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Corporate Governance

Basic Views on Corporate Governance

The Board of Directors of the Kyocera defines the corporate governance of the Kyocera Group to mean “structures to ensure that Directors conducting the business manage the corporations in a fair and correct manner". The purpose of corporate governance is to maintain soundness and transparency of management and to achieve fair and efficient corporate management, through which the management rationale of the Kyocera Group can be realized. The Board of Directors shall promote awareness of the “Kyocera Philosophy", which is the basis of the management policy of the Kyocera Group, to all Directors and employees working in the Kyocera Group, and establish a sound corporate culture, and it shall establish proper corporate governance through exercise of the Kyocera Philosophy.

Basis for Corporate Governance

Corporate Governance System

Image: Corporate Governance System

Board of Directors

The Board of Directors of Kyocera is an organization that decides important matters and supervises the execution of the business of Kyocera Group as a whole. It comprises fifteen Directors, of which three are Outside Directors. The Board of Directors also includes one female Director and two directors from outside of Japan. The policy to nominate the candidates for the Directors of Kyocera is that Kyocera shall maintain the diversity of the members of its Board of Directors in terms of, without limitation, nationality and gender, subject to the prerequisite that Kyocera must always select superior personnel, who understand Kyocera Group well and who excel in their “personality”, “capability” and “insight” to manage Kyocera. Based on this policy, the Board of Directors is well balanced in skills, knowledge and experience, and it is constituted in a manner to achieve both diversity and an appropriate size. Kyocera has also adopted an Executive Officer system to facilitate efficient management. The execution of the businesses is undertaken by the Executive Officers under the instruction of the Representative Director and President of Kyocera. The Representative Director directs the Executive Officers to report on the progress of business execution to the Board of Directors, and the Board of Directors ensures that business is executed efficiently. As such, Kyocera clarifies the responsibility and authority to achieve efficient management of Kyocera, and to realize the efficient functionality of appropriate corporate governance and internal control of Kyocera. The Directors of Kyocera include some presidents of the important subsidiaries in Japan and overseas of Kyocera, to make sure that corporate governance works for whole Kyocera Group.
In principle, the Board of Directors meets once per month. However, extraordinary meetings may also be held should the need arise. The Board of Directors met thirteen times in the year ended March 31, 2020.

Audit & Supervisory Board

The Audit & Supervisory Board comprises four members. Audit & Supervisory Board Members includes 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 a certified public accountant. The Audit & Supervisory Board Members conduct audits of Kyocera as a whole based on the accurate information about Kyocera gathered from inside and utilizing variety of viewpoints as outsiders of Kyocera. The Audit & Supervisory Board met eight times in the year ended March 31, 2020.
In case employees, suppliers, customers and other individuals or organizations associated with the Kyocera Group find conduct that violates or is likely to violate the laws on accounting or matters related to auditing, such as illegal sale or transaction, or feel suspicious of any such conduct, they are encouraged to directly notify the Audit & Supervisory Board by e-mail or letter by means of the System for Internal Complaint Reporting to the Audit and Supervisory Board put in place for this purpose.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee is an advisory body to the Board of Directors and comprises four members, all of the Outside Directors and the Chairman of the Board. In order to ensure fair and appropriate decision-making with regards to the nomination of Directors and Executive Officers and the remuneration of Directors, these matters are subject to prior review by the Nomination and Remuneration Committee before being deliberated by the Board of Directors. The Nomination and Remuneration Committee met three times in the year ended March 31, 2020, deliberating and responding to requests for consultation from the Board of Directors.

Kyocera Group Management Committee

The Kyocera Group Management Committee consists of the Directors (excluding Outside Directors) who are resident in Japan and holds regular meetings throughout the year. This Committee examines not only the agenda of the meetings of the Board of Directors but also other important matters relating to the execution of the businesses of Kyocera Group as a whole to ensure Kyocera Group’s sound management. The Kyocera Group Management Committee met twenty-four times in the year ended March 31, 2020.

