Corporate Governance
At Sumitomo Seika, we believe that corporate governance is a means for a company to achieve sustainable growth and increase its corporate value over the medium to long term. We implement various initiatives to create and strengthen such a system.
Basic Stance
Sumitomo Seika is dedicated to our Corporate Mission: “Following the Sumitomo Business Spirit, the Sumitomo Seika Group will contribute to the advancement of society by developing world class creative technologies in the field of chemistry and, based thereon, supplying unique, high-quality products to people around the world.” In our efforts to attain sustainable growth and enhance our corporate value over the medium to long term, we are committed to strengthening and enhancing our corporate governance in line with the following policies.
- We ensure that our shareholders are provided with all of the information that they need to properly exercise their rights and with opportunities to exercise such rights, and that all shareholders are treated equally.
- We foster a corporate culture that respects the interests of our stakeholders, including shareholders, customers, employees, and local communities, and proactively cooperate with them.
- We establish and implement a code of conduct that our officers and employees must abide by and appropriately manage an internal control system.
- We ensure management transparency by promoting appropriate and adequate information disclosure. This includes publishing financial information in English and providing timely updates on our website.
- Given its fiduciary responsibilities and accountability to shareholders, the Board of Directors presents the management policies and corporate strategies of Sumitomo Seika Group and makes timely and bold decisions in order to promote sustainable growth and improve the Group’s medium to long term corporate value.
- We engage in constructive dialogue with our partner toward achievement of sustainable growth and increased medium to long term corporate value, and we clearly explain our management strategies and plans in an easily understandable manner through such dialogue.
History of Strengthening Corporate Governance
| Date | Main Initiatives |
|---|---|
| 2015 Jun. |
Selected two independent external directors (Increased from one) |
| Dec. |
Formulated the Sumitomo Seika Corporate Governance Guidelines |
| 2020 Jun. |
Selected three external auditors (one female) |
| 2021 Jun. |
Took the form of a company with an Audit and Supervisory Committee |
| Nov. |
Formulated standards relating to the appointment of independent external directors |
| Dec. |
Established the Sustainability Committee |
| 2023 Jun. | Selected independent external directors with management experience |
| Aug. | Selected an independent external director as Chair of the Nomination and Compensation Committee |
| 2024 Jun. | Independent external directors account for 40% of the Board of Directors (four of the 10 members, two men and two women). |
| 2025 Jun. | Of the 10 members of the Board of Directors, three are women (30%), all of whom are independent external directors. |
Corporate Governance Structure
On June 25, 2021, we transitioned from a company with a board of corporate auditors structure to a company with an Audit and Supervisory Committee structure in order to further enhance corporate governance and management transparency by strengthening the supervisory function of the Board of Directors, as well as to accelerate decision-making and thereby further increase our corporate value.
In order to strengthen corporate governance, realize efficient management, and enhance competitiveness, we have adopted an executive officer system that separates directors, who are responsible for formulating basic corporate policies, determining strategies, and supervising business execution, from executive officers, who focus on business execution.
Outline of Corporate Governance Structure
Board of Directors
As well as deciding on management strategies and other important management matters, in accordance with laws and regulations, the Board of Directors takes reports on business execution and other topics from individual directors, and provides oversight to directors’ business execution and other duties. To strengthen the management monitoring and supervision function, executive officers and other non-directors attend board meetings as necessary to explain the status of business execution.
The term for directors who are not members of the Audit and Supervisory Committee is one year, and candidates are nominated by the board, after considering reports by the Nomination and Compensation Committee, and then selected at the Shareholders Meeting.
Outline of the Board of Directors (FY2025)
| Chair |
President |
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| Members |
6 directors (excluding those who are members of the Audit and Supervisory Committee, including 4 directors concurrently serving as executive officers) *On January 30, 2026, Director YOSHIIKE Fujio, who was Audit and Supervisory Committee member, resigned due to health reasons. Since then, the number of directors who are members of the Audit and Supervisory Committee has been three. |
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| Frequency of Meetings |
Once a month in principle, with extraordinary meetings as necessary |
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| Number of Meetings |
14 times |
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| Attendance |
OGAWA Ikuzo 4 times out of 4 times (100%) * At the 112th Annual General Meeting of Shareholders held on June 23, 2025, OGAWA Ikuzo, HAMATANI Kazuhiro, SHIGEMORI Takashi, MICHIBATA Mamor, and KAWASAKI Masashi retired, and ODA Yoshiaki, NAKAMURA Kenji, TAKESHITA Noriaki, YAMAGUCHI Kiyoshi, and MIYAMOTO Keiko newly assumed office. |
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| Main Issues Deliberated |
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Nomination and Compensation Committee
This is a consultative body of the Board of Directors to ensure transparency and fairness in the selection of senior management, the nomination of directors, and the determination of their compensation. Committee members are appointed by the Board of Directors and consist of the President, the Director in charge of human resources, and an independent external director. A majority of the Committee members are independent external directors, and an independent external director is appointed as the Committee Chair.
