Tamron implements the principles of the Corporate Governance Code.
Disclosures based on each principle
【Principle 1-4: Cross-shareholdings】
The Company’s policy is to examine the mid- to long-term economic rationale and future outlook of cross-shareholdings and, if cross-shareholdings are judged to contribute to improvement of the Group’s corporate value in the medium and long term, to hold shares for the purpose of stabilizing corporate management.
With respect to individual cross-shareholdings, the board regularly examines whether or not to hold shares based on a comprehensive consideration of a range of factors including the purpose of holding the shares and the associated returns and risks, and where cross-shareholdings are considered inappropriate, the sale of the shares is considered.
In addition, to exercise its rights as shareholder, the Company exercises its voting rights on all proposals and judges the pros and cons of each proposal from the viewpoint of improving the corporate value of the portfolio company over the medium and long term.
【Principle 1-7. Related-party Transactions】
In the event of a competing transactions or transactions involving conflict of interests between the Company and a Director or other related party, Tamron carries out the necessary checks, including seeking prior approval by the Board of Directors.
【Principle 2-6. Demonstrating Functions as a Corporate Pension Asset Owner】
Tamron operates a defined benefit corporate pension in combination with a defined contribution corporate pension
Tamron endeavors to ensure that management of reserves for the defined benefit corporate pension is conducted under an appropriate organizational structure given that it affects not only the stable asset formation of employees but also Tamron’s financial position.
Management of reserves for the defined contribution corporate pension is undertaken by employees themselves but given that it affects the stable asset formation of employees, Tamron provides education and training on asset management.
【Principle 3-1. Improvement of information disclosure】
（1）Company aims (Corporate Philosophy, etc.), management strategies and management plans
（2）Basic Approach and Basic Policy Regarding Corporate Governance
（3）Policy and procedures for determining Directors’ remuneration
The Company’s remuneration system for directors consists of a fixed base remuneration, short-term incentive remuneration as a bonus in accordance with the business performance for a single year, which is performance -based remuneration, and medium- and long-term incentive remuneration as a performance and stock-based remuneration.
In an aspiration to maintain and increase incentives, in addition to keeping an appropriate ratio of performance -based remuneration, the Company has introduced the medium- and long-term incentive remuneration, a performance and stock-based remuneration, to clarify the link between business performance, stock prices, and director remuneration and further heighten awareness of the importance of contributing to the improvement of medium-and long-term business performance and the increase of corporate value.The amounts of the fixed base remuneration, and the short-term incentive remuneration, a bonus in accordance with the business performance for a single year, which is performance -based remuneration, are to be determined by the Board of Directors through the deliberation of the Compensation Committee chaired by an outside director in consideration of the position, degree of contribution, industry standard or standards of other companies of the same size, and performance, etc. of each director within the range of the remuneration limit resolved at the General Meeting of Shareholders.Medium- and long-term incentive remuneration, a performance and stock-based remuneration, is provided in the form of Company shares. A Trust established by the Company’s monetary contribution acquires these shares and delivers them to directors through the Trust on the basis of points awarded in accordance with position and performance pursuant to the share issuance rules specified by the Board of Directors within the range of the remuneration limit resolved by the General Meeting of Shareholders. Levels of achievement towards the Company’s Medium Term Management Plan , including ROE, are also be assessed. The directors are provided with the Company shares at the time of their retirement as directors.
Independent directors shall be paid the base remuneration only.
[Officer Compensation in the Fiscal Year Ended December 31, 2019]
・Directors (excluding External Directors) : 529 million yen (fixed compensation 320 million yen, short-term incentive compensation 96 million yen, long-term incentive compensation 112 million yen)
・External Directors: 15 million yen (fixed compensation 15 million yen)
・Audit & Supervisory Board Member: 52 million yen (including Outside Audit & Supervisory Board Member 34 million yen)
（4）Policy and procedures for nomination of director candidates and corporate auditor candidates
- Candidates for directors are determined from among those with extensive ability, knowledge, achievements, dignity and morality in consideration of diversity in terms of gender, age, nationality, experience and other aspects.
To appropriately reflect extensive experience, high-level expertise or insight in its management, the Company names multiple candidates for outside directors who satisfy the criteria for independence set by the Company and who can take on the management supervisory and advisory roles from an independent standpoint. The candidates for directors are subject to approval from the Board of Directors after deliberations within the Nomination Committee chaired by an outside director.
- Candidates for audit & supervisory board member are determined from among those with extensive ability, knowledge, achievements, dignity and morality as well as a high level of expertise and insight in corporate management, legal affairs, financial affairs, accounting and the like in consideration of diversity. The Company names multiple candidates for outside audit & supervisory board member who satisfy the criteria for independence set by the Company and who can take on the management supervisory and advisory roles from an independent standpoint. The candidates for audit & supervisory board member are subject to approval from the Board of Directors after consent from the Audit & Supervisory Board .
- Dismissal of a director or other executive is to be determined by the Board of Director and after deliberations at the Nomination Committee if it is deemed appropriate due, for example, to the violation of any law, ordinance, Article of Incorporation or other rule.
（5）Explanation regarding the election and dismissal and nomination of Directors, etc.