Kyocera Disclosure Committee

The Kyocera Disclosure Committee was established as part of our internal system for the disclosure of corporate information. This Committee examines all disclosure documents for the purpose of assuring the appropriate disclosure of corporate information. Its findings are reported to the President and Representative Director. The Committee also educates Kyocera Group companies concerning disclosure rules and promotes appropriate disclosure of information throughout the entire Group. The Kyocera Disclosure Committee met four times in the year ended March 31, 2020.

Kyocera Group Internal Audit Committee

The Kyocera Group Internal Audit Committee was established in order to improve internal control levels within Kyocera Group and strengthen cooperation between the internal audit divisions in each company. The Committee aims to heighten the effectiveness of internal controls by receiving reports of audit results from the Corporate Global Audit Division and the internal audit divisions of consolidated subsidiaries. It then issues instructions for any necessary corrective action given by the President and Representative Director of Kyocera Group or the Directors of each subsidiary. The Kyocera Group Internal Audit Committee met once in the year ended March 31, 2020.

Kyocera Group Philosophy Committee

Kyocera has established the "Kyocera Group Philosophy Committee" to educate and permeate the "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 is the right thing to do as a human being" The committee has set the education policy regarding the "Kyocera Philosophy" of each entity in the Kyocera Group, and discusses and decides the measures to promote the understanding of "Kyocera Philosophy" and practice it. The Kyocera Group Philosophy Committee met twice in the year ended March 31, 2020.

Functions and Roles of Outside Directors and Outside Audit & Supervisory Board Members

Kyocera assigns three Outside Directors, who have plenty of knowledge and experience as certified public accountant and tax accountant, scholar, or attorney-at-law, and two Outside Audit & Supervisory Board Members, who have plenty of knowledge and experience as an attorney-at-law or certified public accountant. Kyocera enhances the supervision to Director and the Board of Directors by providing enough explanation from Directors to Outside Directors and Audit & Supervisory Board Members through the meetings of the Board of Directors. Directors also discuss with the Outside Directors and Audit & Supervisory Board Members relating to management, so that the Directors can make judgment taking outside viewpoint into consideration. Kyocera Corporation establishes sound corporate culture pursuant to the "Kyocera Philosophy," which is the corporate philosophy based on the general criteria in making judgment, namely "what is the right thing to do as human being." Kyocera establishes its corporate governance system through practicing the Kyocera Philosophy. Such system is supplemented by the function to check the management by the Outside Directors and Audit & Supervisory Board Members.

Activities of Outside Directors

Activities of Outside Directors and Audit & Supervisory Board Members (year ended March 31, 2020)

Name Reason for appointment Attendance at meetings in FY3/2020
(meetings attended / total number of meetings)
Board of Directors Audit & Supervisory Board Nomination and Remuneration Committee
Outside Director
Hiroto Mizobata
Independent DirectorMember of the Nomination and Remuneration Committee
Kyocera expects that Mr. Hiroto Mizobata will be capable of providing appropriate advice on and undertaking supervision of general corporate activities based on his abundant experience and exceptional insight as a certified public accountant and licensed tax accountant. 13/13 - 3/3
Atsushi Aoyama
Independent DirectorMember of the Nomination and Remuneration Committee
Kyocera expects that Mr. Atsushi Aoyama will be capable of providing appropriate advice on and undertaking supervision of general corporate activities based on his abundant experience and exceptional insight relating to the area of technology management that studies companies which make much technology development and innovation. 13/13 - 3/3
Akiko Koyano
Independent DirectorMember of the Nomination and Remuneration Committee
Kyocera expects that Ms. Akiko Koyano will be capable of providing appropriate advice on and undertaking supervision of general corporate activities based on her extensive experience and insight as an attorney at law specializing in corporate law and various other areas. She also has wide-ranging insight into social issues such as gender equality. 11/11 - 2/2
Outside Auditors
Hitoshi Sakata
Independent Audit
Kyocera expects that Mr. Hitoshi Sakata will be capable of conducting overall audits of corporate activities based on his extensive experience and deep insight as an attorney at law and his great familiarity with corporate legal practice and overseas intellectual property rights. 13/13 8/8 -
Masaaki Akiyama
Independent Audit
Kyocera expects that Mr. Masaaki Akiyama will be capable of conducting overall audits of corporate activities based on his extensive experience and deep insight as a certified public accountant and substantial knowledge of finance and accounting. 13/13 8/8 -

