Calbee : Corporate Governance (0.2MB)

SECTION4 Corporate Governance

Basic policy on corporate governance

Calbee has a vision of being a company with the "respect, admiration and love, firstly of our customers, suppliers, and distributors, secondly of our employees and their fami- lies, thirdly of the communities, and finally of our stockholders." The reason for this vision is we believe that management that puts customers and business partners first will maximize profits for our shareholders. We believe that enhancing corporate governance is crucial to live up to the trust and expectations of all stakeholders and increase corporate value, and, based on this frame of mind, we intend to increase the transparency of management while building up our internal control and compliance systems.

We have formulated Calbee's Corporate Governance Code, which systematizes our basic policy on corporate governance. Calbee's Corporate Governance Code

https://www.calbee.co.jp/en/ir/pdf/2021/governance_code.pdf

Corporate governance system

We recognize corporate governance as a management priority and have been working to strengthen and enhance our corporate governance system from an early stage. As such, we have adopted a corporate governance system that has functions of management oversight. It comprises the Board of Directors, which has a majority of outside directors, and the Audit & Supervisory Board members, and Audit & Supervisory Board. We have introduced an executive officer system to separate business execution and supervisory functions to improve management transparency, clarify management responsibilities, speed up decision-making, and strengthen the management oversight function. In addition, the Board of Directors and the executive officer system place importance on diversity in regard to the backgrounds and values of the members.

Calbee Report 2022

Transition of corporate governance system enhancement

	Purpose	Measures taken
2001	Separation of supervision and	Adopted an executive officer system
business execution	Appointed outside directors
	Enhancement of supervisory and	Reduced the number of internal directors from nine
	to two
	monitoring functions
2009	Increased the number of outside directors from two
Promotion of diversity of the
	to five
	Board of Directors
	Appointed the first non-Japanese director
2010	Enhancement of management	Established the Advisory Board (currently the
transparency and soundness	Nominating Committee/Compensation Committee)
2014	Clarification of management	Reduced director terms from two years to one year
responsibility
2019	Strengthening of management	Increased the number of internal directors by two; the
structure	Board of Directors increased from six to eight

Clarification of the function of	Changed the Advisory Board into the Nominating
Committee/Compensation Committee, chaired by an
committees
outside director

Number of directors 8	Number of Audit &
Supervisory Board members 3

	Internal		Ratio of outside
Ratio of outside	directors
	Non-Japanese director	Audit &
directors		Supervisory Board
63%			members
Outside		67%
	directors
		Female directors

46

1

Calbee The

Goals Group's

2

Creation Value the at Group Calbee

3 Sustainability 4 CorporateGovernance

5

Data

Corporate Governance

Organization of corporate governance

General Meeting of Shareholders

Appoint / Dismiss

Appoint / Dismiss

Appoint / Dismiss

Audit

Audit & Supervisory Board

Nominating Committee/

Board of Directors

Compensation

Committee

Report

President & CEO, Representative Director

Report

Auditor

Accounting

Report /

Sustainability Committee

Independent

audit

Cooperate

Management Council

Ethics and Risk

Ethics and Risk

Report

Management Advisory

Management Committee

Board

Cooperate

Executive Officers

Internal Audit Division

Internal

audit

Divisions, and Internal

Affiliated companies

Companies

Corporate governance system

Main items	Contents		Main items	Contents
Form of institutional design	Company with Audit and		Audit & Supervisory Board members
Supervisory Board		Term of office	4 years
			Number of Audit & Supervisory Board members	3 (2)
Board of Directors			(of whom, outside Audit & Supervisory Board
Term of office	1 year		members)
Number of directors (of whom, outside directors)	8 (5)		Number of meetings of Audit & Supervisory	14
Number of meetings of the Board of Directors	13		Board (FY2022/3)
(FY2022/3)
Board of Directors' attendance ratio	99%		Adoption of an executive officer system	Yes
(all members)

Calbee Report 2022

Board of Directors

The Board of Directors holds regular meetings once per month, in principle. The Board formulates and makes decisions regarding important management policies and strategies connected to sustainable growth and improving corporate value in addition to making decisions concerning statutory matters, and supervises business execution.

Nominating Committee/Compensation Committee

The Nominating Committee/Compensation Committee meets four times a year, in principle. It is a discretionary committee chaired by an outside director. The committee discusses the nomination and compensation of directors and Audit & Supervisory Board members.

Audit & Supervisory Board

The Audit & Supervisory Board consists of three Audit & Supervisory Board members. (Including 2 outside Audit & Supervisory Board members). The Board ensures transparency and oversees audits management.

Management Council

The Management Council meets once a month, in principle. Regular members consist of senior executive officers (including three directors) and the general manager of the Corporate Planning Department. The council verifies the current status of, and issues facing, business administration and conducts preliminary discussions on important matters.

Sustainability Committee

The Sustainability Committee is responsible for determining material issues for the Calbee Group, deliberating on priority themes, and managing the progress of initiatives.

Ethics and Risk Management Committee

The Ethics and Risk Management Committee is chaired by the president & CEO. The committee discusses, decides, and manages progress on issues and countermeasures related to promoting compliance and risk reduction.

