board truly diverse.

(5) Dialogue with shareholders
In addition to fulfilling corporate accountability, we strive to develop means and initiatives to promote a constructive dialogue with shareholders and investors in order to contribute to sustainable growth and the enhancement of enterprise value over the medium to long term. As regards the publishing of management strategy and plans, we disclose basic policies such as our profit plan, and we strive to provide clear explanations of the qualitative and quantitative targets (sales figures, operating income, ROE, etc.) in the medium-term plan and others, as well as how our strategy is designed to achieve those targets.

(6) Overview of corporate governance system and reasons for adopting the system
The Board of Directors makes decisions on basic operational policy, legal issues, and other important matters, and oversees the status of business execution. Functional separation between the Executive Officers and the Board of Directors enables swift business execution and strengthens the oversight of execution. The Board of Directors is convened monthly in principle. As to Executive Officers, the management meetings which Executive Officers with titles and representatives of the Audit & Supervisory Board Members attend are held twice a month as part of ongoing initiatives to strengthen business operations through prompt decision making and strict execution.
As of June 24, 2021, the Company has appointed eleven Directors, including six (Hirozumi Sone, Kiyohiro Yamamoto, Takayuki Yokota, Masato Iwasaki, Yoshimitsu Hojo, Kazuyasu Hamada) who are involved in business execution and have accumulated experience in the Company’s business and management and five (Katsuhiko Tanabe, Takeshi Itoh, Waka Fujiso, Mitsuhiro Nagahama, Anne Ka Tse HUNG) who are Independent Outside Directors and have independence, broad experience, a wealth of expertise and knowledge, and rich diversity in the form of nationality and gender. Independent Outside Directors make up more than one third of the Board of Directors. In addition to working diligently to enhance the Company’s corporate value through appropriate oversight and advice during the decision-making process at Board of Directors meetings, these Independent Outside Directors regularly exchange opinions with the President and Group CEO. Moreover, upon collecting the self-evaluations and opinions on the effectiveness of the Board of Directors from the Directors and Audit & Supervisory Board Members each year, current evaluations and issues are shared at Board of Directors meetings as we pursue further increase of the effectiveness of the Board of Directors.
Additionally, the Company has established the Nomination and Remuneration Committee, an optional committee that serves as an advisory body to the Board of Directors. The committee’s goal is to ensure a higher level of fairness, objectivity, and transparency in the determination process of the nomination and remuneration of officers, to contribute to the Company’s enduring development and increasing medium- to long-term profitability and productivity. The committee deliberates not only the selection of Director candidates, Representative Director candidates, candidates for President & Group CEO, candidates for Chairperson of the Board, candidates for Directors who also serve as Executive Officers, the executive remuneration system, the remuneration plan, basic remuneration based on the executive remuneration system, individual performance evaluations, progress evaluation of qualitative targets, individual bonus amount, and amendments to the Director remuneration framework, but also the dismissal of Presidents & Group CEOs, Directors, Managing Executive Officers, and Directors who also serve as Executive Officers, as well as items related to the development of successors. The Chairperson of the Nomination and Remuneration Committee is elected through a mutual vote by the Independent Outside Directors. Per the regulations, the committee must be comprised of a majority of Independent Outside Directors. Currently, Katsuhiko Tanabe (Independent Outside Director) serves as the committee chairperson. Takeshi Itoh(Independent Outside Director), Waka Fujiso (Independent Outside Director), Hirozumi Sone (Representative Director) and Kiyohiro Yamamoto (Representative Director) serve as committee members, with Independent Outside Directors comprising a majority of the committee.
Furthermore, the Company is a company with Audit & Supervisory Board in which five Audit & Supervisory Board members, including three Outside Audit & Supervisory Board Members (Kinya Fujimoto, Minoru Sakuma, Fumitoshi Sato), are appointed, with two of the Audit & Supervisory Board Members (Hisaya Katsuta, Tomohiko Matsuyasu)serving on a full-time basis as of June 24, 2021. The Audit & Supervisory Board members carry out rigorous audits of the administrative decisions and execution of business by the Directors and Executive Officers, primarily from the standpoint of the legality of the execution of business. Audit & Supervisory Board Member Tomohiko Matsuyasu has served over many years in the Company’s accounting division and has experience in accounting operations. Audit & Supervisory Board Member Kinya Fujimoto has a wealth of experience and outstanding insight as a certified public accountant. Audit & Supervisory Board member Fumitoshi Sato has many years of experience as the person responsible for the creation of financial statements as the officer in charge of accounting and finance at another operating company. Thus, they have a wealth of knowledge concerning financial affairs and accounting.
We believe that enhancing the functions of the above-mentioned Board of Directors and Audit & Supervisory Board and enhancing the management of the executive officer system is effective for further strengthening our corporate governance.

