GovernanceBoard of Directors
Skills possessed by Board of Directors
The following seven skills have been identified as ones that Board of Directors should possess, and efforts are made to ensure there is a balance in the directors who possess these skills. The Governance Committee on Nominations & Remuneration has approved them.
Skill matrix
| Current positions at Sawai | Corporate management | Legal affairs / risk management | Finance, accounting, tax affairs | Production and quality | Marketing and sales | Research, development, technologies | Medicine and pharmaceuticals | |
|---|---|---|---|---|---|---|---|---|
| Mitsuo Sawai | Chairman and President, Representative Director, member of the Governance Committee on Nominations & Remuneration | ● | ● | |||||
| Shoji Yokota Ph. D. | Director | ● | ● | ● | ||||
| Masatoshi Ohara | Independent External Director, Chairman of the Governance Committee on Nominations |
● | ||||||
| Nawomi Todo | Independent External Director, member of the Governance Committee on Nominations |
● | ||||||
| Masayuki Mitsuka Ph. D. | Independent External Director, member of the Governance Committee on Nominations |
● | ● | ● | ||||
| Tadao Tsubokura | Full-time Audit & Supervisory Board Member | ● | ||||||
| Takanobu Tomohiro | Independent External Audit & Supervisory Board Member | ● | ||||||
| Junichi Hirano | Independent External Audit & Supervisory Board Member | ● |
Reason considered important
| Corporate management | Experience in making decisions in line with the corporate philosophy and being responsible for business is important for the Group’s management decisions. |
|---|---|
| Legal affairs / risk management | Balancing set rules and risk tolerance is important when attempting to maximize corporate value. |
| Finance, accounting, tax affairs | These are important for accurately ascertaining and calculating the Group’s corporate value and properly paying taxes. |
| Production and quality | Advanced quality and production management are important so that consumers can use the Group’s products, etc. with peace of mind. |
| Marketing and sales | Communicating the merits of products and services that the Group produces and provides and broadly gathering information on needs are important. |
| Research, development, technologies | This is important to continue to provide high value-added products and services that the Group produces and meet the needs of society. |
| Medicine and pharmaceuticals | Medicine and pharmaceuticals–related skills are important for the Group, which aims to become a general healthcare company related to life and health. |
Improving the operation of the Board of Directors
More in-depth discussions and deliberations are now held at the Board of Directors meetings due to narrowing the number of important issues to be discussed as a result of transitioning to a holding company structure.
| Main questions and opinions of external directors at fiscal 2022 Board of Directors Meetings |
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Compensation for directors and Audit & Supervisory Board members
Decisions concerning Director remuneration are reported to the Board of Directors upon deliberation of matters concerning Director remuneration at meetings of the Nomination, Remuneration and Other Governance Committee.
Remuneration for Directors (excluding External Directors) consists of a base salary (fixed salary), bonus (performance- based remuneration), and stock options as a medium and long-term incentive. Base salary and bonuses are generally paid at a 3:1 ratio. Stock options generally account for at least 10% of total remuneration and are granted based on Director position and years of service, and in accordance with the separately determined internal regulations of the Company.
The remuneration limit for Directors is ¥670 million per year (of which, no more than ¥100 million is for External Directors).
There is also a remuneration limit for Audit & Supervisory Board Members of ¥50 million per year. The remuneration system, including for Director remuneration, will be reviewed every three years, in principle, based on a comprehensive accounting of market trends concerning Director remuneration, the Company’s performance trends, and cost of living trends. To clarify management’s responsibility for performance, in addition to all Directors returning their bonus for fiscal 2021, monthly remuneration for fiscal 2022 was cut as planned, but payment of performance-linked remuneration (bonus) was restarted in line with rules as fiscal 2022 earnings recovered.
