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Corporate Governance

Basic Views on Corporate Governance

The Kyocera Group has made "Respect the Divine and Love People" its corporate motto and "To provide opportunities for the material and intellectual growth of all our employees, and through our joint efforts, contribute to the advancement of society and humankind." as its management rationale.
The Kyocera Group always strives to maintain equity and fairness and faces all situations with courage and conscience and will realize its management rationale by achieving sustainable growth and raising medium- to long-term corporate value. In doing so, the Kyocera Group shall build systems to undertake fair and efficient corporate management while maintaining the soundness and transparency of management upon taking into consideration the standpoints of all stakeholders.
Additionally, the Kyocera Group shall permeate the "Kyocera Philosophy," a corporate philosophy that is the basis of the management policy of the Kyocera Group, in all Executives and employees in the Kyocera Group, and foster a sound corporate culture. The Kyocera Group shall establish proper corporate governance by building the above-mentioned systems and implementing the "Kyocera Philosophy." Furthermore, the Kyocera Group will constantly seek the ideal system for corporate governance and will always evolve and develop its existing corporate governance system.

image:Basic Corporate Governance

1.Board of Directors

The Board of Directors of Kyocera is an organization to decide the important matters and supervise the execution of businesses of Kyocera Group as a whole. It consists of nine Directors including three Outside Directors. The Directors are nominated at the General Shareholders Meeting based on their demonstrated understanding of Kyocera Group and their outstanding personal qualities, capability and insight.

2. Audit & Supervisory Board

The Audit & Supervisory Board consists of four members. Audit & Supervisory Board Members include two full-time Audit & Supervisory Board Members, originally employees of Kyocera, as well as two Outside Audit & Supervisory Board Members, who have plenty of knowledge and experience as an attorney-at-law or CPA.
The Audit & Supervisory Board Members are conducting audit of Kyocera as a whole based on the accurate information about Kyocera gathered from inside and utilizing variety of viewpoints as outsiders of Kyocera.

3. Nomination and Remuneration Committee

As consulting organization of the Board of Directors, Kyocera has established the Nomination and Remuneration Committee, the majority of which consists of Outside Directors. The Board of Directors examines nominations regarding Directors and Managing Executive Officers as well as the remuneration of Directors after consulting in advance with the Committee to ensure that the decision is made in a fair and appropriate manner.

4. Kyocera Group Management Committee

Kyocera has established the Kyocera Group Management Committee consisting of Representative Director and Chairman, Representative Director and President and Managing Executive Officers who live in Japan and Kyocera holds meetings every month regularly. The Committee examines not only the agendas of the meetings of the Board of Directors, but also other important matters relating to the overall execution of Kyocera Group business to ensure sound management.

5. Kyocera Disclosure Committee

Kyocera has established an organ known as the the Kyocera Disclosure Committee for disclosure of corporate information. The Committee investigates all disclosure documents for the purpose of assuring the appropriateness of disclosures of corporate information, reporting the results of its investigations to the Representative Director and President, who educates Group companies concerning rules relating to disclosure and promotes appropriate disclosure of information for the entire Group.

6. Kyocera Group Philosophy Committee

Kyocera has established the Kyocera Group Philosophy Committee to educate and permeate "Kyocera Philosophy," which is our corporate philosophy setting forth the importance of conducting business of management in a fair and honest way, basing its fundamental judgments on a precept that "What do we consider to be the right choice as a human being?" The Committee sets the "Kyocera Philosophy" education policy for each entity in Kyocera Group, and discusses and decides upon measures to promote the understanding and practice of "Kyocera Philosophy".

7. Risk Management Committee

Kyocera has established the Risk Management Committee to handle Kyocera Group's risk management. This Committee determines risk management policies, and identifies corporate risks to be addressed by the Group.

8. Kyocera Group Sustainability Committee

Kyocera has established the Kyocera Group Sustainability Committee to promote the sustainable growth of both the Kyocera Group and society. This Committee discusses business strategies designed to provide solutions to societal needs, policies and targets regarding social requirements aiming to achieve the management rationale and SDGs.

Composition of the Board of Directors

Views on the Balance, Diversity and Size of the Board of Directors

Kyocera considers that the Board of Directors must be equipped with the following skills from 1 to 5 to be able to suggest general directions of the Kyocera Group's growth strategies, discuss the appropriateness, risks, and other factors of such directions from objective and diverse perspectives, and appropriately oversee the status of business operations.

