Corporate Governance

For HOYA, corporate governance is a matter of utmost importance to management. Based on its fundamental philosophy that “companies should be fair to their stakeholders,” HOYA conducts its corporate management with the goal of maximizing corporate value. To ensure it does not operate according only to internal thinking on management, our articles of incorporation stipulate that over half of directors be independent directors in June 2003, and from the viewpoint of increasing corporate value objectively and comprehensively, independent directors actively supervise and offer advice to the executive officers in the execution of their managerial duties. Also, by giving executive officers authority and responsibility in executing their duties, we accelerate decision-making and increase management efficiencies.

HOYA has established HOYA Corporate Governance Guidelines at the board meeting, and revises it to enhance corporate governance structure and to introduce better governance systems.

Articles of Incorporation ( 99KB)

Regulations of the Board of Directors ( 44KB)

HOYA Corporate Governance Guidelines ( 66KB)

Corporate Governance Report ( 1,103KB)

Corporate Governance Systems

HOYA employs a “company-with-nomination committees” management system, which was created as a result of a legislative amendment. Under the “company-with-nomination committees” management system, by giving executive officers authority to manage business, business decision makings are accelerated. At the same time, three committees - the Nomination Committee, the Compensation Committee and the Audit Committee - were established, with a majority of the members being independent directors (at HOYA, the committees are composed exclusively of independent directors), to ensure the effectiveness of management supervision by the Board of Directors. Adopting the “company-with-nomination committees” management system enables us to clearly separate the execution and supervision of corporate management, whereas this was not possible with the previous “company-with-auditors” system. Through this system, we aim to ensure efficient management and improve the overall soundness and transparency of management.

<Governance Structure>

Governance Structure

The Board of Directors

Our Board of Directors comprises five independent directors and one internal director, for a total of six directors. The Board holds 10 regular board meetings per year. At meetings, independent directors draw on their ample management experience and international perspectives to supervise and offer advice to the executive officers in the execution of their duties from a wide range of viewpoints. Also at the meetings, besides approving major business plans, a detailed information is provided to independent directors though means such as presentations by division managers regarding products and the competitive environment.

Executive Officers

At HOYA, candidates for Chief Executive Officer (CEO), Chief Financial Officer (CFO), Executive Officer, Chief Legal Officer (CLO) and Head of Corporate Development and Affairs, Executive Officer in Charge of Information Technology and Chief Technology Officer (CTO); are nominated by the Nomination Committee and appointed at the Board Meeting (CEO serves concurrently as an internal director.) They manage business execution of the HOYA Group according to the mission designated by the Board of Directors and decision makings are made promptly. In regards to day-to-day business operations in each business, significant power is delegated to each division managers and executive officers direct division managers to create and execute specific measures based on a business policy decided at a board meeting. At the monthly business reporting meetings, division managers report to executive officers about the progress of their respective operations.

Committees

As internal organizations of the Board of Directors, we have the Nomination Committee, Compensation Committee and Audit Committee; each of which is composed exclusively of independent directors.

Nomination Committee

The Nomination Committee selects candidates for directors in accordance with selection standards, and submits nominations to the General Meeting of Shareholders for approval. Also, the committee selects candidates for executive officers and representative executive officer and submits nominations to the Board of Directors for approval. When necessary, the Nomination Committee refers proposals to relieve directors of their posts to the General Meeting of Shareholders, and refers proposals to relieve executive officers of their posts to the Board of Directors.

Our Nomination Committee has set standards for selecting candidates for directors, and the outline of the selection standards are as follows:

Those with appropriate personalities and insights as director and with no health problems in performing their duties. With regards to internal director candidates, they must have a high level of knowledge in our business, excellent business decision-making ability and business execution ability.
Regarding candidates for independent directors, they must have extensive experience as business managers or be in positions as professionals in law, accounting, finance or similar fields. They must not have significant interests in the HOYA Group, be able to maintain their independence and participate in at least 75% of HOYA Group´s board meetings.

To ensure the independence of candidates for independent directors, candidates must not fall under any of the categories below.

<Those related to the HOYA Group>

Those who previously worked for the HOYA Group.
Those who have a family member (spouse, child or blood relatives or in-laws up to the second degree) who have held the position of a director, executive officer, corporate auditor or management employee in the past 5 years.

<Major shareholders>

Those who are major shareholders (10% or more) of the HOYA Group, or who are directors, executive officers, auditors or employees of companies which are major shareholders. Or those whose family members are the executive officers of such companies.
Those who are administering a company of which a major shareholder is the HOYA Group.
<Those related to a big business partner>
Those who are operating officers, executive officers or employees of HOYA Group´s important clients who make up 2% or more of HOYA' s consolidated sales in the past 3 years; or if the HOYA Group is an important client who makes up 2% or more of the consolidated sales of the candidate's enterprise group in the past 3 years. Or those whose family members are the executive officers of such companies.