Distribution of remuneration for Directors and Audit & Supervisory Board Members (A & SB Members)
| Classification | Total remuneration (Millions of yen) |
Total remuneration by category (Millions of yen) |
Number of eligible persons |
||
|---|---|---|---|---|---|
| Fixed salary | Performance-based remuneration |
Stock options |
|||
| Directors (not including External Directors) |
292 | 153 | 55 | 84 | 4 |
| A & SB Members (not including External A & SB Members) |
17 | 17 | - | - | 1 |
| External Directors and A & SB Members | 30 | 30 | - | - | 4 |
Training policy for directors and Audit & Supervisory Board members
The Company will proactively provide directors and Audit & Supervisory Board members with a variety of information, including the current status of the Company's business and finances, so that they can appropriately fulfill their expected roles and responsibilities.
The Company will also provide information on various systems and rules related to the industry and governance, as well as opportunities for training, etc., as necessary.
Supporting system for External Directors and/or Audit & Supervisory Board members
On almost a monthly basis, a report on Group earnings is submitted to the Board of Directors, and questions regarding progress compared to projections and unexpected developments if they occur are properly answered.
At least once a quarter, the IR Division provides External Board members with a report on meetings with investors, and if necessary, questions are answered at the Board of Directors meeting. Revisions to in-house basic regulations are noted in the minutes of Board of Directors meetings; therefore, there is an opportunity to obtain information on revisions to in-house regulations accompanying amendments to laws.
As for projects under consideration, the state of the examination is reported to the Board of Directors several times starting before the project is voted on by the Board of Directors. At that time, various measures are implemented, including letting all Directors and Audit & Supervisory Board Members, including External Directors, provide instructions on issues that careful consideration should be given to and ask questions regarding unclear points, which the responsible department answers. Therefore, there is a system that makes it possible to share information on progress with various parties, including External Directors.
Furthermore, the External Board Members Liaison Committee, consisting of External Directors, External Audit & Supervisory Board Members, and full-time Audit & Supervisory Board Member, meets periodically to exchange opinions and information. The Secretariat of the Board of Directors sends materials in advance to all participants of Board of Directors meetings, including External Directors and External Audit & Supervisory Board Members, and provides them with prior explanations as necessary in order to enhance the quality of deliberations at the Board of Directors meetings. As for expenses necessary for External Directors and External Audit & Supervisory Board Members to execute their duties, such as the cost of examinations, there is a right to bill those expenses up to a reasonable amount, and members of the Group General Affairs Department and Internal Inspection Office support some of the work of External Directors and External Audit & Supervisory Board Members so they can focus on their duties. This was done to reinforce information sharing and the supervisory function of External Directors.
Independence Standards for External Directors / Audit & Supervisory Board members
Reasons for Appointment of Outside External directors
| Name | Designation as Independent director | Reasons of Appointment |
|---|---|---|
| Masatoshi Ohara Attended Meetings (FY2022) Board of Directors: 13/13 (100%) |
Applicable |
Except for his service as an external director of SAWAI PHARMACEUTICAL, Mr. Masatoshi Ohara is not, and has never been, an officer or employee of the Company's group, a major shareholder or investor, a major business partner, a consultant, an accounting expert or a legal expert who receives a large amount of money or other assets, nor is he from any of them, nor is he a close relative of any of them, and is not thought to pose a risk of conflict of interest. In addition, he has a wide range of legal knowledge through his activities as an attorney and has experience as an external director of other companies. Therefore, we believe that he can be expected to provide useful advice and judgment from an independent standpoint, which will strengthen the supervisory function of the Board of Directors and improve transparency. He attended all 13 Board of Directors meetings held between April 2022 and March 2023. At every meeting, as an external director, he asked questions about reports and resolutions and shared his views from an external standpoint. In consideration of the above, he has been appointed as an external director and Independent Officer of the Company. |
| Nawomi Todo Attended Meetings (FY2022) Board of Directors: 13/13 (100%) |
Applicable |