Corporate Governance Framework (As of June 24, 2021)

Changes to Improve Corporate Governance

We strive to strengthen and enhance corporate governance to ensure fairness, transparency and objectivity of the management.

Overall Balance and Diversity of the Board of Directors

In a rapidly changing business environment, we believe that the Company needs a Board of Directors that offers diversity and provides a good overall balance of knowledge and experience that will contribute to the enhancement of corporate value over the medium to long term. Based on this fundamental principle, we have appointed directors with executive experience in the Company’s business and management, and also outside directors, from various backgrounds, having wide-ranging experience in corporate management and supervision, independence, extensive expertise and professional knowledge. Of the eleven (11) Directors, two (2) are women (one of whom is a foreign national). Also, at a Board of Directors meeting held on May 14, 2021, we established the skills expected of the Directors with respect to the realization of the Company’s medium-term plan and other management strategies, and confirmed the independence, diversity, and expected skills of the current entire Board of Directors. In appointment of directors, the Board of Directors selects candidates after screening by the “Nomination and Remuneration Committee,” a voluntary advisory body which consists of independent outside directors (who constitute a majority) and representative directors, headed by an independent outside director. Also, as to the Audit & Supervisory Board, we are enhancing the supervisory function through appointing three independent outside members including one certified public accountant, as well as having members who have knowledge about finance, accounting and legal affairs, and at least one member with ample knowledge of finance and accounting. Thus, we maintain the Board of Directors with a good overall balance.
As of 24 June, 2021, we have six executive directors who have experience in our business and management and five outside directors with broad experience, expertise and knowledge who are independent and diverse in such areas as nationality and gender. Outside directors now account for more than one-third of the 11-member Board of Directors.

Improving the Effectiveness of the Board of Directors

The Board of Directors makes appropriate decisions following open and constructive discussion and strives to improve corporate value over the medium and long terms. To continue fulfilling its roles and responsibilities properly, the Board of Directors identifies issues and areas requiring improvement with the aim of enhancing the Board’s effectiveness. As last year, members of the Board of Directors and Audit & Supervisory Board have conducted annual self-evaluations and have collected views on the (1) Size and composition of the Board of Directors; (2) Management status of the Board of Directors; (3) Support systems and communication with outside directors and Audit & Supervisory Board members; (4) Decision-making process of the Board of Directors; and (5) activities of the Nomination and Remuneration Committee. Based on this information, the Board of Directors has made an assessment of its current effectiveness, shared information on issues, and engaged in constructive discussions on future action.
As a result, we have confirmed that the Board of Directors overall is performing effectively and appropriately. For example, the size, composition, and operating status of the Board of Directors are appropriate, and systems are in place to make important management decisions and supervise business execution. Also, the composition and operation of the Nomination and Remuneration Committee, which serves as an advisory body, are appropriate. And members of the Board—both internal and external officers with wide-ranging experience and expertise—have a profound understanding of their roles and engage in open, active, and constructive discussions based on adequate communication, even when meetings are held on-line using a web conference format because of the changed business environment. In FY2020, in the context of formulating a new medium-term plan for the long-term growth and development of the Company, extensive discussions were conducted regarding the direction of the Group’s future growth and how that should inform the plans for each of our businesses. We also had a series of discussions on how to achieve the SDGs, including our response to changes in the business environment—incorporating the perspective of sustainability—new business opportunities, technology/R&D, and human resource strategies. Moreover, as part of the evaluation of the effectiveness of the Board of Directors, we conducted our own assessment of the appropriateness of the processes employed for appointing directors and for replacing the president, and we also evaluated the Nomination and Remuneration Committee. This committee, which is an advisory body of the Board of Directors, features a majority of independent outside directors, one of whom acts as chairperson. In addition, to enhance Group management supervision we regularly compile detailed reports on the performance and strategy reviews as well as business management of the major subsidiaries.
All members of the Board of Directors recognize the need to share and discuss the progress of the new medium-term plan at Board meetings; to further enhance discussions on aspects of business management, including compliance, and corporate governance; to improve the reporting to the Board of Directors of the deliberations and decisions made by the Nomination and Remuneration Committee; and to expand deliberations at the Board of Directors meetings on receipt of reports from the Nomination and Remuneration Committee. We will continually strive to improve the effectiveness of the Board of Directors so as to achieve sustainable growth and enhance corporate value over the medium to long term.