Ethics and Risk Management Advisory Board

The Ethics and Risk Management Advisory Board includes an eternal expert. The Board discusses management risks and compliance issues, and then makes proposals to the CEO and the Ethics and Risk Management Committee.

47

1

Calbee The

Goals Group's

2

Creation Value the at Group Calbee

3 Sustainability 4 CorporateGovernance

5

Data

Corporate Governance

Policies and processes for appointing Directors and Audit & Supervisory Board Members

Policy

Composition of the Board of Directors

The Board of Directors is composed of a majority of independent directors. We actively promote the Board's diversity by appointing members with differing personal histories, genders, and nation- alities. In addition, we appoint a balanced combination of outside directors with backgrounds in many different areas of expertise, such as the food industry, general industry, academia, and journalism.

Policy on appointing Outside Directors and Outside Audit & Supervisory Board members

In appointing outside directors or outside Audit & Supervisory Board members, we place importance on the following points and comprehensively consider whether or not they contribute to sound and efficient corporate management. Evaluations of the independence of directors and Audit & Supervisory Board members are conducted based on the standards established by the Tokyo Stock Exchange.

Expectations for useful, objective, and fair advice and supervision based on a thorough knowledge and experience of corporate management, and a high level of knowledge in the food industry

Expectations for useful, objective, and fair advice and supervision based on a high level of knowledge in the specific field

Processes

The nomination of outside directors is decided upon approval at the General Meeting of Shareholders after being reviewed by the Nominating Committee, which is a discretionary advisory committee, and recommended by the Board of Directors.Regarding the nomination of candidates for outside Audit & Supervisory Board members, candidates must have a strong will to respond to the mission entrusted to them from the shareholders and a background in finance, accounting, and/or law. Candidates are recommended by the Board of Directors and approved by the Audit & Supervisory Board before being decided on at the General Meeting of Shareholders.

Calbee Report 2022

Enhancing the effectiveness of the Board of Directors

Evaluation of the effectiveness of the Board of Directors

To continuously improve the effectiveness of the Board of Directors, we conduct an annual evaluation of its effectiveness. Directors are interviewed individually and fill out a questionnaire pertaining to the effectiveness of Board meetings. Effectiveness is evaluated in terms of whether the Board of Directors is capable of decision-making that increases corporate value from the shareholders' perspective and whether the Board can fulfill its supervisory function over executive divisions. Results are then analyzed to further improve the functions of the Board of Directors.

Method of evaluation of the effectiveness

In the evaluation of the effectiveness of the Board of Directors for the fiscal year ended March 31, 2022, questionnaires on the following subjects were issued to directors and Audit & Supervisory Board members. The format of these questionnaires involved three-level quantitative evaluation and open response columns. In order to develop a better understanding of the questionnaire responses, individual meetings were held with all directors, and the results were discussed at a Board of Directors' meeting.

Questionnairesubjects

1. Processes and composition of the Board of Directors
2. Specialties and diversity of directors
3. Auditing systems
4. Adequacy of discussions at Board of Directors' meetings from a medium- to long-term perspective
5. Sufficiency of discussion on Director/officer appointments by Nominating Committee
6. Adequacy of discussions on evaluations and compensation of Director/Senior management by Compensation Committee

48

1

Calbee The

Goals Group's

2

Creation Value the at Group Calbee

3 Sustainability 4 CorporateGovernance

5

Data

Corporate Governance

Results of effectiveness evaluation

The evaluation conducted in the fiscal year ended March 31, 2022, found that the Board of Directors was sufficiently effective.

	Results
Quantitative	The overall average for all responses was "generally appropriate," and responses of
evaluation	"generally appropriate" and "appropriate" were received for more than 90% of questions.

Calbee Report 2022

Future initiatives by the Board of Directors

In the fiscal year ending March 31, 2023, initiatives will advanced based on the following three priority themes in order to drive ongoing improvements to the effectiveness of the Board of Directors through means such as reinforcing risk management and internal control.

Priority themes

Policies

49

1

Goals Group's Calbee The

	The number of outside directors and other aspects of the composition of the Board of
	Directors were deemed appropriate, and directors are effectively performing their duties.
	The directors selected feature diverse career backgrounds and possess the insight and
Qualitative	expertise required to perform their duties.
Although meetings of the Board of Directors were held remotely, brisk, unrestrained, and
evaluation
meaningful discussion took place with frequent questions asked, despite the time
	limitations.

Discussions for policies and strategies regarding important management issues

It is important for the Board of Directors to discuss the growth strategies to be implemented leading up to 2030 as well as the related priority issues. The following goals will be pursued by the Board of Directors based on a recognition of the importance of formulating policies and resource allocation founded on appropriate strategies.