Except for her service as an external director of SAWAI PHARMACEUTICAL, Ms. Nawomi Todo is not currently or has never been an officer or employee of the Company's group, a major shareholder or investor, a major business partner, a consultant, an accounting expert or a legal expert who receives a large amount of money or other assets, nor is she from any of them, nor is she a close relative of any of them, and is not thought to pose a risk of conflict of interest. In addition, as she has extensive expertise, experience, etc., as a physician, we believe that she can be expected to provide useful advice and judgment from an independent standpoint, which will strengthen the supervisory function of the Board of Directors and improve transparency. She attended all 13 Board of Directors meetings held between April 2022 and March 2023. At every meeting, as an external director, she asked questions about reports and resolutions and shared his views from an external standpoint. In consideration of the above, she has been appointed as an external director and Independent Officer of the Company. |
| Masayuki Mitsuka Ph. D. Attended Meetings (FY2022) Board of Directors: -/- times (elected June 2023) |
Applicable |
Mr. Masayuki Mitsuka is not, and has never been, an officer or employee of the Company's group, a major shareholder or investor, a major business partner, a consultant, an accounting expert or a legal expert who receives a large amount of money or other assets, nor is he from any of them, nor is he a close relative of any of them, and is not thought to pose a risk of conflict of interest. In addition, as a former top executive of a leading manufacturer and distributor of ethical pharmaceuticals in Japan, he has a wealth of expertise and experience. Therefore, we believe that he can be expected to provide useful advice and judgment from an independent standpoint, which will strengthen the supervisory function of the Board of Directors and improve its transparency. In consideration of the above, he has been appointed as an 10 external director and Independent Officer of the Company. Since he was appointed at the General Meeting of Shareholders held in June 2023, his attendance at the Board of Directors meetings held between April 2022 and March 2023 is not taken into consideration here. |
Reasons for Appointment of Supervisory Board members
| Name | Designation as Independent director | Reasons of Appointment |
|---|---|---|
| Takanobu Tomohiro Attended Meetings (FY2022) Board of Directors: 13/13 (100%) Audit & Supervisory Board: 13/13 (100%) |
Applicable |
Mr. Takanobu Tomohiro, except for his term of office as an external Audit & Supervisory Board member of SAWAI PHARMACEUTICAL, is not currently or has not been an officer or employee of the Company's group, a major shareholder or investor, a major business partner, a consultant, an accounting expert or a legal expert who receives a large amount of money or other assets, nor is he from any of them, nor is he a close relative of any of them, and is not thought to pose a risk of conflict of interest. In addition, as a partner of a law firm, he has extensive legal expertise and experience in office management through his activities as an attorney. Therefore, we believe that he can provide useful advice and audits from an independent standpoint and can appropriately perform his role as an external Audit & Supervisory Board member. He attended all 13 Audit & Supervisory Board meetings and all 13 Board of Directors meetings held between April 2022 and March 2023. At every meeting, as an external director, he asked questions about 13 reports and resolutions and shared his views from an external standpoint. In consideration of the above, he has been appointed as an external Audit & Supervisory Board member and Independent Officer of the Company. |
| Junichi Hirano Attended Meetings (FY2022) Board of Directors: 13/13 (100%) Audit & Supervisory Board: 13/13 (100%) |
Applicable |
Mr. Junichi Hirano, except for his service as an external Auditor of SAWAI PHARMACEUTICAL, Mr. Junichi Hirano is not currently or has not been an officer or employee of the Company's group, a major shareholder or investor, a major business partner, a consultant receiving a large amount of money or other assets, an accounting expert or a legal expert who receives a large amount of money or other assets, nor is he from any of them, nor is he a close relative of any of them, and is not thought to pose a risk of conflict of interest. He also has considerable knowledge of taxation, finance and accounting through his activities as a tax accountant with his own tax accounting office and his previous positions at the National Tax Agency and as head of several tax offices, as well as his experience as an external Audit & Supervisory Board member of other companies. He is expected to provide useful advice and auditing from an independent standpoint, and we believe that he will be able to appropriately perform his role as an external Audit & Supervisory Board member. He attended all 13 Audit & Supervisory Board meetings and all 13 Board of Directors meetings held between April 2022 and March 2023. At every meeting, as an external director, he asked questions about reports and resolutions and shared his views from an external standpoint. In consideration of the above, he has been appointed as an external Audit & Supervisory Board member and Independent Officer of the Company. |
Evaluation of the effectiveness of the Board of Directors
It is the Company’s policy to analyze and evaluate the effectiveness of the Board of Directors on a regular basis and to make improvements as necessary. Below is a summary of the results of the evaluation of the effectiveness of the Board of Directors in fiscal 2022.