Executive Compensation

1. Basic Policy

As part of its efforts to strengthen corporate governance and to realize sustainable enhancements of enterprise value through achieving the azbil Group’s management targets, at the Board of Directors meeting held on May 12, 2017, the Company established a policy on determination of the details of remuneration to individual Directors (hereinafter, “Policy on Determination”). Furthermore, prior to the promulgation of the Revised Companies Act on March 1, 2021, after consulting with the Nomination and Remuneration Committee, at the Board of Directors meeting held on February 26, 2021, the Policy on Determination was disclosed and confirmed. The remuneration for directors is commensurate to their roles, responsibilities, and accomplishments and designed to contribute to sustainable growth and enhancements of enterprise value.

2. Composition and Approach for Executive Remuneration

Remuneration for directors who concurrently perform executive duties comprises “basic remuneration” that is a fixed remuneration paid monthly based on their roles and responsibilities and “bonuses” paid twice annually at fixed periods that are linked to business results for the fiscal year and are also determined in consideration of the degree of achievement of medium-term targets. “Basic remuneration” for directors who concurrently perform executive duties comprised three forms of remuneration: director remuneration, executive position remuneration, and executive responsibility remuneration. The fixed amounts paid to the representative directors and directors are determined in director remuneration. Executive position remuneration comprises fixed amounts determined by individual executive position. Executive responsibility remuneration is the amount of remuneration paid based on the individual responsibility grade that is determined based on the weight of duties, scope of role, and quantitative and qualitative evaluations for each fiscal year. Such responsibility grades are revised each year based on a review by the Nomination and Remuneration Committee.
Furthermore, to share common interests with the shareholders and to create a continuous incentive to enhance enterprise value, for Directors who concurrently perform executive duties, they own the Company’s stocks through the officer stock ownership plan with the fixed annual contribution amount proportional with each officer’s positions and responsibilities and continually hold these stocks. Directors who do not concurrently perform executive duties and outside directors are paid only basic remuneration that is fixed remuneration to ensure that they perform their management supervision function fully.

3. Performance-linked Remuneration

Directors who concurrently perform executive duties are paid a bonus in consideration of a performance evaluation and qualitative evaluation*Note as well as the degree of achievement of medium-term targets, etc., and the performance-linked portion of remuneration is designed to contribute to the Company’s continuous growth and enhancement of enterprise value. In the specific calculations, evaluations are performed from the standpoint of responsibility for the Group’s consolidated management based on indicators such as increase in operating income and ratios such as ROE in light of both profitability and capital efficiency. Furthermore, the level of growth in the amount of operating income and other factors have been selected as indicators from the standpoint of working to enhance medium- to long-term enterprise value, and performance-linked remuneration is reviewed individually by the Nomination and Remuneration Committee taking comprehensive account of these indicators.
Regarding the amount of operating income in FY2020, results were 25.7 billion yen versus the target of 25.5 billion yen (consolidated basis).
*Note: In the qualitative evaluation, the level of achievement for qualitative targets set individually at the beginning of the period based on individual roles, including initiatives in CSR activities and development of succeeding personnel is considered.
Furthermore, while the breakdown according to the type of the Company’s remuneration is not determined in advance, for the proportion of remuneration for individual directors, our current system is designed in such a way that performance-linked remuneration increases as corporate performance improves, and the proportion of performance-linked remuneration making up the individual directors’ total remuneration increases as their contribution levels to corporate performance rise.