<Those who provide professional services (lawyers, chartered accountants, certified tax accountants, patent attorneys, judicial scriveners and those in similar professions)>

Those who have received remuneration of 5 million yen or more per year from the HOYA Group in the past three years. Or those whose family member received remuneration of 5 million yen or more per year from the HOYA Group.
When the organization that the candidate belongs to, such as a company, association, etc., has received cash, etc. from the HOYA Group, of which amount exceeds whichever larger, 100 million yen per year or 2% of consolidated sales of the said companies and such.
<Donation, etc.>
When the association or organization which the candidate belongs to as chairman or operating officer has received donations or grants from the HOYA Group in the past three years, of which the amount exceeds whichever is larger, 10 million yen per year or 30% of the said organization’s average annual total costs. Or when the association or organization to which the candidate’s family member belongs to has received donations or grants equivalent to the aforementioned amount.
<Other categories>
When directors are mutually assumed between HOYA and other companies or organizations.
If the candidate’s company has any other important interests within the HOYA Group.
Compensation Committee

The Compensation Committee prepares a remuneration philosophy and system that incentivizes directors and executive officers. The objective is to contribute to improved financial performance for HOYA, by undertaking appropriate evaluations of results. The Compensation Committee decides on a remuneration package for each director and executive officer in accordance with the following policies: 

•Policy on compensation for directors
The remuneration of Directors consists of a fixed salary and stock options.
The fixed salaries consist of a basic compensation and compensation for being a member or a chairman of the Nomination, Compensation or Audit Committee. The compensation levels are set appropriately by taking into consideration such factors as the Company's business environment and the levels set by other companies as determined by a survey conducted by an outside professional organization.
In order for newly-appointed Directors to share the same perspective as shareholders in regards to share price, and for re-appointed to share common interest with shareholders on long-term basis, commensurate stock options, fixed number of stock options are granted to Outside Directors each year,
After a waiting period of approximately one year, the exercisable portion of the stock options in each of the years following thereafter will be 25% of the total number granted. The period during which the stock options may be exercised is 10 years.

[Composition ratio of remuneration]
Fixed salary: medium- and long-term incentive (stock options) = Approximately 1:0.3-0.6

(Note) The ratio of the above medium- and long-term incentive shall fluctuate with changes in the Company’s share price and other factors.

•Policy on compensation for executive officers
The remuneration of Executive Officers consists of a fixed salary, an annual incentive (performance-based bonuses) and a medium- and long-term incentive (PSU).
For fixed salaries, basic compensation is set appropriately according to the office and responsibility of each Executive Officer (Representative Executive Officer, CFO, etc.) and by taking into consideration such factors as the Company's business environment and the levels set by other companies as determined by a survey conducted by an outside professional organization. Other than basic compensation described above, benefits granted to expatriates (such as housing) are also set at appropriate levels in consideration of the Company's business environment and the levels set by other companies as determined by a survey conducted by an outside professional organization.
Performance-based bonuses shall be determined according to quantitative results and qualitative evaluations, and shall range roughly from 0 to 200%.
As indicators of quantitative results, sales, profit attributable to owners of the Company, and basic earnings per share (EPS) given on the Consolidated Financial Statements are selected.
The PSU is a system for granting shares at a number that is in proportion to the level of achievement of the predetermined performance conditions and the Company selected the indicators of sales, basic earnings per share (EPS) and ROE given on the Consolidated Financial Statements. The payment ratio that corresponds to the level of achievement of the performance targets will range from 0 to 200%, based on the performance over three-fiscal-year periods.

[Composition ratio of remuneration]

CEO Fixed salary: annual incentive: medium- and long-term incentive (PSU) = Approximately 1:1:1
Executive Officers excluding CEO Fixed salary: annual incentive: medium- and long-term incentive (PSU) = Approximately 1:1:0.5
(Note) Subject to a 100% achievement rate for all targets and assuming a share price in three years roughly equivalent to the current share price.

For more detailed information, please refer to the press release below.

Audit Committee

The Audit Committee, which is comprised of 6 independent directors, formulates the audit policies and audit plans for each fiscal year, and verifies financial statements, etc. based on the quarterly reports, the year-end reports and the reports in a timely received from the Independent Auditor according to such policies and plans. It also interviews the Audit Department and the Internal Audit Division to obtain the results of operational audits, and verifies the soundness, legality, efficiency, etc. of management. All important matters are reported to the Board of Directors, and countermeasures are taken as necessary.

The Company and its independent directors have concluded an agreement that limits possible future liabilities of the latter prescribed in the first paragraph, Article 423 of the Companies Act to the higher of a prefixed amount exceeding 10 million yen or the amount prescribed by the Act.

Full Disclosure and Investor Relations Activities

HOYA considers fair and prompt disclosure of information to be a fundamental duty of management. The Company also values communication with shareholders, and it continues to clearly reflect their views in its management practices. Top management is actively involved in investor relations activities, for example, the CEO attends quarterly investor meetings to explain results and answer questions from securities analysts and institutional investors.

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