Outline of Nomination and Compensation Committee (FY2025)
| Chair |
Independent external director |
|---|---|
| Members |
6 (of which there are 4 independent external directors) * On January 30, 2026, Director YOSHIIKE Fujio, who was Audit and Supervisory Committee member, resigned due to health reasons. Since then, the number of members of the Nomination and Compensation Committee has been five, including three independent external directors. |
| Number of Meetings |
7 times |
| Main Activities |
Nominations
Determining compensation
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Audit and Supervisory Committee
The Audit and Supervisory Committee audits directors' business execution from the perspective of legality and appropriateness, thereby contributing to the improvement of the Company's corporate governance. It also shares opinions and deliberates about, and investigates, a wide range of topics related to the suitability and effectiveness of management, and compliance, as well as offering advice or suggestions on legality and suitability.
The committee consists of one director (full-time Audit and Supervisory Committee member) and three external directors (Audit and Supervisory Committee members), and conducts effective audits by combining the independence of the part-time members with the information-gathering capabilities of the full-time member.
Outline of the Audit and Supervisory Committee (FY2025)
| Members |
4 directors (including 3 external directors) * On January 30, 2026, Director YOSHIIKE Fujio, who was Audit and Supervisory Committee member, resigned due to health reasons. Since then, the number of members of the Audit and Supervisory Committee has been three, including two independent external directors. |
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|---|---|---|---|---|---|---|---|
| Frequency of Meetings |
Once a month in principle, with extraordinary meetings as necessary |
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| Number of Meetings |
14 times |
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| Attendance |
MICHIBATA Mamoru 4 times out of 4 times (100%) * MICHIBATA Mamoru and KAWASAKI Masashi retired as the Audit and Supervisory Committee members at the conclusion of the 112th Annual General Meeting of Shareholders held on June 23, 2025. YAMAGUCHI Kiyoshi and MIYAMOTO Keiko were newly appointed as directors who are the Audit and Supervisory Committee members at the same shareholders' meeting. Therefore, the number of the Audit and Supervisory Committee meetings and board of directors meetings eligible for attendance differs from that of others. Additionally, YOSHIIKE Fujio resigned on January 30, 2026, due to health reasons, so the number of the Audit and Supervisory Committee committee meetings and board of directors meetings eligible for attendance also differs from that of others. |
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| Main Issues Deliberated |
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Outline of the Committees and Frequency of Meetings
| Name | Outline |
Frequency of Meetings |
|---|---|---|
| Management Meeting | The Management Meeting deliberates on the Group’s management strategies and other important management matters. |
24 times/year (twice/month) |
| Sustainability Committee | To advance sustainability management, the Sustainability Committee formulates sustainability policies and plans, confirms and improves on the progress of sustainability within the Company and in other group companies, and deliberates other matters required to promote sustainable management. |
Once/year |
| Internal Control Committee | In order to oversee the Company’s internal controls, the Internal Control Committee receives reports on the status of the operation of the internal control system and provides any needed instructions to each organization and the Risk and Compliance Committee to sustain and improve internal controls. |
3 times/year |
| Responsible Care Committee | To advance activities related to Responsible Care, the Responsible Care Committee deliberates and decides on the development of medium- and long-term plans for safety, environment, and quality (including risk and compliance). This includes formulating annual plans, implementing major changes to operational systems, and taking actions in response to significant issues. | 3 times/year |
| HR Committee | The HR Committee selects and trains candidates for management positions and deliberates on their promotion to or continuation in key roles (such as department manager level or above, special-grade reemployment, etc.). | Twice/year |
The president and the executive officers responsible for business operations attend each committee meeting. Full-time members of the Audit and Supervisory Committee also participate as observers to monitor and supervise business operations.
Moreover, the table above shows the frequency of meetings in principle only, while each committee meets on an as-needed basis on an ad hoc basis.
Corporate Governance Structure Chart
Evaluating the Effectiveness of the Board of Directors
As part of our efforts to ensure that the Board of Directors effectively fulfills and further improves its own roles and functions, we conduct an evaluation of the effectiveness of the Board of Directors. Our most recent assessment of the effectiveness of the Board of Directors was conducted for fiscal 2025, and we are pleased to provide a summary of the results.