4. Items related to Resolutions on Remuneration, etc. for Directors and Audit & Supervisory Board Members at the General Meeting of Shareholders

The Company resolved that the maximum annual remuneration for directors shall be not more than 450 million yen (for eight (8) directors, excluding amounts paid as salaries for employee) at the 84th Ordinary General Meeting of Shareholders held on June 29, 2006. Remuneration for Audit & Supervisory Board Members comprises only basic remuneration that is fixed remuneration considering their duties and responsibilities. The Company resolved that the maximum annual remuneration for Audit & Supervisory Board Members shall be not more than 120 million yen (for five (5) Audit & Supervisory Board Members) at the 85th Ordinary General Meeting of Shareholders held on June 28, 2007, and the individual remuneration amounts are determined through discussion held by the Audit & Supervisory Board Members.

5. Items related to Determination of Remuneration for Individual Directors and Delegation associated with this Determination

The Company has established an optional Nomination and Remuneration Committee as an advisory body of the Board of Directors to ensure transparency and objectivity in the remuneration determination process. The Nomination and Remuneration Committee reviews the executive remuneration plan, the basic remuneration amounts based on the executive remuneration system, individual performance evaluations, progress evaluations for qualitative items, the amount of individual bonus payments, and revision of remuneration amounts for directors. Per the regulations, the Chairperson of the Nomination and Remuneration Committee is elected through a mutual vote among the independent outside directors and the Committee must be comprised of a majority of independent outside directors. The members currently serving on the Nomination and Remuneration Committee are Katsuhiko Tanabe (Independent Outside Director), who is the Chairperson, Takeshi Itoh (Independent Outside Director), Waka Fujiso (Independent Outside Director), Hirozumi Sone (Representative Director) and Kiyohiro Yamamoto (Representative Director). (Please refer to “(1) Board of Directors and Audit & Supervisory Board Members” under “3. Matters Concerning Officers” for a list of the roles taken on by each director.) As to the basic remuneration amounts paid to individual directors and the total amounts of bonuses and the amounts of bonus to be paid to individual directors who concurrently perform executive duties, the president & CEO (representative director), who is delegated by resolution of the Board of Directors, prepares a draft of each remuneration based on Director Remuneration Regulations and Nomination and Remuneration Committee Regulations, within the remuneration limits set at the Ordinary General Meeting and the Nomination and Remuneration Committee reviews and decides it. The remuneration of representative directors is ruled to be deliberated and decided at the Nomination and Remuneration Committee after the screening without the representative director who is the member of the Nomination and Remuneration Committee. The reason that the authority associated with the determination of remuneration for individual Directors is delegated is that, as mentioned above, the Committee is comprised of a majority of independent outside directors and chaired by an independent outside director, thus we deem that the determination being made by the Nomination and Remuneration Committee which is as an advisory body to the Board of Directors ensures high levels of fairness, objectivity, and transparency in the remuneration determination process. In this way, at the Company, because the Nomination and Remuneration Committee that is highly fair, objective, and transparent and acts as an advisory body to the Board of Directors, deliberates and determines the details of individual directors’ remuneration based on a multi-faceted evaluation including consistency with the Policy on Determination, in principle the Board of Directors respects this determination, and we deem that the details of the remuneration for individual directors in the current fiscal year follows the Policy on Determination.

Contribution of Outside Officers

In addition to the requirements for independent officers stipulated by the Tokyo Stock Exchange, we follow criteria for independence that we have formulated when appointing outside officers as prescribed by the Companies Act. Candidates deemed capable of providing constructive suggestions and accurate observations and advice concerning the company’s business and the improvement of enterprise value in the medium and long terms are appointed as outside directors. Candidates who are knowledgeable about key aspects of finance, accounting, and auditing and who are independent of company executives are appointed as outside members of the Audit & Supervisory Board. Our outside officers, from their diverse perspectives, are active in asking questions and giving suggestions at Board of Directors meetings, thereby contributing to sustainable corporate growth and the enhancement of enterprise value over the medium and long terms.

