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Corporate governance

Basic policy and management philosophy

Hamamatsu Photonics has established the basic policy on corporate governance as the foundation of its corporate governance. At the heart of this policy is the following management philosophy.

【Management philosophy of the Hamamatsu Photonics group】

We pursue the unknown where no one has yet explored. By leveraging photonics technology to establish new industries and reach for the world's highest levels of manufacturing excellence, we build enterprise value and contribute to the development of science and technology.

Light is a fundamental technology that supports various industries, and further advances in photonics technology are required on a global scale to achieve technological innovation today and to improve the performance and accuracy of electronic equipment in the future. However, only a small fraction of the nature of light has been elucidated. We explore fields not yet explained. Based on the knowledge generated by that inquiry, we enhance our enterprise value by discovering practical applications with which to create new industries and expand our business operations.

At the same time, we have a duty to generate a stable earnings base and continuous growth on which a long-term development of technology depends. To respond flexibly and quickly to the expansion of the photonics industry and to changes in the business environment, we have formed a framework for the proactive investment in R&D and equipment for continuously stable and high earnings, based on our medium-to-long-term vision.

In addition, we believe that people, technology and knowledge are the foundation of sound management. We improve ourselves everyday through our work, discovering the things that only we can do. In so doing, we conduct technology development which is backed up by the knowledge, needs and competitive technologies for building the photonics industry. We believe it is vital that we, guided by a mind of “Wa” *, foster a corporate culture that can combine our individual talents to form a whole that is greater than the sum of its parts. At the heart of this, effort is a bottom-up operational approach that is focused on the workplace.
*“Wa” means collaborative spirit and integration of diversified talents.

 The basic policy on corporate governance is established and revised by the Board of Directors.

Basic policy on corporate governance of Hamamatsu Photonics

Basic structure of corporate governance

We have adopted a company structure with an Audit & Supervisory Board. As of December 20, 2019, we have thirteen directors (two of whom are outside directors) and four Audit & Supervisory Board Members (two of whom are outside Audit & Supervisory Board Members).

The Audit & Supervisory Board plays a critical role in the effective functioning of Hamamatsu Photonics. Composed of two Audit & Supervisory Board Members who are former employees and two outside Audit & Supervisory Board Members , the Audit & Supervisory Board cooperates in its audits with external accounting auditors to ensure effectiveness. The reason for appointing former employees as Audit & Supervisory Board Members is that they have inherited our corporate culture. For the continuing development of the Company, each Audit & Supervisory Board Member conducts audits on an independent, individual basis, informed by a thorough understanding of our corporate culture and operations.

【Schematic diagram of our corporate governance structure】

Board of Directors

The Board of Directors is the highest decision-making body of Hamamatsu Photonics after the general meeting of shareholders. We have formulated rules for the Board of Directors and have established standards for agenda items in the regulations on official authority. The Board of Directors meets once a month and on an as-needed basis to ensure swift decision-making and transparency, as well as to supervise the execution of duties by the directors. To facilitate extensive discussions, materials on agenda to be resolved by the Board of Directors are distributed to the directors and Audit & Supervisory Board members prior to the Board of Directors meeting.

Audit & Supervisory Board

The Audit & Supervisory Board meets approximately six times a fiscal year. The Audit & Supervisory Board formulates the auditing policy and implementation plan. Based on these directions, each Audit & Supervisory Board Member attends important meetings within the Company, including meetings of the Board of Directors, to assess management performance, and audits the execution of duties by the directors by conducting interviews in each department. In addition, the Audit & Supervisory Board meets with external accounting auditors, regularly or on an as-needed basis, to exchange information.

Outside directors and outside Audit & Supervisory Board Members

Hamamatsu Photonics has appointed outside directors since 1987, and in 2015 established a two-outside-directors system. Outside directors are required to have a high level of insight into technology and management. We have also appointed outside  Audit & Supervisory Board Members since 1987, and in 2004 established a two-outside-Audit-&-Supervisory-Board-Members system. Outside Audit & Supervisory Board Members include individuals with considerable knowledge of finance and accounting. When appointing outside directors and outside Audit & Supervisory Board Members, the Company actively and concretely discloses its interest in the appointment to ensure their independence, thereby increasing transparency and gaining the understanding of shareholders.

One concern sometimes voiced about outside directors and outside Audit & Supervisory Board Members is that they may lack insight into the internal workings of the Company, preventing them from making informed decisions on the agenda to be resolved at meetings of the Board of Directors and other meetings. To ensure that outside directors and outside Audit & Supervisory Board Members can function effectively at meetings of the Board of Directors, we implement the following measures.
・Advance distribution of materials on matters for resolution
・Prior explanation of the agenda as necessary
・Reporting of views of internal Audit & Supervisory Board Members
We have also appointed Kenji Yoshida, Managing Director and Division Director, Administration Headquarters, as a corresponding director for outside directors and outside Audit & Supervisory Board Members.

General meeting of shareholders

The general meeting of shareholders convenes in mid- or late December every year for the fiscal year ending in September. Although many shareholders attend the general meeting every year, to encourage broader participation and facilitate the exercise of voting rights, we are taking the following measures.

【Trends in attendance of general meetings of shareholders】

 December 2019: 531
 December 2018: 533
 December 2017: 602
 December 2016: 614
 December 2015: 632

 

Establishment of an executive committee

Under the Board of Directors, the Company has established a meeting structure called the Executive Committee. The Executive Committee, which meets once a week, is composed of directors, Audit & Supervisory Board members, executive managers, and managers. In addition to sharing information, the Executive Committee reports to the Board on matters related to corporate management and discusses from diverse perspectives important matters other than those resolved by the Board of Directors. After deliberating on these matters, if necessary the Executive Committee submits them to the Board of Directors.

