Corporate Governance System

Basic Stance on Corporate Governance

Guided by the Group Mission “Kawasaki, working as one for the good of the planet,” Kawasaki established a corporate governance system centered on directors and corporate auditors, with content appropriate for the activities that the Group undertakes, and efforts are made to further improve the system. The basic stance on corporate governance for the Group as a whole is to raise enterprise value through effective and sound business activities while forming a solid relationship with all stakeholders, including shareholders, customers, employees and communities, through highly transparent management practices.


Overview of the Corporate Governance System

Kawasaki adopts the statutory auditor system with a Board of Directors and Board of Auditors, and appoints an independent auditor. The Company also has the discretionary Nomination Advisory Committee, Compensation Advisory Committee, Management Committee, and Executive Officers Committee. The composition and role of each of these organizations are described below.

Board of Directors

The Board of Directors comprises 11 directors (authorized number: 18), with the chairman serving as the presiding officer. Seeking to strengthen the supervisory function of the Board of Directors, the Company appointed three outside directors (independent officers, as required by the Tokyo Stock Exchange) who are independent of any role in the execution of business activities.
Furthermore, the Nomination Advisory Committee and Compensation Advisory Committee have been established as advisory bodies to the Board of Directors, in an effort to strengthen the transparency and objectivity of the Board of Directors. A majority of the committees' members are outside officers, and the presiding officers of each are outside directors.

Number of Board of Directors' Meetings, and Directors' and Corporate Auditors' Attendance Rates (Includes Extraordinary Meetings)

April 2014–
March 2015
April 2015–
March 2016
April 2016–
March 2017
April 2017–
March 2018
April 2018–
March 2019
Number of meetings 18 16 14 15 17
Directors' attendance rate 98.6% 96.9% 99.4% 99.4% 99.0%
Outside director's attendance rate 100.0% 96.7% 100.0% 100.0% 100.0%
Auditors' attendance rate 100.0% 98.4% 100.0% 98.6% 100.0%
Outside corporate auditors' attendance rate 100.0% 100.0% 100.0% 97.7% 100.0%

Reason for Appointment of Outside Director

Name Reason for Appointment
Michio Yoneda Mr. Yoneda previously served as President & CEO (Member of the Board) of Osaka Securities Exchange Co., Ltd., and Director & Representative Executive Officer and Group COO of Japan Exchange Group, Inc., and other important positions. The Company has received helpful opinions and advice on important management decisions based on his deep insight for corporate governance and abundant management experience cultivated in those positions from a standpoint independent from the Company’s execution of duties. Considering these points, the Company has judged that he will be able to fully perform his roles as an Outside Director supervising the execution of duties of the Company and enhancing its enterprise value.
Yoshiaki Tamura Mr. Tamura served as Representative Director and Executive Vice President, Asahi Glass Co., Ltd. (At present: AGC Inc.), Overall Business Management, GM of Technology General Division, Deputy Leader of AGC Group Improvement Activities and Executive Vice President, President of Glass Company and other important positions. The Company has received helpful opinions and advice on important management decisions based on his deep insight for manufacturing and abundant management experience cultivated in those positions from a standpoint independent from the Company’s execution of duties. Considering these points, the Company has judged that he will be able to fully perform his roles as an Outside Director supervising the execution of duties of the Company and enhancing its enterprise value.
Jenifer Rogers Ms. Rogers has extensive international experience and deep insights into legal affairs, compliance, and risk management, having served as an in-house lawyer and counsel at financial institutions in Japan and overseas for many years. The Company has received helpful opinions and advice on important management decisions based on her deep insight for legal affairs, compliance, risk management and abundant international experience cultivated in those positions from a standpoint independent from the Company’s execution of duties. Considering these points, the Company has judged that she will be able to fully perform her roles as an Outside Director supervising the execution of duties of the Company and enhancing its enterprise value.

Board of Auditors

The Audit & Supervisory Board comprises five audit & supervisory board members (authorized number: five). To ensure the reliability of financial reports, the Company appoints internal audit & supervisory board members who have considerable knowledge of finance and accounting. Furthermore, to ensure the objectivity and neutrality of the supervisory function, the Company appoints three outside audit & supervisory board members (independent officers, as required by the Tokyo Stock Exchange) with no business relationships or other vested interests in the Company. The internal and outside audit & supervisory board members share information closely and work to enhance the supervisory function.

Number of Board of Auditors' Meetings, and Corporate Auditors' Attendance Rate

April 2014–
March 2015
April 2015–
March 2016
April 2016–
March 2017
April 2017–
March 2018
April 2018–
March 2019
Number of meetings 19 17 17 17 17
Corporate auditors' attendance rate 100.0% 100.0% 100.0% 100.0% 100.0%
Outside corporate auditors' attendance rate 100.0% 100.0% 100.0% 100.0% 100.0%

Reason for Appointment of Outside Corporate Auditors

Name Reason for Appointment
Satoru Kohdera The Company has judged that Mr. Kohdera will be able to fully perform his roles as an Outside Corporate Auditor from an independent position, based on his abundant experience as an attorney and high level of knowledge of legal affairs.
Atsuko Ishii The Company has judged that Ms. Ishii will be able to fully perform her roles as an Outside Corporate Auditor from an independent position, based on her abundant experience and high level of knowledge of labor administration.
Saito Ryoichi
(newly appointed)
The Company has judged that Mr. Saito will be able to fully perform his roles as an Outside Corporate Auditor from an independent position, based on his abundant experience as a corporate manager and high level of knowledge of business planning, finance and accounting, and risk management.