Remuneration of Directors

Directors

The structure and level of remuneration for Directors is determined by the Board of Directors within the range of a resolution at the General Meeting of Shareholders after advance consultation with the Nomination and Remuneration Committee, a majority of which consists of Outside Directors. This process is followed to ensure objectivity and transparency in decision-making processes. The Nomination and Remuneration Committee also refers to objective remuneration survey data provided by external specialist institutions, and confirms the appropriateness of Kyocera’s remuneration in light of public standards.

  Basic remuneration Bonuses to Directors
(short-term incentives)
Restricted stock compensation
(mid to long-term incentives)
Applicable to: Directors Directors (excluding Outside Directors) Directors (excluding Outside Directors)
Items determined at General Meeting of Shareholders 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).
No more than 0.2% of profit attributable to owners of the parent for the relevant fiscal year, provided that such amount shall not exceed 300 million yen per year 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 (The total number of common stocks to be issued or disposed of shall not exceed 25,000 shares per year).
The transfer restriction period is between 10 and 30 years and is determined by the Board of Directors.
Details and determination
method
  • Remuneration to be paid based on the responsibilities of each Director
  • Level of the amount to be paid to each Director shall be decided based on the responsibilities of each Director taking into consideration the amount of remuneration at other companies involved in similar businesses to Kyocera
  • Performance linked remuneration system various with the "profit attributable to owners of the parent" in each fiscal year
  • The amount to be paid is determined based on the level of each Director’s contribution to performance
  • There is no established ratio relative to total renumeration, no limits have been set in order to maximize the incentive to grow the business
  • Profit attributable to owners of the parent was selected as a business performance indicator in order to maximize the incentive for Directors to generate profit and to align the interests of Directors and shareholders by creating a clear connection to the payout ratio
  • Compensation to be paid for the purpose of providing incentives for Directors to continuously improve Kyocera’s corporate value, as well as to promote further shared value between Directors and shareholders over the medium to long term
  • The amount of payment is set according to the position of Director
  • Lifting of transfer restrictions
    Transfer restrictions are lifted for all restricted stock upon the expiration of the transfer restriction period, provided that the Director concerned has continuously served as an Executive Officer of Kyocera from the start date of the transfer restriction period until the date of the first Ordinary General Meeting of Shareholders to be held following the expiration of the transfer restriction period. However, if the Director concerned leaves their position as Director in the event of their death, the expiration of their term of office, or for any other reason determined to be legitimate by the Board of Directors, transfer restrictions for an allocation of restricted stock shall be lifted immediately. The amount of stock shall be determined in consideration of the length of service prior to the Director leaving their position.
  • Uncompensated acquisition
    Kyocera shall automatically acquire all restricted stock for which transfer restrictions have not been lifted free of charge upon the expiration of the transfer restriction period or immediately following the lifting of transfer restrictions under the terms described above.
Proportion of amount for the year ended March 31, 2020 50% 40% 10%

Audit & Supervisory Board Members

Items determined at General Meeting of Shareholders: Basic Remuneration of no more than 100 million yen per year
Individual payment amounts are determined within the range of the above resolution upon consultation among Audit & Supervisory Board Members.