1. Global management
2. Sales / Marketing
3. Technology
4. Financial affairs / Accounting
5. Legal affairs / Risk management

Kyocera's nomination policy for the appointment of Directors is to balance the skills required of the Board of Directors and ensure diversity, including race, ethnicity, gender, nationality, work experience, and age groups on the assumption of electing individuals having an adequate understanding of the Kyocera Group, who in terms of managing the Kyocera Group excel in their "personal qualities," "capability" and "insight." Based on such policy, the Board of Directors is well balanced in skills and it is constituted in a manner to achieve both diversity and appropriate size. Please refer to Corporate Governance Report for the Key skills possessed by the current Directors.

Efforts to Improve the Effectiveness of the Board of Directors

Establishment of the Nomination and Remuneration Committee

Kyocera has established a Nomination and Remuneration Committee to ensure the objectivity and transparency of the procedures to determine nomination and remuneration. The Nomination and Remuneration Committee adequately deliberates on the nomination of the senior management and Directors (including succession plans), their remuneration, and other important matters, taking into account perspectives such as gender and other types of diversity and personal skills. The policy, mandates, roles, and other elements of the independence of the composition of Kyocera's Nomination and Remuneration Committee are as follows:

<Policy of Independence of the Composition>

 Independent Outside Directors comprising a majority of the Committee members ensure its independence.

<Mandates and Roles>

 In response to inquiries of the Board of Directors, the Committee deliberates on 1, matters concerning the appointment and dismissal of Directors, 2, matters concerning remuneration of Directors, and 3, matters concerning the appointment and dismissal of executive officers and reports the results to the Board of Directors. Beyond such inquiries, the Committee also provides the Board of Directors with advice as appropriate.

Evaluation of the Effectiveness of the Board of Directors

Kyocera analyzes and evaluates the effectiveness of the Board of Directors as a whole in order to obtain an appropriate understanding of the current condition of the Board of Directors and to achieve more effective operation. Please refer to Corporate Governance Report for summary of the evaluation.

Training for Directors and Audit & Supervisory Board Members

The Directors and Audit & Supervisory Board Members are given, at the time of their assumption of their office, explanations concerning the details of the business of Kyocera and their respective roles and responsibilities as considered necessary in order for them to perform their roles and fulfill their responsibilities. Further, even after assuming office, if a Director or Audit & Supervisory Board Member requests, training tailored to meet the individual requests are given and opportunities for advancement of necessary knowledge are offered or introduced, or financial support for the necessary expenses for such purposes are provided, according to their individual situations.

Involvement in Succession Planning

The Board of Directors is actively involved in the establishment and implementation of a succession plan for Executives based on Kyocera's objectives (such as the management rationale) and specific management strategies. Appropriate monitoring is also conducted to ensure that sufficient time and resources are dedicated to the systematic development of candidates for succession. In addition, we have established an Executive Officer system to ensure the effective and efficient operation of the business execution system. One of the objectives of this Executive Officer system is to plan the development of the next generation of executives by actively identifying managers who display outstanding humanity and ability to take charge of the future management of Kyocera.
In line with this purpose, the Board of Directors checks the development of future Executives every year and determines the appointment of Executive officers based on these findings.

Current Initiatives for the Enhancement of the Functions of the Audit & Supervisory Board Members

Current initiatives for the enhancement of the functions of the Audit & Supervisory Board Members are as follows:

  • Allocating certain employees who are selected from Corporate Global Audit Division upon the request of the Audit & Supervisory Board Members, through prior discussion with the Audit & Supervisory Board Members, to assist in their tasks and the Audit & Supervisory Board.
  • Holding regular meetings with Representative Directors to exchange opinions relating to the management of Kyocera as a whole;
  • Holding regularly the "Kyocera Group Audit & Supervisory Board Members Meeting" where all audit & supervisory board members of companies within Kyocera Group gather to report and discuss the condition of auditing the legality of the business execution and the status of the internal control of the directors of the companies within Kyocera Group;
  • Establishing the system called "Whistleblower System to Kyocera Audit & Supervisory Board" so that the related parties with Kyocera can directly submit complaints to the Audit & Supervisory Board;
  • Holding regular meetings with accounting auditors to discuss about the audit plan and substance of quarterly audit and result of the audit, and exchanging information and opinions as necessary from time to time;
  • Holding meetings in a timely fashion with internal audit division of Kyocera in order to evaluate and monitor whether the business of the Kyocera Group is duly and efficiently executed in accordance with the laws and regulations and internal rules of Kyocera; and
  • Nominating two Outside Audit & Supervisory Board Members who are independent and not to have any conflict of interest with the shareholders in general of Kyocera.

