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Corporate Governance

Corporate Governance Structure

The SWCC Group is working to increase the efficiency and speed of business execution by substantially delegating authority for business execution to Corporate Officers, while promoting the strengthening of auditing and supervisory functions centered on the Audit & Supervisory Committee.
In addition, by having clearly defined the authority and responsibility of the persons responsible (Corporate Officers in charge) for respective segments that are aligned with our business segments, we are promoting further enhancements to the revenue structure, which is no longer defined by individual business operating companies, and efficient management based on the performance indicator Return On Invested Capital (ROIC) and others.

Corporate Governance Structure Diagram (as of April 1, 2025)

Corporate Governance System Diagram

Skills Matrix for Directors and Auditors

Skill matrix of each Director

Name Essential skill Sales Overseas
business
Accouting &
finance
Engineering
Corporate
management
Sustainability
Takayo Hasegawa
Tetsuo Komata
Yuji Sakakura
Takashi Mukuno
Minako Nishimura
Koji Naito
Kumiko Baba
Futoshi Yamaguchi

Note:

1. The Company plans for Ms. Takayo Hasegawa and Mr. Tetsuo Komata to be reappointed as Representative Directors by resolution at a meeting of the Board of Directors to be held after the conclusion of the Ordinary General Meeting of Shareholders.
2. Mr. Yuji Sakakura will have served as Director (at the conclusion of the meeting) for five years, while Mr. Futoshi Yamaguchi will have served as Director (at the conclusion of the meeting) for one year.


Directors Compensation or Remuneration

Overview of the Policy for Determining Individual Directors' Compensation

The compensation of directors is determined by the Board of Directors based on deliberations and recommendations from a voluntary Nomination and Compensation Committee composed of independent outside directors. In making compensation decisions, the Board ensures consistency with the established policy and respects the committee's recommendations. Additionally, compensation levels are set with reference to external benchmarks based on surveys conducted by specialized external organizations.


The compensation for executive directors consists of the following three components:

  • Fixed compensation
  • Short-term incentive compensation (linked to annual performance)
  • Long-term incentive compensation (restricted stock compensation)
  • This structure is designed to appropriately reward performance from both short- and long-term perspectives. On the other hand, non-executive directors and directors who are members of the Audit and Supervisory Committee receive fixed compensation only, without any incentive-based components, as their role focuses on oversight rather than business execution.

    Compensation Structure

    Compensation for directors (excluding non-executive directors and directors who are members of the Audit and Supervisory Committee) consists of fixed compensation, performance-linked compensation, and restricted stock compensation. The compensation structure for fiscal year 2025 is as follows.

    Type

    Percentage*1

    Contents

    Fixed

    Remuneration

    100

    It consists of basic compensation and role-based additional compensation according to each director's duties and responsibilities.
    The basic compensation corresponds to the position, its importance, and complexity.

     

    Performance-Linked
    Remuneration

    55

    Short-term incentive cash payments are based on achievement against operating profit and ROIC targets (set at 105% of initial forecasts),
    plus ESG indicators such as renewable energy adoption, CO₂ emissions, injury frequency rate, and engagement score.

    The indicators, formulas, and performance linkage mechanism are as follows.



    1.Company Performance Indicators

    Compensation is paid based on the achievement rates of operating profit (A) and ROIC (B) as follows:

    · Operating Profit Achievement Rate (A) = (Actual Operating Profit÷ Target Operating Profit) × 100%

    ·ROIC Achievement Rate (B) = (Actual ROIC÷ Target ROIC) × 100%



    2.ESG-Related Indicators

    Compensation is paid according to the number of achieved targets among the  following: internal adoption rate of renewable energy (C),
    greenhouse gas (CO₂) emissions (D), lost time injury frequency rate (E), and engagement score (F).



    3.Reason for Selecting Indicators

    Operating profit achievement rate is set as a profitability indicator, and ROIC achievement rate as a capital efficiency indicator. For ESG-related indicators,
    the company identifies material social issues and prioritizes key themes with specific action plans and KPIs. Among these, the internal adoption rate
    of renewable energy, CO₂ emissions, lost time injury frequency rate, and engagement score are selected as important ESG indicators.
    Achieving these targets is expected to enhance corporate value.



    4.Formula

    Annual performance-based compensation = Fixed compensation × (Annual target achievement for company performance (A × 50% + B × 50%)
    + Annual target achievement for ESG indicators (based on number of achieved items among C, D, E, and F))


    5. Annual Target Achievement (Proportion and Mechanism)

    Annual target indicators

    Target

    Prppotion
    *2

    Payout Rate

    Company performance

    · Operating income

    25.7 billion yen
    (Published figure: 24.5 billion yen)

    25%

    0-150%

    Company performance

    · ROIC

    12.9%
    (Published figure: 12.3%)

    25%

    0-150%

    ESG-Related

    · Internal adoption rate of renewable energy *3

    · Greenhouse gas (CO2) emissions

    · Lost time injury frequency rate

    · Engagement score

    30%
    50% decrease compared to fiscal year 2013
    0.23 or less
    45

    5%

    0-125%



    Restricted Stock-based Compensation

    27.5

    Restricted stock compensation is allocated as a fixed proportion of the fixed compensation.

    No restricted stock compensation is granted to non-executive directors (including those serving on the Audit and Supervisory Committee).

    Note:

    1. The ratio of annual performance-based compensation is shown assuming a 100% payout rate.
    2. The propotions of corporate performance and ESG-related indicators, which are annual target metrics, are shown assuming a 100% payout rate.
    3. Renewable energy includes energy derived from non-fossil sources.
    4. The performance-based compensation for the Chairman of the Board is calculated as 45% of the fixed compensation, and the compensation for the grant of restricted stock is set at an amount equivalent to 50% of the value obtained by applying 55% to the fixed compensation, regardless of position.

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