Amount of Remuneration by Classification, Components and Number of Directors and Audit & Supervisory Board Members

(Yen in Millions)

Classification Amount Components Number of Directors
and Audit & Supervisory Board Members
Basic remuneration Bonuses to Directors Restricted Stock
Compensation
Directors
(excluding Outside Directors)
347 163 135 49 12
Outside Director 38 38 - - 4
Audit & Supervisory Board Members
(excluding Outside Audit & Supervisory Board Members)
36 36 - - 2
Outside Auditors 21 21 - - 2
Total 442 258 135 49 20
  • The amount of restricted stock compensation stated in the table above is the amount recognized as expense for the year ended March 31, 2020.
  • Aside from the “Basic remuneration” and “Bonus to Directors” in the above table, the aggregate amount of remuneration to Directors (excluding Outside Directors) was 273 million yen in salaries for services as employees or Executive Officers for those Directors who serve as such and 179 million yen in bonuses for services as employees.

Evaluation of the effectiveness of the Board of Directors

The Board of Directors shall conduct analysis and evaluation of the effectiveness of the Board of Directors as a whole, and a summary of the results shall be disclosed once per year. Kyocera conducts this evaluation by issuing questionnaires to all Directors and Audit & Supervisory Board Members in order to obtain an appropriate understanding of the current condition of the Board of Directors and of avenues for more effective operation. Discussions are conducted within the Board of Directors about the results of the evaluation and the opinions raised therein. In the evaluation conducted for the year ended March 31, 2020, it was found that improvements had been made in the sharing of information and discussions concerning the broad direction of corporate strategy. The Board of Directors was also found to be generally effective in carrying out its functions through measures such as prior briefing sessions on the matters to be submitted to the Board of Directors for Outside Directors and Outside Audit & Supervisory Board Members, which were implemented during the period under examination. We shall endeavor to operate even more effectively and to make ongoing improvements moving forward.

Cross-Shareholdings

Policy regarding cross-holding of shares

We engage in cross-holding of shares with the objective of improving our business value in the medium to long-term, focusing on corporate growth through enhancement, maintenance and development of business relationships, realization of profits through shareholdings, and the issuing companies’ social significance. In our annual review of cross-holdings of shares, if we determine that there is no significance in holding the relevant shares, in principle we will dispose of such shares. Pursuant to the above-mentioned policy, we currently hold shares in KDDI CORPORATION (KDDI). We continue to hold these shares for economic reasons and because we anticipate that KDDI will be an important business partner of ours in future business opportunities.

Review of cross-holdings of shares

Kyocera Group Management Committee and our Board of Directors conduct an annual review of all cross-holdings of shares to assess whether continued holding of the relevant shares is appropriate, taking into account business needs, such as maintenance and/or enhancement of business relationships and efficiency in use of assets, including capital costs, with respect to individual shares. We decrease our holdings of shares for which a justifiable reason for holding them cannot be identified through discussions with the issuing companies. We sold some of our cross-holdings of shares in the fiscal year ended in March 2020 as a result of such reviews.

Exercise of voting rights

In exercising the voting rights of shares that we hold through cross-holdings, we undertake a comprehensive assessment based on criteria that include whether the proposed measure conforms to our basic policy regarding cross-holdings of shares, and whether our exercise of such voting rights will produce improvement in medium to long-term business value and in shareholder returns, or may cause damage to the management efficiency or financial soundness of the issuers, while continuing to respect their overall management policy and strategy.

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.

1. "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."

2. "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

Corporate System for Timely Disclosure

Internal Control Audits of the Kyocera Group

Kyocera was listed on the New York Stock Exchange until June 26, 2018, and because of this, we had been among the companies to which Section 404 of the Sarbanes-Oxley Act applies. Section 404 requires business operators to construct and maintain internal control systems relating to fiscal reporting. It assesses the effectiveness of internal control systems through internal audits based on internal control evaluation criteria.
As Kyocera voluntarily delisted its stocks from the New York Stock Exchange, we will assess the effectiveness of internal control systems based on the Companies Act and the Financial Instruments and Exchange Act (J-SOX rules).