How we evaluate effectiveness
This year's Board of Directors effectiveness evaluations were conducted targeting all directors (9 members) through the following process.
The areas of the questionnaire are as follows:
- Efficient operation and system of the Board of Directors (number of agenda items, distribution of materials, time allocation, etc.)
- Composition of the Board of Directors (number of members, skills, diversity, etc.)
- Nomination and Compensation Committee (roles, composition, reporting content, etc.)
- Discussions and decision-making at the Board of Directors (discussion environment, etc.)
- Supervision of the execution of duties by the Board of Directors (execution of business plans, internal controls, sustainability, succession planning for executive management, etc.)
- Status of addressing issues raised in last year's effectiveness evaluation
FY2025 Board of Directors effectiveness evaluation
Based on questionnaires and interviews with each director, our Board of Directors held discussions on the effectiveness of the board in fiscal 2025, the status of addressing previous issues, and future challenges. The discussions confirmed that the Board of Directors is functioning effectively with active debates under appropriate management, and that progress and improvements regarding the previous issues have been recognized. Additionally, challenges to be addressed in the current fiscal year were identified. Based on these results, our Board of Directors evaluated that it is fulfilling its roles and functions required to enhance corporate value. The details are as follows.
Status of efforts toward issues identified in the previous yearʼs effectiveness evaluation
We addressed the issues identified in last year's effectiveness evaluation as described below. We assess that progress and improvements have been made for all the issues.
| Issue | Initiatives | Evaluation |
|---|---|---|
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In fiscal year 2024, an incident was uncovered in which our group company of changing raw materials suppliers without prior notice to customers and overbilling them for product proceeds ("this incident"). The Board of Directors supervises the implementation of recurrence prevention measures and other actions related to this incident. |
The Board of Directors received reports on recurrence prevention measures for this incident and their implementation status, provided improvement instructions, and supervised to ensure more reliable execution. |
Although the recurrence prevention measures have been completed and improvements made, issues related to group company management and strengthening quality assurance are ongoing challenges that cannot be resolved in a single year. Therefore, going forward, these issues will be addressed, and their status will be reported to the Board of Directors. |
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To enable more effective supervision by the Board of Directors, the executive side reviewed the reporting to the Board. |
Reports to the Board were made with efforts to ensure a thorough understanding of the importance of each issue and the countermeasures. |
The reporting content is evaluated as improved. Going forward, further improvements will be pursued, and efforts to strengthen quality assurance will be enhanced, with progress reports provided to the Board. |
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The Board of Directors receives reports on initiatives for business resilience and conducts effective supervision through discussions based on these reports. |
Reports on the technology strategy of the business and the strengths of each product were made to the Board, and future challenges and responses were examined. |
The reporting itself was evaluated as appropriate. Going forward, efforts toward business resilience will be advanced with a sense of urgency. |
Future Challenges
To enhance our corporate value going forward, we will advance initiatives on the following challenges.
- Strengthening discussions on growth strategies
- Developing successors for executive management personnel
- Enhancing internal controls, risk management, and compliance that support the foundation of corporate growth
Nomination and Compensation of Directors
Nomination of Candidates for Directors
The Board of Directors selects and discloses the skills (knowledge, experience, and abilities) that the Board collectively should possess to drive the Company’s sustainable growth and enhance corporate value. Additionally, we nominate candidates for the Board who not only have these essential skills but also meet our director selection criteria in terms of personal qualities. In doing so, we consider diversity, including gender, background, and nationality.
External Directors
We designate external directors as independent directors and notify the Tokyo Stock Exchange of their designation, in order for them to express their opinions on management policy and management improvement, supervise business execution, and ensure proper management from an independent and external standpoint.
At least one-third of the total number of directors are independent external directors. If circumstances arise in the future that require an increase in the number of independent external directors due to changes in the business environment or other factors, we will consider increasing the number of personnel according to the required fields.
Independence Criteria for Designation of Independent Directors
Independent external directors may be qualified as independent directors if they possess excellent ability, experience and insight that contribute to the management of the Company and can be expected to contribute to frank, active and constructive discussions at the Board of Directors, and if none of the following a. through i. apply.
- An executor of the business of the Company or a company of the Company’s Group (a director other than an external director, an executive officer, or an employee [by whatever name, any person having an employment relationship with the Company or a company of the Company’s Group])
- An executor of the business of a major customer or business partner. A major customer or business partner means a person who falls under any of the following items.
