GovernanceBoard of Directors
Skills possessed by Board of Directors
The following six skills have been identified as ones that Board of Directors should possess because of their relationship to items listed as materiality and relationship with stakeholders listed in the corporate philosophy and key sustainability policy. The Governance Committee on Nominations & Remuneration has approved them.
The skills related to the following were identified as necessary from the particular perspective: quality, medicine and pharmaceuticals, research, and development from the perspective of healthcare professionals and patients, who take the drugs and access the healthcare business, the Group’s core business; marketing and sales from the perspective of providing products and information to healthcare professionals; production and technologies from a stable supply perspective; finance, accounting, and tax affairs from the perspective of providing accurate financial information to stockholders and investors and paying taxes; and legal affairs and risk management from a compliance, risk management, and social responsibility perspective. Efforts are made to ensure there is a balance in the directors who possess these skills.
Skill matrix
| Current positions at Sawai | Legal affairs / risk management | Finance, accounting, tax affairs | Production and quality | Marketing and sales | Research, development, technologies | Medicine and pharmaceuticals | |
|---|---|---|---|---|---|---|---|
| Mitsuo Sawai | Chairman, Representative Director, member of the Governance Committee on Nominations & Remuneration | ● | |||||
| Kenzo Sawai | Deputy Chairman, Representative Director | ● | ● | ● | |||
| Kazuhiko Sueyoshi | President, Representative Director | ● | ● | ||||
| Toru Terashima | 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 |
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| Tadao Tsubokura | Full-time Audit & Supervisory Board Member | ● | |||||
| Takanobu Tomohiro | Independent External Audit & Supervisory Board Member | ● | |||||
| Junichi Hirano | Independent External Audit & Supervisory Board Member | ● |
Improving the operation of the Board of Directors
Important matters will now be discussed by the Board of Directors following deliberation by the Group Strategy Council and Group Investment Committee, which was established with the Company’s transition to a holding company system. Revising Regulations on the Management of Affiliated Companies made it possible for the Board of Directors to conduct detailed deliberations on more important issues. In addition, reports on the main operations of each Group company are made to the Board of Directors in line with the same Regulations on the Management of Affiliated Companies.
| Main opinion of external directors regarding the Board of Directors in fiscal 2021 |
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Compensation for directors and Audit & Supervisory Board members
Decisions concerning Director compensation are reported to the Board of Directors upon deliberation of matters concerning Director compensation at meetings of the Governance Committee on Nominations & Remuneration.
Compensation for Directors (excluding External Directors) consists of a base salary (fixed salary), bonus (performance-based compensation), 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 compensation and are granted based on Director position and years of service, and in accordance with the separately determined internal regulations of the Company. The compensation limit for Directors is ¥670 million per year (of which, no more than ¥100 million is for External Directors). There is also a compensation limit for Audit & Supervisory Board Members of ¥50 million per year. The compensation system, including for Director compensation, will be reviewed every three years, in principle, based on a comprehensive accounting of market trends concerning Director compensation, the Company’s performance trends, and cost of living trends. However, in fiscal 2021, the full amount of all directors’ bonuses was returned and monthly compensation for some directors in fiscal 2022 was cut based on their position to clearly indicate management’s responsibility for earnings.
Distribution of compensation for Directors and Audit & Supervisory Board Members (A & SB Members)
| Classification | Total compensation (Millions of yen) |
Total compensation by category (Millions of yen) |
Number of eligible persons |
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|---|---|---|---|---|---|
| Fixed salary | Performance-based compensation |
Stock options |
|||
| Directors (not including External Directors) |
177 | 177 | - | - | 4 |
| A & SB Members (not including External A & SB Members) |
17 | 17 | - | - | 1 |
| External Directors and A & SB Members | 28 | 28 | - | - | 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 (FY2021) Board of Directors: 13/13（100%） | Applicable | Except for his service as an outside 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 outside 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. In consideration of the above, he has been appointed as an outside director and Independent Officer of the Company. |
| Nawomi Todo Attended Meetings (FY2021) Board of Directors: 13/13（100%） | Applicable | Except for her service as an outside 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. In consideration of the above, she has been appointed as an outside director and Independent Officer of the Company. |
Reasons for Appointment of Supervisory Board members
| Name | Designation as Independent director | Reasons of Appointment |
|---|---|---|
| Takanobu Tomohiro Attended Meetings (FY2021) Board of Directors: 13/13（100%） Audit & Supervisory Board: 16/16 (100%) | Applicable | Mr. Takanobu Tomohiro, except for his term of office as an outside 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 outside Audit & Supervisory Board member. In consideration of the above, he has been appointed as an outside Audit & Supervisory Board member and Independent Officer of the Company. |
| Junichi Hirano Attended Meetings (FY2021) Board of Directors: 13/13（100%） Audit & Supervisory Board: 16/16 (100%) | Applicable | Mr. Junichi Hirano, except for his service as an outside 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 outside 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 outside Audit & Supervisory Board member. In consideration of the above, he has been appointed as an outside 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. To evaluate the effectiveness of the Board of Directors in fiscal 2021—for the first time after the foundation of Sawai Group Holdings Co., Ltd. as a holding company—we adopted a system of self-assessment based on a questionnaire survey of Directors and Audit & Supervisory Board members. The Board’s Secretariat compiled, analyzed, and evaluated the survey responses, the results of which were reported to the Board of Directors for discussions. The results of the Board’s discussions are summarized as follows.
Major items in which Sawai Group Holdings Co., Ltd. has been judged to meet the standards for listing on the Prime Market
- Establishment of an environment that supports appropriate risk-taking and full examination of proposals
- Management remuneration systems
- Effective supervision of strategy implementation
- Independent and objective judgment
- Audit & Supervisory Board members’ and the board’s appropriate expression of their views to management and independent directors’ advice from the perspectives of sustainable growth and a medium-to long-term increase in corporate value
- Oversight of management and monitoring of conflicts of interest
- Appropriate representation of the views of stakeholders
Major item in which Sawai Group Holdings Co., Ltd. has been judged to be short of the standards for listing on the Prime Market
- Status of the appointment of independent external directors, including the absence of external directors with management experience.
Based on the results of the above self-assessment, from fiscal 2022 onward, we will consider the appointment of external directors with management experience and the formulation of plans for the selection of successors to the CEO and other executives, which has long been a focus of our concern.
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 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.