Corporate Governance

Denka's CSR Management

Corporate Governance

Updated in October 2022

Corporate Governance

Based on “The Denka Value” (corporate philosophy), the cornerstone for all the corporate activities undertaken by the Denka Group, we are striving to fulfill the expectations and earn the trust of our many stakeholders, including shareholders, customers, local communities and employees. To this end, we are strengthening our business foundation by working to enhance our earning potential and expand our scope of operations. At the same time, we are making every effort to continue being a company that can win the trust and support of society and thereby improve our corporate value. Denka considers corporate governance to be the bedrock on which the above rests, and so we have striven to strengthen our governance framework in order to fulfill the responsibilities we owe to all our stakeholders and ensure transparent and sound management.

Corporate Governance

Director Remuneration

We have set the remuneration for each director (excluding Audit Committee Members) based on their roles and responsibilities within the limit of the total amount approved by the General Meeting of Shareholders. In order to enhance objectivity and transparency, remuneration is determined by the Board of Directors after receiving advice and recommendations from the Nomination and Remuneration Advisory Committee and this process is set forth in our internal regulations. Remuneration for directors (excluding Audit Committee Members) consists of a basic remuneration set at a fixed amount as well as performance-linked remuneration and stock remuneration. The performance-linked remuneration is designed to increase awareness of directors of their responsibility to work to improve business performance each fiscal year so as to function as an incentive, while the stock remuneration aims to instill a strong sense of purposefulness toward achieving medium- to long-term growth in corporate performance and corporate value in our directors. However, outside directors and non-executive directors receive only basic remuneration in light of their duties.
Further, the value of the performance-linked remuneration is determined in step with consolidated operating income for each period. However, this amount may be decreased or fully withheld in cases where consolidated operating income did not reach a certain amount, the company suffered a significant loss or a director was found to be involved in a serious compliance violation or other significant misconduct.
In addition, remuneration paid to directors with concurrent membership in the Audit Committee consists only of basic monthly compensation in a fixed amount. Total remuneration paid to such directors is determined within the upper limit approved by the General Meeting of Shareholders.

[FY2021 Director Remuneration]

① Directors (excluding Audit Committee Members)
Basic remuneration:	¥242 million paid to 10 recipients (¥15 million to three outside directors)
Variable remuneration	(in-house directors only) Performance-linked remuneration: ¥47 million paid to four recipients Stock remuneration: ¥22 million paid to seven recipients

② Director (Audit Committee Member)
Basic remuneration:	¥78 million paid to eight recipients (¥36 million to five outside directors)

There are currently nine directors (including four outside directors), and the above compensation includes compensation for directors who resigned at the conclusion of the 162nd Ordinary General Meeting of Shareholders held on June 22, 2021.
The number of directors (excluding directors who are Audit Committee Members) is five (including two outside directors), and the number of directors (Audit Committee Members) is four (including two outside directors).