Reasons for Appointing Outside Directors and Their Attendance Record in FY2020

Katsuhiko Tanabe

Mr. Katsuhiko Tanabe has outstanding expert viewpoints as a lawyer and insights on management, as he has successively served in important posts in the legal field, and has a record of superior performance in corporate legal affairs of global business based on his expert views. In addition, by utilizing his experience as an outside officer at several companies, at Board of Directors meetings of the Company, he not only supervises business execution but also proactively offers his opinions based on his broad knowledge as a legal expert and keen insight on corporate governance, in order to increase transparency and fairness of management, thus fulfilling such appropriate roles as supervision and advising, etc. on business execution.

Attendance record : Board of Directors meetings 13 of 13

Takeshi Itoh

In addition to management experience and experience as an analyst in investment banks and investment advisory companies, etc. domestically and abroad, with his long-term overseas work experience and experience in the consulting business including fundraising and M&A advice, Mr. Takeshi Itoh has a record of superior performance in advanced corporate analysis, etc. In addition, by utilizing his experience as executive officer in investment management companies domestically and abroad, at Board of Directors meetings of the Company, he not only supervises business execution but also proactively offers his opinions based on his advanced knowledge and experience as an expert in the fields of international financing and investment, in order to increase transparency and fairness of management, thus fulfilling such appropriate roles as supervision and advising, etc. on business execution.

Attendance record: Board of Directors meetings 13 of 13

Waka Fujiso

Ms. Waka Fujiso possesses extensive knowledge and experience that she gained mainly during her activities over many years as a public prosecutor, and, after retiring from the position of public prosecutor at the Supreme Public Prosecutors Office, during her service as a council member at a government agency at which time she also taught at a law school. At Board of Directors meetings of the Company, she not only supervises business execution, but also proactively offers opinions from her extensive knowledge as a legal expert, aiming at more thorough compliance management and risk management as well as the enhancement of management transparency and fairness. In these ways, Ms. Fujiso fulfills such appropriate roles as supervising and giving advice on business execution.

Attendance record: Board of Directors meetings 13 of 13

Mitsuhiro Nagahama

Mr. Mitsuhiro Nagahama possesses broad knowledge and extensive experience in the financial/securities sectors and abroad, as he has successively served in important posts at financial institutions. He was appointed as an Outside Audit & Supervisory Board Member in 2015, and has audited the Company’s overall business with his outstanding insights on corporate governance and ideal way of company management, contributing to the improvement of the Company’s corporate governance and internal control from an independent perspective. Furthermore, as an Outside Director since 2019, he has not only supervised business execution, but also proactively offered opinions from wide-ranging perspectives, aiming at enhancing management transparency and fairness. In these ways, Mr. Nagahama fulfills such appropriate roles as supervising and giving advice on business execution.

Attendance record: Board of Directors meetings 13 of 13

Anne Ka Tse HUNG

Ms. Anne Ka Tse HUNG worked at an international law office as a partner attorney, and supported the conclusion of transaction agreements in international transactions for Japanese companies in addition to overseas corporate matters. She also has ample business experience with Japan-based companies, is familiar with Japanese business customs, and possesses knowledge in the industry to which the Company belongs. The Company expects that she will utilize her abundant experience, insight, and global knowledge as Outside Director of the Company to offer objective indications and advices for the enhancement of management transparency and fairness from wide-ranging perspectives in addition to supervise business executions for the Board of Directors. The Company believes that she will fulfill her appropriate roles in these ways.

Attendance record: Board of Directors meetings 10 of 10

* She was elected at the 98th Ordinary General Meeting of Shareholders held on June 24, 2020, her attendance only applies to Board of Directors meetings held after her appointment.