Remuneration of Directors and Audit & Supervisory Board Members

Directors

"Decision Policy Regarding the Details of Individual Remuneration for Directors"

Basic policy

  • The remuneration system for Directors is designed to be a mechanism that effectively encourages Directors to thoroughly demonstrate their abilities and fulfill their roles and responsibilities toward the healthy and sustainable growth of the Kyocera Group.
  • The remuneration level of Directors shall be set at an appropriate level by referring to objective data from external specialist organizations while giving consideration to securing and maintaining excellent human resources necessary for realizing the management rationale.
  • Regarding the remuneration system and remuneration level of Directors, high objectivity and transparency in the process for determining remuneration for Directors shall be assured by making decisions according to a resolution by the Board of Directors based on the deliberations with and reports from the Nomination and Remuneration Committee, which consists of a majority of Outside Directors.
  Basic Remuneration Bonuses to Directors
(Performance-linked remuneration)
Restricted Stock Compensation
(Non-monetary remuneration)
Applicable to: Directors Directors (excluding Outside Directors) Directors (excluding Outside Directors)
Items determined at General Meeting of Shareholders <The 55th Ordinary General Meeting of Shareholders held on June 25, 2009>
No more than 400 million yen per year
(not including salaries for services as employees or Executive Officers for those Directors who serve as such).
<The 55th Ordinary General Meeting of Shareholders held on June 25, 2009>
Not exceed 0.2% of the consolidated net income* of Kyocera for the relevant fiscal year, provided that such amount of bonuses shall in no case exceed 300 million yen annually.
* Notation changed to "Profit attributable to owners of the parent" in line with the adoption of the International Financial Reporting Standards (IFRS).
<The 65th Ordinary General Meeting of Shareholders held on June 25, 2019>
No more than 100 million yen per year as well as no more than 0.1 % of the profit attributable to owners of the parent as the reasonable amounts and that the number of shares shall be no more than 25,000 shares per year.
Details

Monetary remuneration to be paid according to the responsibilities of the Directors.

Individual payment levels of the payment amount will be determined according to each respective role upon taking into consideration the payment levels of other companies in the same industry.

The annual amount shall be paid monthly in 12 equal portions.

Monetary remuneration to be paid according to the degree of contribution of each Director to business results in the relevant fiscal year

The performance indicator is "profit attributable to owners of the parent." This is calculated by multiplying the numerical value determined based on this performance indicator by a prescribed coefficient according to the position of the Director and a coefficient for individual assessment according to the degree of contribution to performance.

Provided once per year following the end of the business year.

Remuneration to be provided Kyocera's common stock (restricted stock) for the purpose of further sharing value with shareholders while granting incentives to continuously improve the medium-to-long-term corporate and shareholder value.

The amount to be paid to each Director shall be determined by position.

Granted once a year in each business year

(Note) Implementation of the performance-linked restricted stock compensation system and the partial revision of the restricted stock compensation system were decided at the 69th General Meeting of Shareholders on July 27, 2023.

Views on Remuneration Proportion

  • Based on the belief that a system for the healthy and sustainable growth of the Kyocera Group is important, the proportion of basic remuneration and restricted stock compensation is determined placing emphasis on the level and stability of basic remuneration as well as giving consideration to the pursuit of shareholder interests. Moreover, the higher the position of the Director, the higher the proportion of the restricted stock compensation to basic remuneration.
  • For bonuses to Directors, to ensure maximize incentives for growing business results, no limit shall be established for proportions of basic remuneration or restricted stock compensation.