The Notice of Convocation of General Meeting of Shareholders includes the career history of each candidate and the reasons for election.
【Supplementary Principle 4-1-1. Outline of scope of delegation to Management】
In addition to the matters stipulated in laws and regulations and the Articles of Incorporation, Tamron sets forth matters to be decided by the Board of Directors and the scope of delegation in internal regulations.
【Principle 4-8. Effective use of Independent External Directors】
（1）Tamron elects as External Directors a number of individuals who meet Tamron’s Independence Criteria and can take on the role of supervising and advising management from an independent standpoint, in order to appropriately reflect their extensive experience of corporate management, high levels of expertise and insight in Tamron’s management.
（2）The External Directors attend Tamron’s important meetings such as meetings of the Board of Directors, Management Meetings and performance review meetings and they also have regular meetings with Audit & Supervisory Board Members. Tamron also elects a lead External Director and puts in place systems for liaison, adjustment and collaboration between External Directors and management, Audit & Supervisory Board Members and the Audit & Supervisory Board.
【Principle 4-9. Criteria for Assessing the Independence of Independent Directors and Outside Audit & Supervisory Board Members】
The Company considers that an independent director or an outside Audit & Supervisory Board member (hereinafter, an “outside officers”) is independent if he/she satisfies the standards for independence specified by Tokyo Stock Exchange and does not fall under any of the following items.
1.Executing person of the Company and its subsidiaries (hereinafter, the “Group”).
2.The Group’s major business partner (business partner who has received payment from the Group in an aggregate amount equaling no less than 2% of its annual consolidated sales) or its executing person.
3.The Group’s major business partner (business partner who has made payment to the Group in an aggregate amount equaling no less than 2% of its annual consolidated sales) or its executing person.
4.Executing person of the Group’s major lender (lender from whom the Group has borrowed funds equaling no less than 5% of the Group’s consolidated net assets).
5.The Group’s large shareholder (person holding no less than 10% of voting rights, directly or indirectly) or its executing person.
6.Representative partner or partner of audit _rm which conducts accounting audits of the Company.
7.Consultant, attorney, certified public accountant or other persons who provide professional services who annually receive no less than 10 million yen in cash or other property benefits, other than executive compensation, from the Company
8.Administration officer or other executive persons of an organization, etc. to which the Group annually donates or provides grant in aid of no less than 10 million yen.
9.Executive person of a company with which the Company has relationships through outside executive officers;
10.Spouse or relative within the second degree of relationships of any person listed in 1 through 9 in the above (excluding those who are not important).
11.Any person who has fallen under 1, above, even once in the past, or
12.Any person who has fallen under any person listed in 2 through 10 in the past three years.
【Supplementary Principle 4-11-1. View on balance, diversity and appropriate board size】
To ensure that the Board of Directors is able to discuss and examine matters sufficiently, make decisions swiftly and accurately, properly manage risks and supervise business execution, Tamron shall take the diversity and balance required to cover all Tamron’s functions and business units into consideration, have an appropriate board size of not more than 15 directors and ensure the effectiveness of the board as a whole.
【Supplementary Principle 4-11-2. Concurrent service of Directors as executives at other listed companies】Tamron discloses the concurrent service of its External Directors and Outside Audit & Supervisory Board Members at other companies every year through communications such as the Notice of Convocation of the Ordinary General Meeting of Shareholders and the Annual Security Reports. Tamron also discloses attendance at meetings of its Board of Directors and Audit & Supervisory Board, and the extent of concurrent service is reasonable, allowing External Directors and Outside Audit & Supervisory Board Members to dedicate the time and effort needed to properly fulfil their roles and duties.
【Principle4-11-3. Analysis/assessment of the viability of the entire board of directors】
The Company conducts a survey of the directors and corporate auditors regarding the composition and operation of the Board of Directors to self-assess the viability of the overall Board of Directors. At present, discussions that contribute to the sustainable growth of the business and the enhancement of corporate value are being held. As for the governance function, the supervision of business execution and audit independence are functioning effectively. We therefore acknowledge that the viability of the entire Board of Directors is generally and appropriately secured. Based on the survey results, the Company shares awareness of issues and strives to review the composition, size, and frequency of meetings, operation methods and other concerns of the Board of Directors.The Company will continue discussions and verifications based on the survey results and work to further enhance the viability of the Board of Directors.
【Supplementary Principle 4-14-2. Training policy for Directors and Audit & Supervisory Board Members】
To fulfil their roles, Directors and Audit & Supervisory Board Members are required to constantly actively gather information and deepen their understanding of Tamron’s financial position, compliance, corporate government and other matters.
When they first take up their post, they are required to acquire necessary knowledge about Tamron’s business, finance, organizations ,etc., and they must undergo training to gain knowledge about the Companies Act and other relevant laws and regulations, corporate governance and other matters required as the officer of a listed company, in order to fulfil the role and responsibilities, including legal responsibilities, of Directors or Audit &Supervisory Board Members entrusted to them by shareholders (fiduciary duty).
After taking up their post, they are required to keep undergoing training on management, compliance and other matters on a regular basis.
【Principle 5-1. Policy for constructive dialogue with shareholders】