Reasons for Appointing Outside members of the Audit & Supervisory Board and Their Attendance Record

Kinya Fujimoto

Mr. Kinya Fujimoto has a wealth of knowledge and experience concerning financial affairs and accounting as a certified public accountant. He reflects his professional discernment based on this knowledge and experience in the auditing of the Company’s overall business and in the strengthening of the management of Group companies. He was elected for further improvement of the corporate governance from a position of independence. He asks questions and makes recommendations from perspectives relating to the audits of the Company’s overall business at Board of Directors meetings based on his long-term experience as a certified public accountant and wealth of expertise and experience concerning financial affairs and accounting.

Attendance record : Board of Directors meetings 13 of 13,the Audit & Supervisory Board meetings 14 of 14

Minoru Sakuma

Mr. Minoru Sakuma has held key positions at a government financial agency and has wide-ranging knowledge about international finance and extensive experience overseas. He also has management experience at an investment company and experience at a business company that develops global activities. Based on these experience, he raises questions and made comments from the perspectives of the validity of the Company’s business strategy and enhancing the Group’s overall corporate governance.

Attendance record : Board of Directors meetings 13 of 13,the Audit & Supervisory Board meetings 14 of 14

Fumitoshi Sato

Mr. Fumitoshi Sato has held key positions in Japan’s central bank and has wide-ranging knowledge and abundant experience in the financial field. He also has work experience and management experience as a director of a company in the manufacturing field, where he served in the department overseeing accounting, legal, and personnel affairs. Based on these experience, he raises questions and made comments from the perspectives of the validity of the Company’s business and financial strategy and enhancing the Group’s overall corporate governance.

Attendance record : Board of Directors meetings 13 of 13,the Audit & Supervisory Board meetings 14 of 14

Comment by an Outside Director

Azbil corporate governance, present and future

We have been making progressive efforts to strengthen and expand our corporate governance, and our achievements in this regard have been highly commended by outside parties. Allow me to take this opportunity to explain something of the current Board of Directors, which forms the core of our governance framework.

In FY2019, the proportion of independent outside directors, relative to the total number of directors, increased to five out of eleven. In FY2020, the Board has demonstrated increased diversity as two of the outside directors are now women (one of whom is a foreign national).
Before each meeting of the Board, a briefing is held so that the members will have a good understanding of the issues in advance, thus facilitating effective deliberations in the meeting. Moreover, we are actively implementing various measures to improve the effectiveness of the Board of Directors—such as holding regular meetings to exchange information between outside directors and Audit & Supervisory Board members, and organizing meetings between the representative directors and outside members of the Board in which opinions can be shared. We also arrange opportunities for Board members to freely discuss strategy outside regular Board meetings. Lively discussions are held at each meeting of the Board of Directors as well as at the other, aforementioned meetings. The outside directors, including the outside Audit & Supervisory Board members, bring to these meetings diverse, wide-ranging knowledge and business experience; this multifaceted approach imparts significant added value to the discussion.
The Nomination and Remuneration Committee, which is chaired by an independent outside director, consists of a majority of independent outside directors. This is to ensure fairness, objectivity, and transparency in processes involving the nomination and compensation of officers. The Committee conducts in-depth deliberations in the same manner as the Board of Directors.
While it is true that the spread of Covid-19 has led to major constraints on corporate governance, we still strive to ensure deliberations of a high caliber, employing, in tandem, a web conference system—featuring robust IT security—for meetings of the Board of Directors, briefings, and other meetings. We believe that this arrangement means that our deliberations maintain an adequate level of effectiveness.

With the paradigm shift caused by the Covid-19 pandemic, the most important issue for increasing enterprise value over the medium to long term is sustainability—including ESG. We aim to find solutions to social issues while achieving sustainable growth through management that is linked “in series” to the SDGs. Our founding spirit of “freeing people from drudgery” is entirely congruent with the central purpose of SDGs. So, while continuing to focus on enhancing corporate governance, which is a significant part of our business foundation, we will make solid progress based on our Group philosophy and on the corporate DNA that goes all the way back to our roots.

Outside Director
Nagahama Mitsuhiro