- A business partner providing products or services to the Company or a customer to whom the Company is providing products or services of which the total amount of such transactions in the most recent business year relevant to intended designation as an independent officer exceeds 2% of the Company’s unconsolidated sales or exceeds 2% of their sales to the Company
- A financial institution providing loans to the Company of which the total amount at the end of the most recent business year relevant to intended designation as an independent officer exceeds 2% of the Company’s unconsolidated loans; provided, however, that even if the amount does not exceed 2%, a financial institution stated as a lender to the Company on annual securities reports, business reports, or other public documents shall be included in major business partners
- A consultant, certified public accountant, attorney, or other expert receiving remuneration from the Company other than remuneration for officers of which the total amount of the remuneration paid, other than the remuneration for officers from the Company, in the most recent business year relevant to intended designation exceeds 10 million yen
- A person who belongs to an organization that is a consulting firm, tax accounting firm, law office, other corporate body, or partnership, which has transactions with the Company, and whose sales to the Company in the most recent business year relevant to intended designation as an independent officer exceeds 2% of the organization’s total sales or 10 million yen, whichever is larger
- A shareholder of the Company whose share of voting rights at the end of the most recent business year relevant to intended designation as an independent officer is 10% or more (a total of direct and indirect holdings) of the total voting rights or an executor of the business at the shareholder entity
- Of the companies in which the Company holds shares, a company in which the Company’s share of the voting rights at the end of the most recent business year relevant to intended designation as an independent officer is 10% or more (a total of direct and indirect holdings) of the total voting rights or an executor of the business at the shareholder entity
- A person who belongs to an auditing firm that conducts statutory audits of the Company
- A person to whom a above was applicable in the past or to whom any of b. to g. above was applicable in the past five years
- A spouse or a relative (within a second degree of kinship) of a person to whom any of a. to h. above applies
Compensation for Directors
1. Compensation Determination Policy
- Basic Policy for Determining Compensation Amounts
- The compensation system for directors and executives (executive officers with control over business operations) uses the achievement of performance targets as an incentive and aims for long-term increases in corporate value, not just quick profits.
- Compensation shall be set at a level that is competitive in terms of attracting and retaining human resources, while taking into consideration the size and nature of the Company's business and other factors.
- Whether the level of compensation is reasonable or not is something that is reviewed using objective materials.
- The amount of individual compensation shall be determined based on whether the director concurrently serves as an executive officer, the executive officer's position (chief executive officer, senior managing executive officer, managing executive officer, without role, etc.), and whether he/she is independent.
- The transparency and fairness of decisions about compensation are ensured with contributions from the Nomination and Compensation Committee, more than half of whose members are independent external directors.
- Compensation for directors who are members of the Audit and Supervisory Committee shall be limited to base remuneration only, and shall be determined through consultation among the Audit and Supervisory Committee members within the scope of the total amount of remuneration determined by a resolution of the General Meeting of Shareholders.
- Compensation Breakdown
- Compensation for directors and executives comprises two elements: fixed compensation (“base compensation”) and compensation linked to the Company’s business performance (“performance-linked compensation”) that takes the form of bonuses or stock-based compensation in the Company.
- Directors who are not involved in business execution are responsible for monitoring and overseeing management; as such, they only receive base compensation.
- The ratio of base compensation and performance-linked compensation ("bonuses" and "stock-based compensation") for each fiscal year for directors who execute operations shall be designed to be within the following ranges depending on whether directors and executive officers hold concurrent posts and on the position of executive officers (hereinafter referred to as "Positions") assuming the achievement of target performance index of 12,000 million yen for the final year of the Medium-Term Business Plan (FY2023-FY2025).
Base Compensation (Fixed Compensation) Performance-linked Compensation (Bonuses) Performance-linked Compensation (Stock-based Compensation) 63-67% 19-27% 10-14% - The share price per share was calculated at 1,182 yen, which was the closing price on the Tokyo Stock Exchange as of March 31, 2026.
- Base Compensation
- Base compensation is according to roles and responsibilities, in order to function as the foundational remuneration for professional duties.
- Base compensation is paid monthly as a pecuniary amount.
- Performance-linked Compensation
- Bonuses: As short-term incentives, these fluctuate depending on the consolidated performance for the relevant fiscal year, and are paid as a pecuniary amount at a fixed time (scheduled for the end of June).
- Stock-based compensation is positioned as a medium- and long-term incentive to promote a greater sharing of value with shareholders and sustainable growth for the Company. This is paid at a time decided by the Board of Directors.
2. Mechanisms of Each Compensation Element
- Base Compensation
- The base compensation amount shall not be changed during the term of office (one year).
- Should the “size of the Company” (net sales, market capitalization, number of employees) and "profitability" (operating profit, ROE, D/E ratio) change, this will be reflected in the amount for the following year (term of office).