Key Internal Committees Other Than Board of Directors and Board of Auditors

Name Activities
Nomination Advisory Committee
  • An advisory body on nomination of directors and corporate auditors
Compensation Advisory Committee
  • An advisory body on compensation for directors
Management Committee
  • Includes executive directors and internal company presidents
  • Assists the president as an advisory body with regard to Group management
  • Discusses important management policy, management strategy, management issues, and other matters from a Group perspective
Executive Officers Committee
  • Comprises all executive officers appointed by the Board of Directors
  • Conveys business execution policy based on management policy and management plans determined mainly by the Board of Directors and the Management Committee
  • Venue for communicating necessary and important information regarding business execution and exchanging opinions
Corporate CSR Committee
  • Discusses and decides on basic policy and important matters related to CSR for the Group as a whole and monitors implementation status
Corporate Risk Management Committee
  • Discusses important issues pertaining to risk management for the Group as a whole and monitors implementation status
Major Project Committee
  • Assesses risk and considers appropriate responses before acceptance of major projects
Project Risk Management Committee
  • Regularly follows up on major projects during execution

Kawasaki Group’s Governance Structure (As of June 26, 2019)

Kawasaki's Governance Structure

Audit Status

Internal Audit

The Auditing Department, which is an internal audit division and consists of around fifteen (15) persons, makes efforts to improve the internal control function such as regularly auditing whether our group's execution of general business activities is properly conducted in accordance with laws and internal rules etc. Furthermore, corporate auditors and the Auditing Department exchange information and share information such as each audit results and findings.

Auditor's Audit

Corporate auditors attend board of directors meetings and management meetings, etc. (Outside corporate auditors attend management meetings etc. as needed.) In addition, corporate auditors inspect important documents, meet directors and executive officers, conduct operational audits on the head office and operating division, and investigate the status of business and assets through an investigation on the subsidiaries, etc. Furthermore, by three (3) outside corporate auditors, further objectivity and neutrality of audit function are ensured. In addition, information is shared with full-time corporate auditors and outside corporate auditors, and the audit function is enhanced.

Independent Auditing

With regard to independent auditing, Kawasaki undergoes audits of its financial statements by the independent auditor KPMG AZSA LLC. Corporate auditors and the Board of Auditors receive an outline of the audit plan and a report on important audit items from the independent auditor, and the Board of Auditors explains the Company’s auditing plan to the independent auditor. Corporate auditors and the Board of Auditors periodically receive reports on the results of audits by the independent auditor, and conversely, the independent auditor receives reports on the results of audits by the corporate auditors and the Board of Auditors, who strive to keep lines of communication open with the independent auditor by also exchanging information and opinions. When necessary, corporate auditors take part in the audits performed by the independent auditor, and may also receive reports from the independent auditor concerning audits when appropriate.

Independent Auditor Compensation in Fiscal Year Ended March 31, 2019

(Millions of yen)

Subject of audit Compensation based on
audit certification services
Compensation based
on non-audit services
Kawasaki Heavy Industries Ltd. 190 71
Consolidated subsidiaries 47 2
Total 238 74

Compensation to Corporate Officers

The compensation system for Kawasaki directors and audit & supervisory board members—which is designed to promote sustained improvement in corporate performance and enterprise value and to secure outstanding human resources—ensures a level of compensation in line with the duties of the individual officer. Compensation for directors, excluding outside directors consists of basic compensation, performance-based compensation, and a stock purchase fund. Among these, performance-based compensation is determined by linking corporate performance with the aim of using compensation as an incentive for achieving business goals. The stock purchase fund is distributed in fixed amounts each month for the purpose of sharing value with shareholders and incentivizing directors to enhance medium- to longterm enterprise value, with the entire amount contributed to the officers' stock ownership plan in order to purchase shares of the Company on a continuous basis. Compensation for outside directors is set at a fixed level not tied to corporate performance, from the perspective of professional independence. These types of compensation for directors are determined by the President as delegated by the Board of Directors, after consultation with the Compensation Advisory Committee. The compensation of audit & supervisory board members is set at a fixed level not tied to corporate performance, from the perspective of professional independence. This compensation is determined by the Audit & Supervisory Board.

Amount of Corporate Officers’ Compensation in Fiscal Year Ended March 31, 2019

(Millions of yen)

    Directors 16 people Audit & supervisory bord members 6 people Total 22 people
(Including 7 people from outside)
Total amount of compensation       605 108 713 (73)
Total amount of compensation, etc.
by category
Basic compensation 445 108 553 (73)
Performance-based compensation 97 - 97 (-)
Stock purchase fund 62 - 62 (-)
Note:
The maximum amount of compensation for directors is ¥1,200 million per year (as resolved at the 189th Ordinary General Meeting of Shareholders held on June 27, 2012). The maximum amount of compensation for corporate auditors is ¥120 million per year (as resolved at the 194th Ordinary General Meeting of Shareholders held on June 28, 2017).

Contact

If you need more information about our business,
please feel free to contact us.

CONTACT