Process for Determining Remuneration

  • The Nomination and Remuneration Committee composed of a majority of Outside Directors shall be established as an advisory body to the Board of Directors.
    This committee receives inquiries from the Board of Directors and also upon referring to objective data such as benchmark results of executive compensation provided by external specialist organizations the committee validates the appropriateness of the Director remuneration system that encompasses the basic remuneration payment standard, the bonuses to Directors calculation standard, and restricted stock compensation grant standard, and the results shall be reported to the Board of Directors.
  • The Chairman of the Board and Representative Director and the President and Representative Director shall be delegated with the authority to determine specific details for the amounts of individual remuneration for Directors based on a resolution of the Board of Directors.
  • To ensure that the above delegated authority is properly exercised by the Chairman of the Board and Representative Director and the President and Representative Director, the Board of Directors shall consult with and obtain a report from the Nomination and Remuneration Committee on the payment standards, calculation method and grant standards for each type of remuneration by position and the Chairman of the Board and Representative Director and the President and Representative Director shall make their determinations in accordance with the contents of the relevant report, and shall report the results of the determined payment amount and the number of shares to be allotted to the Nomination and Remuneration Committee.

Audit & Supervisory Board Members

Items determined at General Meeting of Shareholders: Basic Remuneration of no more than 100 million yen per year (The 55th Ordinary General Meeting of Shareholders held on June 25, 2009)
Individual payment amounts are determined within the range of the above resolution upon consultation among Audit & Supervisory Board Members.

Cross-Shareholdings

Policy Regarding Cross-holding of Shares

We engage in cross-holding or unilateral holding of shares with the objective of improving our corporate value in the medium to long-term, focusing on corporate growth through maintenance of business relationships, realization of profits through shareholdings, and the social significance of the issuing companies.
If the Company judges, as a result of annual examination of its shareholdings, that a particular shareholding does not provide value to the Company, the Company will reduce such shareholding.
Also, in order to clarify the immediate policy to further reduce such shareholdings, in April 2023 the Company resolved at a meeting of its Board of Directors to adopt a target of reducing its shareholdings by at least 5% on a book value basis by the fiscal year ending March 31, 2026.
The Company founded Daini Denden Inc. (current KDDI Corporation) based on its management philosophy, "contributing to the advancement of society and humankind," and since then the Company has been holding its shares. As the value of the shares of KDDI Corporation increased in reflection of its business development, the value of such shares within the Company's net assets has also increased.
The Company plans to maintain its shareholding in KDDI Corporation to further its strategic alliance with KDDI Corporation with the aim of increasing the Company's corporate value over the medium to long terms, and also to use such shares for procurement of investment funds necessary for the Company's sustainable growth.

Review of Cross-holdings of Shares

To achieve the target of reducing its shareholdings, the Company will conduct an annual review of all individual shareholdings to decide whether or not the Company's holding of the relevant shares is appropriate, taking into account the need to maintain the business relationship and/or efficiency in use of assets (taking into considering its cost of capital), etc. For any shares as to which a justifiable reason for holding them cannot be identified, the Company will decrease its holdings of such shares through discussions with the issuing company of such shares.

Exercise of Voting Rights

The Company exercises its voting rights represented by its holdings based on a comprehensive judgment, verifying whether each proposal continues to conform to the Company's shareholding policy and whether the issuing company's management policy and strategy remain consistent with the Company's business philosophy. The Company also examines whether each proposal submitted will contribute to a medium- to long-term increase in corporate value and the common interests of shareholders, or whether it will cause a decrease in management efficiency or damage to the Company's financial health.

Fundamental Attitudes of Timely Disclosure

Kyocera, based on the ethical views stated in "The Kyocera Philosophy," believes that it is important to ensure a high degree of trust from its shareholders, investors and other stakeholders. For this purpose, Kyocera recognizes that sincere efforts to provide timely and appropriate disclosure of corporate information are indispensable and has accordingly established the following basic policies toward the disclosure of information.

  • With respect to the disclosure of information, it shall be our policy to disclose both favorable information and unfavorable information timely in an equal and accurate manner.
  • With respect to the disclosure of information, it shall be our policy to disclose information without delay and in a fair manner, with no bias towards the domestic or foreign, and without preference towards specific persons.

Corporate System for Timely Disclosure

images:Fundamental Attitudes of Timely Disclosure

Internal Control Audits of the Kyocera Group

Kyocera delisted its shares from the NYSE in June 2018.
Therefore, since March 2019, we have been conducting internal control audits to evaluate the effectiveness of the establishment and maintenance of internal control over financial reporting required of management under the Companies Act and the Financial Instruments and Exchange Act (J-SOX rules).

Related Information