- Performance-linked Compensation and Bonuses (short-term incentives)
- These are paid on the proviso that consolidated operating profit for the relevant fiscal year reaches or exceeds 5,000 million yen, and are determined according to the formula below.
Bonus calculation formula: performance indicator × coefficient - The performance indicator is the sum of consolidated operating profit and financial balance, in order to reflect the consolidated performance for each fiscal year.
In the fiscal year under review, the Company recorded 3,208 million yen of compensation for damage as an extraordinary loss associated with the case of overbilling of customers for product proceeds at a group company in the term ended March 2025. The corresponding amount has been deducted from the performance indicator. As a result, the effective value of the performance indicator for the current fiscal year under review was 11,460 million yen. - The coefficient is used to calculate the amount of bonus (set by Positions, etc., and according to whether the recipient is also a director and according to their position, with the higher the position, the higher the coefficient) based on the ratio given in 1.b.(iii) above, and the relevant bonus amount is set as a division of the target of 12,000 million yen.
- It is possible to reflect individual performance for each person's bonus within a range of +/- 10% based on the calculation formula. However, the total bonus amount does not change.
- These are paid on the proviso that consolidated operating profit for the relevant fiscal year reaches or exceeds 5,000 million yen, and are determined according to the formula below.
- Performance-linked Compensation and Stock-based Compensation (medium- and long-term incentives)
- Transfer-restricted stock in the form of common shares of the Company is granted in a number dependent on the recipient’s Positions and other factors (however, the grant takes the form of payment as monetary claims equivalent to the price of the relevant shares; for directors and executives it will be paid in as property contributed in kind, to be received as shares of the Company’s common stock to be issued or disposed of).
- The number of shares is determined based on the ratio given in 1.b.(iii) above, according to whether the recipient is concurrently a director and with the higher the position, the higher the number.
- Recipients must hold the shares until they resign or retire from their position assigned by the Company.
- Monetary compensation linked to such considerations as the price of a share of Company common stock (phantom stock), under similar applicable conditions, is awarded to nonresidents of Japan to whom it is difficult to award transfer-restricted stock.
3. Organization and Procedures for Determining Directors’ Compensation
General Meeting of Shareholders
It was resolved and approved at the 108th Ordinary General Meeting of Shareholders, which was held on June 25, 2021, that the total annual amount of compensation for all directors who are not members of the Audit and Supervisory Committee, including the phantom stock grants, shall be not more than 360 million yen (including 20 million yen for external directors). The number of directors to which this resolution relates is eight (including one external director).
It was also resolved and approved at the 108th Ordinary General Meeting of Shareholders, which was held on June 25, 2021, that the total annual amount of compensation for all directors who are members of the Audit and Supervisory Committee shall be not more than 60 million yen. The number of directors to which this resolution relates is four.
At the 110th Ordinary General Meeting of Shareholders, which was held on June 23, 2023, it was determined that the total amount set aside for transfer-restricted shares to directors (excluding those who are members of the Audit and Supervisory Committee, the external directors and the non-executive directors) shall be set to not more than 90 million yen per annum. The number of directors to which this resolution relates is five.
Board of Directors and Consultative Body
The Company has established the Nomination & Compensation Committee as a consultative body to the Board of Directors on compensation for directors who are not members of the Audit and Supervisory Committee and executives. The Nomination and Compensation Committee, consisting of the president, the director in charge of human resources, and four independent external directors, is intended to ensure transparency and fairness in the determination of compensation for directors who are not members of the Audit and Supervisory Committee and executives by advising the Board of Directors regarding the determination of compensation systems, levels, and specific amounts to be paid.
The Board of Directors deliberates and determines the policy and method of determining compensation for directors who are not members of the Audit and Supervisory and executives based on advice from the Nomination and Compensation Committee. As they perform corporate management under the leadership of top management, the amounts of individual compensation for directors who are not members of the Audit and Supervisory Committee and executives for the relevant fiscal year have been delegated by Board of Directors decision to ODA Yoshiaki, the president and representative director, to determine. Conditions for delegation to the president include determining the individual compensation amounts for directors who are not members of the Audit and Supervisory Committee and executives in accordance with the relevant policies. Additionally, the president shall consult the Nomination and Compensation Committee to ensure these amounts are appropriate based on the compensation determination policy, and shall accept the committee's confirmation of their suitability. Through the above, the Company has ensured that the president exercises his authority appropriately, and the Board of Directors has judged that the individual compensation amounts for directors who are not Audit and Supervisory Committee members and executives are in line with relevant policies.
