Sustainability

Governance

 As a member of modern society, the Alps Alpine Group aims to strengthen foundations for enabling and practicing fair management by implementing active measures in the areas of corporate governance, compliance, risk management and information security.

Corporate Governance

Approach to Corporate Governance

 The Alps Alpine Group defines corporate governance as the “establishment and operation of frameworks for realizing efficient and appropriate decision-making and execution of business affairs by senior management, prompt reporting of outcomes to stakeholders, and sound, efficient, and transparent business administration for the purpose of heightening corporate value.” The Group’s basic approach, placing importance on maximizing benefits for shareholders and all other stakeholders, is to realize sustainable growth and maximize medium- to long-term corporate value, in addition to delivering benefits directly or indirectly to stakeholders in a balanced way, thereby satisfying their respective interests.
 Furthermore, in order to fulfill its responsibilities to stakeholders, including shareholders, customers, local communities, and employees, and realize effective corporate governance as a business entity, Alps Alpine has established “Alps Alpine Co., Ltd. Corporate Governance Policies” and disclosed the policies on the Company’s website.
 (www.alpsalpine.com/e/ir/index.html)

Corporate Governance Structure

 Alps Alpine has adapted a company with an audit and supervisory committee system as its organizational design under the Companies Act. Independent of executives, the Audit and Supervisory Committee bolsters auditing and supervisory functions while closely coordinating with an independent auditing firm and the internal audit department, thereby further strengthening corporate governance and enabling fair and highly transparent business administration.


Corporate Governance at Alps Alpine

Board of Directors' and Vice Presidents' Meetings

 The Company’s Board of Directors consists of eight (8) directors (excluding directors who are members of the Audit and Supervisory Committee, two (2) of whom are outside directors) and six (6) directors who are members of the Audit and Supervisory Committee (including four (4) outside directors). Outside directors account for more than one-third of the Board of Directors. The Board of Directors deliberates and makes decisions on basic management policy and important management matters, including short- and medium-term business plans, and facilitates the delegation of duties regarding decision-making on the execution of important duties to executive directors. The Company has positioned the Board of Directors as an organ that carries out audit and supervision of the execution of business, thereby strengthening the monitoring function.
 In addition, the Company has adopted a vice president system, in which chief officers have been appointed for such individual functions as sales, technology, production, materials, quality, and management, and the directors tasked with making important decisions on the execution of business by the Board of Directors provide instruction and guidance to the chief officers and vice presidents responsible, so that the execution of business can be performed effectively in accordance with the business type and size of the Company and subsidiary. In addition to the by-function organization, the vice presidents responsible have been appointed to each business area and business unit, and discussions and deliberations are held at Vice Presidents’ and other meetings, where they engage in prompt and accurate decision-making and the execution of business.
 Furthermore, the company system was abolished as of April 1, 2020, and by forming a matrix-type organization based on function and responsible business areas and units, the Company will look to further optimize its management resources and maximize its overall synergies.
 The Board convenes once a month for regular meetings and on other occasions as required to thoroughly deliberate and pass resolutions on all important matters. Matters to be resolved are checked in advance from legal affairs, accounting, tax, economic rationality, and other perspectives to ensure legal compliance and reasonableness of resolutions of the Board of Directors, in accordance with the rules and bylaws for the Board of Directors. Moreover, the Company formulates short- and medium-term business plans based on Company policy. Business plans are deliberated and resolved by the Board of Directors after an opportunity for deliberation and information sharing at business plan meetings held twice a year with directors of the Company in attendance. Operations are implemented with progress monitored on a monthly basis, while important matters are submitted to the Board of Directors for deliberation in accordance with the rules and bylaws for the Board of Directors to ensure optimal utilization of management resources.
 Since introducing outside directors in 2013, the Company has promoted corporate governance reforms including the transition to a company with an audit and supervisory committee system, the formulation of its Corporate Governance Policies, revisions to the director remuneration system, including retirement benefits, and evaluations of the effectiveness of the Board of Directors. In addition to these improvements, to coincide with the establishment of Alps Alpine Co., Ltd. in January 2019, the Company introduced its vice president system, thereby assembling a framework that separates management super-vision from business execution and enhances management maneuverability. To strengthen the Board of Directors and its monitoring activities, in June 2020 the Company increased the number of outside directors to six members, including three female directors. By doing so, the Company has increased independent and objective perspectives to secure shareholder profits and is working to realize sustain-able growth and create value over the medium to long term.
 In fiscal 2019, the Board of Directors’ meeting attendance rate for each director was as follows.