Evaluation method
- We adopted a self-evaluation method based on a questionnaire survey of Directors and Audit & Supervisory Board members.
- Specifically, we evaluated the current status of the Company according to the required standards for listed companies in the TSE Prime Market concerning the 14 principles and 23 supplementary principles stipulated in Chapter 4 “Responsibilities of the Board” of the Corporate Governance Code.
- We also used the Company’s governance rating score provided by an external rating agency for analysis and evaluation.
- The Board of Directors meeting on May 22, 2023 discussed the evaluation results based on materials compiled by the Corporate Secretariat.
Improvement measures implemented in fiscal 2022 in response to issues pointed out in the fiscal 2021 evaluation
- Nominating candidates for external directors with management experience
- Considering increasing the number of external directors (resulting in external directors accounting for 50% of the Board of Directors)
- Formulating the outline of a succession plan for the CEO and other top executives
Main standards for Prime Market-listed companies that the Company was recognized as complying with
- Extending the time for deliberations, holding Board meetings with appropriate frequency, and distributing materials in advance
- Collecting information and obtaining understanding through the External Board members Liaison Committee
- Receiving timely and appropriate reports from the Group Internal Inspection Office and various committees
- Ensuring free and open discussions at Board meetings
- Ensuring the full functioning of the Nomination, Remuneration and Other Governance Committee
- Having in place a favorable environment to obtain necessary governance information
Main standards for Prime Market-listed companies that the Company was recognized as not complying with
- Having external directors account for more than 50% of the Board of Directors
- Further enhancing discussions on management strategies and plans
- Ensuring full discussion on the relationship between the vision for human capital and human resource development on one side and management strategies on the other
- Further strengthening relationships with stakeholders
Based on the results of this evaluation, in fiscal 2023, we will work to achieve improvements in the following three items in the process of devising measures to achieve management that is conscious of cost of capital and stock price.
- Further enhancing discussions on management strategies and plans
- Ensuring full discussion on the relationship between the vision for human capital and human resource development on one side and management strategies on the other
- Further strengthening relationships with stakeholders
Policy for Cross-shareholdings and Voting Standards
In order to achieve sustainable growth and enhance corporate value over the medium to long term, the Group may hold listed shares as it deems necessary as part of its management strategy, including stable procurement of raw materials, fund procurement, and business alliances. In principle, the Group does not hold investment shares purely for investment purposes. In addition, we believe that strategic shareholdings can be an effective means of strategic alliances. When the Group holds listed shares, the Board of Directors periodically reviews the rationality of holding major strategic shareholdings in line with the purpose of holding the shares, including the consideration of the cost of capital, and reduces its shareholdings when it judges that such shareholdings are not rational.
In exercising voting rights, we have not established uniform standards for the exercise of voting rights, as the content of each agenda item and its background differ from one another. The Company will exercise its voting rights appropriately after examining each proposal individually to determine whether it will contribute to the sustainable growth and medium- to long-term enhancement of the Group's corporate value by conducting dialogue with the companies in which we hold shares and deepening our understanding of their management policies and the contents of their proposals.