Evaluation of the effectiveness of the board of directors

To enhance the effectiveness of directors, since 2016 the members of the Board of Directors are asked to conduct self-evaluations. All directors and Audit & Supervisory Board Members are subject to a five-point evaluation and a free-form descriptive questionnaire regarding the composition, operation and responsibilities of the Board of Directors. The results are reported at meetings of the Board of Directors and used as appropriate to improve the Board’s operation.

Training for executive officers

We encourage directors and Audit & Supervisory Board Members to conduct voluntary self-training to enhance their ability to fulfill their duties. We also obtain training from outside sources.

【Examples of topics covered in executive officer training】

 2019: Cost of capital
 2018: Directors’ duties and responsibilities
 2016: Director’s responsibilities and the Corporate Governance Code
 2015: Information security

Candidates for directors and audit & supervisory board members

The Articles of Incorporation stipulate that the term of directors of Hamamatsu Photonics is two years and the term of Audit & Supervisory Board Members is four years. Directors and Audit & Supervisory Board Members are elected when attending shareholders with a majority of voting rights approve their appointment at a general meeting of shareholders in which at least one third of the total voting rights of all shareholders are exercised by the attending shareholders.

Candidates for director are required to have deep knowledge of photonics, a desire to explore the frontiers of light and an entrepreneurial spirit with passion for a new industry. To put these qualities into practice, candidates should be capable of implementing bold reforms, backed by leadership and teamwork. Based on these criteria, the Company selects candidates through a comprehensive assessment of their performance, achievements, insight, character, ethics and other factors. After obtaining feedback from outside directors as well, we select candidates at meetings of the Board of Directors. We also receive advice from a female outside director on how to promote the success of female employees.

Candidates for Audit & Supervisory Board Members are required to fulfill their duties from an independent and objective standpoint. Candidates should be individuals of outstanding character, insight and abilities, abundant experience, and high ethical standards. At least one director is appointed with appropriate knowledge of finance and accounting.

Beginning with the December 2017 regular general meeting of shareholders, the Company discloses its reasons for nominating candidates for directors in the reference documents for the notice of convocation, both for inside and outside candidates.

Training successors

To fulfill its corporate social responsibility on a sustainable basis, Hamamatsu Photonics believes it is vital to take effective steps to cultivate successors, not only for the president but also for directors. However, the Company has no officially stipulated procedures for cultivating successors.

Instead, the Company relies on a bottom-up process of manager development. A characteristic of the Company that has continued since its foundation is that each small manufacturing-group unit or “segment” is required to be profitable in its own right. Multiple small segments combine to comprise a manufacturing department, and the manufacturing departments combine to form a business division. Personnel in charge of each unit are asked to carry out management with an awareness of profitability. This arrangement enables managers to acquire the awareness and qualities they need to serve the Company as management professionals.

Compensation scheme for directors

Hamamatsu Photonics requires directors to strive forward with a medium- to long-term perspective, rather than merely with a short-term mindset. Therefore, we see it appropriate to put fixed compensation at the base of the Company’s compensation scheme for directors. We have also introduced stock-based compensation with restrictions on transfer as part of the Company’s compensation scheme. The purpose of this is to encourage our directors to hold the Company’s stock on a long-term, stable basis, with the intention that they share the same perspectives as our shareholders and contribute to the sustainable growth of Hamamatsu Photonics’ corporate value.

【Compensation data for directors and Audit & Supervisory Board Members】

Compensation of directors Cash Remuneration:55 million yen or less per month
(3 million yen or less per month for outside directors)
Determined at the December 22, 2017 regular general meeting of shareholders
Restricted Stock Remuneration:200 milliom yen or less per year
(Excluding Outside Directors)
Determined at the December 20, 2019 regular general meeting of shareholders
Compensation of Audit & Supervisory Board Members 6 million yen or less per month Determined at the December 20, 2012 regular general meeting of shareholders

Executive structure

As of December 20, 2019

Name Title
Akira Hiruma President and CEO
Kenji Suzuki Vice President
Koei Yamamoto Senior Managing Director
Tsutomu Hara Managing Director
Kenji Yoshida Managing Director
Tadashi Maruno Managing Director
Takayuki Suzuki Managing Director
Naofumi Toriyama Director
Kazuhiko Mori Director
Hisaki Kato Director
Minoru Saito Director
Kashiko Kodate Director(Outside)
Ken Koibuchi Director(Outside)
Hiroshi Mizushima Audit & Supervisory Board Member(Standing)
Akira Utsuyama Audit & Supervisory Board Member(Standing)
Yuji Maki Audit & Supervisory Board Member(Outside)
Saburo Sano Audit & Supervisory Board Member(Outside)

Note: The Company submits the list of all outside directors and outside Audit & Supervisory Board Members to the Tokyo Stock Exchange as independent officers, as stipulated in the securities listing regulations of the Tokyo Stock Exchange.

Prevention of conflict of interest

If a real or apparent conflict of interest arises with respect to a director of Hamamatsu Photonics, the director in question must immediately obtain approval from the Board of Directors to conduct the business related to the real or apparent conflict. The director also reports the result of execution of the approved action to the Board of Directors.