DirectorNumber of meetings attended /
Number of meetings held
Attendance rate
Toshihiro Kuriyama12/12100%
Nobuhiko Komeya12/12100%
Takashi Kimoto12/12100%
Koichi Endo12/12100%
Yoichiro Kega2/2100%
Satoshi Kinoshita*12/12100%
Yasuo Sasao10/10100%
Junichi Umehara12/12100%
Shinji Maeda12/12100%
Takashi Iida*12/12100%
Kazuya Nakaya*12/12100%
Satoko Hasegawa*2/2100%
Yoko Toyoshi*12/12100%
Yuko Gomi*10/10100%
*Outside director

Evaluation of the Effectiveness of the Board of Directors

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 The Company has established the Corporate Governance Policies for fulfilling its responsibilities to stakeholders, including shareholders, customers, employees, and the local community, as well as for implementing effective corporate governance with the objectives of sustainable growth and medium- to long-term improvement in its corporate value. Based on this, we conduct an evaluation on the effectiveness of the Board of Directors each year, with the goal of further improving the function of the Board of Directors.
 The results of the evaluation of the effectiveness of the Board of Directors for fiscal 2019 are as follows.

Summary of the Fiscal 2019 Evaluation Results of the Effectiveness of the Board of Directors

  1. Method of Analysis and Evaluation
     A non-anonymous questionnaire regarding the size, structure, operation, and deliberations of the Board of Directors, communication among directors, support systems, and the nomination and remuneration of directors, etc., was conducted of all members of the Board of Directors, and the directors performed self-evaluations, as well as giving their opinions. The Audit and Supervisory Committee, including outside directors, and the vice presidents responsible for management analyzed the results, organized issues, and reported to the Board of Directors, which verified and deliberated on the results.
  2. Summary of Analysis and Evaluation Results
     For fiscal 2019, the Board of Directors confirmed that the increase in the ratio of outside directors under the new system after the business integration of Alps Electric Co., Ltd. and Alpine Electronics, Inc. in January 2019 contributed to the enhancement of corporate governance and that the newly established Nomination and Remuneration Advisory Committee was operating properly.
     On the other hand, issues were clarified with respect to securing more time for prior examination of materials, discussion on the overall direction of corporate strategy and mid-term business plans, leadership in the ongoing creation of synergies through business integration, and leader-ship in the implementation of the 1st Mid-Term Business Plan, specific opinions and suggestions for further improvement and reform were received, and the Board of Directors verified and discussed them.
  3. Future Action
     In response to these evaluation results and opinions, the Company will work on further improvement and reform by giving priority to the issues clarified, and will implement effective corporate governance with the objectives of sustainable growth and medium- to long-term improvement in the corporate value of the Company.

Audit and Supervisory Committee

 The Audit and Supervisory Committee, which consists of six members, including four outside directors, audits the execution of duties of directors from an objective standpoint independent of that of the Board of Directors through attendance at important meetings, checking of important documents, and interviews with the representative directors, other directors, vice presidents, and employees. The audits are carried out through the collective efforts of four outside Audit and Supervisory Committee members—who have experience as corporate managers, extensive legal expertise as attorneys at law, and accounting expertise as certified public accountants—and two inside Audit and Supervisory Committee members—who are familiar with the Company’s business. Through the cooperation of the internal audit department, the Audit and Supervisory Committee endeavors to provide opinions to management at Board of Directors’ meetings and other important meetings.
 The two inside Audit and Supervisory Committee members are both full-time members and attend important in-house meetings and carry out such tasks as gathering valuable information, receiving reports on a daily basis, and sharing such information with the four part-time outside Audit and Supervisory Committee members.The committee convenes regularly once a month and on other occasions as required. In fiscal 2019, the attendance rate for the Audit and Supervisory Committee meeting was as follows.


Audit and Supervisory Committee memberNumber of meetings attended /
Number of meetings held
Attendance rate
Junichi Umehara16/16100%
Shinji Maeda16/16100%
Takashi Iida※16/16100%
Satoko Hasegawa※4/4100%
Kazuya Nakaya※16/16100%
Yoko Toyosh※16/16100%
Yuko Gomi※11/1292%
※Outside director


Outside Directors

 Alps Alpine appoints outside directors based on their wealth of experience and extensive insight as experts on business management, law, and accounting from an objective perspective to offer advice on and conduct oversight of Company management. Outside directors also work to realize effective supervision by regularly visiting facilities of Alps Alpine to gather information and engage in information and opinion exchange with other directors, vice presidents, and employees. The appointment of outside directors is determined based on Company standards for the selection of director candidates, including criteria for independence, and outside directors, with their con-sent, are designated as independent directors with their appointment as independent directors being notified to Tokyo Stock Exchange, Inc.