Provision of more opportunities for regularly sharing information regarding the progress of new businesses and the issues that have arisen during the course of these businesses

2

the at Creation Value

	Outside directors engaged in discussions based on their varied perspectives and with
	sufficient information due to materials on agenda items supplied in advance of meetings.
	Improvement has been seen in discussions from a medium- to long-term perspective
Areas of particular	with regard to agenda items for Board of Directors' meetings.
The addition of internal Audit & Supervisory Board members well versed on Calbee's
improvement
business in the fiscal year ending March 31, 2023, is anticipated to make for a strong
	auditing system comprised of two full-time Audit & Supervisory Board members.

Initiatives based on issues recognized in evaluation in the fiscal year ended March 31, 2021

The Board of Directors took steps to enhance reporting regarding the progress of important overseas projects, new development projects that are priorities under the Medium-term Business Plan, and the establishment and implementation of sustainability strategies, climate change response measures, and digital transformation strategies. In addition, avenues for monitoring these activities and pursuing qualitative improvements were pursued. Moreover, input and suggestions received from institutional investors and other stakeholders was shared at meetings of the Board of Directors via discussion with outside directors and investors in order to facilitate deliberations aimed at improving corporate value.

	Expansion of opportunities for tracking M&A and post-merger integration projects in
	overseas businesses and the status of raw material procurement in frontline
	operations
	Emphasis on quantitative indicators when deciding policies and strategies
	We will enhance monitoring by the Board of Directors through the bolstering of the
Enhancement of	scope and targets of monitoring.
monitoring regarding	Confirmation of the progress of strategic investment and development projects and
strategy formulation	status of projects facing issues along with reasons for issues and remedy measures
and implementation	Confirmation of status of human resources, digital transformation, and other impor-
	tant management measures
	The roles of the Nominating Committee and the Compensation Committee will be
Expansion of roles	clarified based on the understanding of their critical role in improving corporate gover-
nance in order to fully capitalize on their respective functions.
and activities of
nominating committee	Coordination between Board of Directors and Nominating Committee and the
and compensation	Compensation Committee regarding succession planning
committee	Enhancement of Nominating Committee and the Compensation Committee secre-

tariat functions and coordination with outside directors

Group Calbee

3 Sustainability 4 CorporateGovernance

5

Data

Corporate Governance

Calbee Report 2022

Executive remuneration

50

1

To enhance management transparency, remuneration paid to directors goes through a process of discussion by the Compensation Committee, resolution by the Board of Directors, and approval at the General Meeting of Shareholders. Remuneration for senior executive officers goes through a process of discussion by the Compensation Committee and then resolution by the Board of Directors. The remuneration of the Company's directors and senior executive officers comprises 1) basic remuneration (fixed remuneration), 2) bonuses (variable remuneration), 3) performance-based stock

compensation(variable remuneration), and 4) retirement bonus(variable remuneration). Approximately half of the remuneration is performance-based to promote medium- to long-term growth in addition to continued and improved performance every fiscal year and to connect remuneration to shareholder interests.

Outside directors and Audit & Supervisory Board members are limited to fixed remuneration only, as they are in positions independent from business execution.

Calbee The Goals Group's

Director	Basic remuneration 50%			Bonuses 25%			Performance-based stock compensation
(excluding outside					Retirement bonus 25%
directors)
Senior executive
officers
1. Basic remuneration	2. Bonuses	3. Performance-based stock compensation	4. Retirement bonus
Position	Compensation for executive duties	Short-term incentive	Medium- to long-term incentive
Linked to results during the fiscal year				Linked to results during the period of appointment
Payment form	Cash	Cash	Shares	Cash
		Annual compensation linked to degree of accomplishment of targets	Non-monetary remuneration issued at time
	Payment of compensation based on opera-	set for evaluation indicators
	of resignation based on points (shares of
	tional execution duties for specific ranks	Payments based on duties and degree of accomplishment of targets for	One half of the annual bonus amount set
	Company stock) allocated each year in
Overview​	Compensation amounts decided through	personal performance indicators and consolidated performance indicators	aside and paid in one lump sum upon
accordance with rank and degree of accom-
	comprehensive assessment of ranks,	(net sales, operating profit, and profit attributable to owners of parent)	retirement
	plishment of consolidated performance
	duties, and responsibilities	Diversity and other human resource development targets representing
	targets
		50% of personal performance indicators

2

Creation Value the at Group Calbee

3 Sustainability 4

		Rate of Influence of Evaluations on Bonuses
In-house com-
Consolidated performance 50%		In-house company performance 30%	Personal performance
pany presidents					20%
Other officers
Consolidated performance 70%			Personal performance 30%

Evaluation Indicators for Performance-Based Stock compensation

Prior to March 31, 2022​			Profit attributable to owners of parent
Consolidated Net Sales 20%		Consolidated operating profit 50%			30%
From April 1, 2022	Profit attributable to owners of parent		Sustainability targets*
Consolidated Net Sales 20%		Consolidated operating profit 40%		25%			15%

• Sustainability targets have been set for protein-rich product sales ratio, ratio of women in management, domestic procurement volume of potatoes, Food Communications participants, rate of use of certified palm oil (rates of accomplishment of the targets indicated on the Company's corporate website for the aforementioned indicators), and employee engagement

Governance Corporate

5

Outside directors/

Audit & SupervisoryBasic remuneration 100% Board Members

Data