Name Reason for appointment Status on major concurrent holding of positions
Naofumi Fujie Based on his extensive experience and wide-ranging knowledge accumulated through working in the technological development division of an automotive business over many years, the Company deems him an appropriate person for helping the Company realize steady growth.
Noriko Oki Based on her extensive experience and wide-ranging knowledge accumulated as a securities analyst over many years in the financial industry, the Company deems her an appropriate person for helping the Company realize steady growth.
Takashi Iida Based on his many years of work as a lawyer and extensive experience and wide-ranging knowledge in the legal profession, the Company deems him an appropriate person for helping improve its management. Outside Audit & Supervisory BoardMember, NIPPON TELEGRAPH AND TELEPHONE CORPORATION
Kazuya Nakaya Based on his specialized knowledge and experience and wide-ranging know-how accumulated as a business practitioner over many years, the Company deems him an appropriate person for helping the Company realize steady growth.
Yoko Toyoshi Based on her accounting audit experience gained from working at accounting firms over many years and her specialized knowledge and experience and wide-ranging know-how accumulated as a certified public accountant, the Company deems her an appropriate person for improving its management. Outside Audit & Supervisory Board Member, Kokuyo Co., Ltd.
Yuko Gomi Based on her many years of work as a lawyer, her service as a member of expert committees at government-related institutions, her role as an outside director at other companies, and her specialized knowledge and extensive insight, the Company deems her an appropriate person for improving its management. Outside Corporate Auditor, NIPPON GAS CO., LTD.Outside Audit and Supervisory Board Member, Lawson, Inc.

Director Remuneration System

 Under the remuneration system focusing on linkage with performance in the short term and performance over the medium to long term, the Company incentivizes actions of directors for increasing corporate performance and the share price to the maximum extent in order to achieve sustainable improvements in the Group’s corporate value. Specifically, the composition of remuneration is as follows:


Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof

・Policy for Determining Remuneration
a)Remuneration for inside directors (excluding Audit and Supervisory Committee members)
The Company’s remuneration for inside directors (excluding Audit and Supervisory Committee members) consists of fixed remuneration, performance-based bonuses, and restricted shares. Performance-based bonuses place emphasis on the link to short-term performance and vary between a range of 0% to 200% according to single-year performance (operating income margin and profit attributable to owners of parent). Restricted shares are granted as remuneration linked to medium- to long-term performance, ensuring that both the merits of an increase in the price of the Company’s stock and the risks of a decrease in the stock price are shared with shareholders under this system.

b)Remuneration for outside directors and directors who are members of the Audit and Supervisory Committee
The Company’s remuneration for outside directors and directors who are members of the Audit and Supervisory Committee consists only of fixed remuneration.


Procedures for Determining Remuneration

 The Company determines the remuneration for directors (excluding directors who are members of the Audit and Supervisory Committee) at Board of Directors’ meetings, and decides on the remuneration for directors who are members of the Audit and Supervisory Committee at Audit and Supervisory Committee meetings, to the extent of the total amount of remuneration approved at the General Meeting of Shareholders. In order to enhance the objectivity and transparency of remuneration and strengthen corporate governance, the amount of remuneration for directors (excluding directors who are members of the Audit and Supervisory Committee) is determined at Board of Directors’ meetings upon consideration by the Nomination and Remuneration Advisory Committee, of which six of its 10 directors who are members of the Audit and Supervisory Committee are outside directors.
 In fiscal 2019, director remuneration was as follows.


Director Remuneration in Fiscal 2019

Classification Total value of remuneration
(Millions of yen)
Total remuneration by type (Millions of yen) Number of applicable officers
(People)
Fixed remuneration Bonuses Restricted shares
Directors (excluding Audit and Supervisory Committee members) 200 128 33 38 7
(of whom, outside directors) (9) (9) (-) (-) (1)
Directors (Audit and Supervisory Committee members) 65 65 7
(of whom, outside directors) (41) (41) (-) (-) (5)
Total 265 193 33 38 14
(of whom, outside directors) (50) (50) (-) (-) (6)
  1. The amount of remuneration for directors (excluding Audit and Supervisory Committee members) does not include an employee-portion salary for directors who also serve as an employee.
  2. As of March 31, 2020, there were six directors (excluding Audit and Supervisory Committee members), of whom one was an outside director, and six directors (Audit and Supervisory Committee members), of whom four were outside directors.
  3. For bonuses, the amount is recorded as costs in fiscal 2019.

Internal Controls

Acknowledging the Founding Spirit (Alps Precepts) as the origin of Group management, Alps Alpine has established the Alps Alpine Group Management Paradigm (consisting of the Corporate Philosophy, Management Approach and Alps Alpine Group Code of Ethics) and an Agreement Relating to Administration of the Alps Alpine Group, prescribing fundamental philosophy and action guidelines relating to Alps Alpine Group management, compliance and environmental conservation that apply to Alps Alpine and its subsidiaries. We also maintain internal controls (systems for ensuring the appropriateness of business operations) conforming to the Companies Act of Japan and ordinances for enforcement of the act to make sure that the Group as a whole is operated efficiently and appropriately. For basic policy and an overview of the operating status of internal controls, view the "Matters Related to Internal Control Systems" section of our Corporate Governance Report.
www.alpsalpine.com/e/ir/governance.html


Alps Alpine Group Internal Control Structure