Corporate Governance

The Board of Directors

As the highest decision-making body, the Board of Directors reviews and resolves fundamental policies and the most important cases concerning the Group’s management, and also supervises business execution through proposals of important matters and regular reports from the executing body. The Independent Directors supervise the Executive Directors and overall system of business execution. They also provide opinions and advice on corporate governance.

Election Policy of the Board of Directors and Procedure for Appointing Directors

In appointing candidates for Directors, we prioritize diversity and take into consideration gender, age, international experience, and other characteristics, and appoint multiple candidates who possess abundant experience, specialized knowledge, and advanced expertise from both inside and outside Sojitz, to ensure decision-making and management supervision appropriate to a general trading company involved in a wide range of businesses.

In line with the aforementioned policy, the Board of Directors deliberates on the experience and quality as an officer with respect to each Director candidate based on the results of discussion at the Nomination Committee, which provides advisory services to the Board of Directors, and resolves the candidate proposal for submission to the General Shareholders’ Meeting for approval.

Composition of the Board of Directors

The Board of Directors consists of 11 members (4 women and 7 men). The Board includes 4 Directors who are Audit and Supervisory Committee Members.

• The skills, careers, and expertise required for the Board of Directors will be reviewed in response to changes in the business environment and management policies.
• Areas of particular attention should be paid to by each officer in supervising management are marked with (●).
• For more information on each Director’s career, please click here.

＜Purpose of selection of each skill＞

Matters Deliberated by the Board of Directors

The Board of Directors reviews and resolves fundamental matters concerning the management of Sojitz Group including management policies, plans, and important personnel, systems, and organizational matters. These deliberations are conducted based on relevant laws and regulations, the Articles of Incorporation, and the internal rules of the Board of Directors. The Board of Directors also reviews and resolves important matters related to business execution, such as important investments and loans.

Regarding the execution of business other than these matters resolved by the Board of Directors, the President & CEO and the executing bodies reporting to the President & CEO (namely the Management Committee, the Finance & Investment Deliberation Council, and the Human Resource Deliberation Council) review and approve matters depending on the content, scale, importance, and risks in each case.

In June 2024, the Company transitioned to a Company with Audit and Supervisory Committee. As a result, authority was passed from the Board of Directors to the Executive Directors. Also, in order to ensure effective and efficient debate in the Board of Directors for monitoring purposes, changes were made to systematize the previous report items and merge related proposals.

The Company establishes the annual schedule of the Board of Directors at the beginning of the fiscal year in order to properly ensure deliberation time in the Board of Directors for these important proposals as it takes efforts to standardize the number of proposals and meeting times.

＜Main deliberations at the Board of Directors meetings held during FY2024＞

Systems for Supporting and Sharing Information with Independent Directors

We take the following initiatives to enable Directors to appropriately fulfill their roles and responsibilities.

• The Board Meeting Operation Office has been established as an organization which is comprised of five full-time staff (as of the filing date of this report), who support the Directors by reporting to, providing information to, and communicating with Directors in a timely and appropriate manner.
• In order for Directors to deepen their understanding of proposal details, materials are distributed up to five business days before the pre-meeting briefing of the Board of Directors meeting in order to secure sufficient deliberation time. A pre-meeting briefing on proposals will be established up to two business days before the Board of Directors meeting to provide sufficient information about the proposals.
• We provide newly appointed Directors with opportunities to participate in lectures on the medium-term management plan, DX promotion activities, the internal control, risk management structure, IR and sustainability initiatives by each business executing department. In addition, external lawyers also provide lectures about the duties and responsibilities of Directors and Audit and Supervisory Committee Members.
• In order for Directors to deepen their understanding of the latest macroeconomic conditions, our research institute holds monthly briefing sessions. In addition, we provide other necessary information on an ongoing basis.
• We offer Directors opportunities to attend seminars, etc. held by external organizations as needed.

In addition, we establish opportunities to provide and share information with independent Directors as below, to deepen their understanding of the Company businesses, promote communication and mutual understanding between Directors, and facilitate constructive discussions in the Board of Directors meetings.

Analysis/assessment of effectiveness of the Board of Directors

Each year, we analyze and assess the effectiveness of the Board of Directors as a whole in order to improve its functions. In FY2024, upon the transition to a Company with Audit and Supervisory Committee, in order to further enhance the function of the Board of Directors, the Company hired an independent third party (Japan Board Review Co., Ltd.) to conduct an analysis and evaluation.

The method of analysis and the results of the FY2024 assessment, as well as the action plan for the fiscal year 2025 based on these results, are as follows.

2．Effective assessment results
The Board of Directors discussed the results of the survey and individual interviews, and confirmed that the effectiveness of the Company’s Board of Directors has been ensured.

(1) Evaluated items
Through the questionnaire and individual interviews, the following points were evaluated highly.

1) Related to transition to a Company with Audit and Supervisory Committee

The delegation of authority to executive members corresponding to the transition to a Company with Audit and Supervisory Committee reduced the number of proposals and streamlined the report items. This was evaluated highly as it managed to improve the quality of discussion in the Board of Directors and enhance the speed of management decisions.

The Audit and Supervisory Committee had a smooth start in its first year as it conducted appropriate deliberations through appropriate operation and structure.

2) Scale and composition of Board of Directors

The Board is an appropriate scale and composition, being comprised of members with a balance from the perspective of the skills matrix.

3) Operations of Board of Directors

Under the appropriate operation of the Board of Directors meetings (frequency/time of meetings, resolution items, materials, briefings, etc.), executive members properly present and share information.

Open and lively deliberations are conducted in the Board of Directors meetings. Independent Directors provide opinions and observations from a perspective that contributes to improving corporate value and differs from the discussions of each meeting inside the Company.

Opinion exchanges in pre-meeting briefings and outside the deliberations are actively held. Therefore, the Board of Directors meeting itself can be held with members fully prepared to discuss proposals.

Discussion point organization before the Board of Directors meetings and the operation of the discussion on the day of the meeting by the Chair contributes to improving the quality of the Board of Directors discussion.

4) Support system for Independent Directors

Support system for Independent Directors (pre-meeting briefings, information sharing meetings with Executive Directors, participation as observer in management level training camp summer sessions, business office visits in and outside Japan) is appropriate.

(2) Initiatives and actions taken for FY2024

1) Medium-Term Management Plan 2026

2) Transition to a Company with Audit and Supervisory Committee

3) Initiatives for FY2025

1) Ongoing discussion in the Board of Directors meeting, etc. about the medium-to-long-term strategy and distribution of management resources

• Utilize the time created by reducing the number of resolutions by delegating authority as a result of the transition to a Company with Audit and Supervisory Committee and continuously discuss the medium-to-long term strategy and distribution of management resources in order to achieve the Medium-Term Management Plan 2026 and Next Stage (double growth of corporate value).
• In these discussions, take efforts to provide communication and explanations based on the gap of current status recognition and information between executive members and Independent Directors. Also utilize opportunities outside of deliberations to further enhance discussions.
• Proactively propose and suggest specific themes and discussion points to deepen the discussions at the Board of Directors meetings.

2) Efforts to provide information to Independent Directors in order to enhance supervisory functions

• While maintaining active opinion exchange in pre-meeting briefings and other opportunities outside of the deliberations, take efforts to adjust the agenda setting and the specificity of information and materials provided at the Board of Directors meetings to ensure that such meetings allow for substantial debate from a broad perspective.
• Continue the previous system of information sharing (Independent Director meetings and opinion exchange sessions, etc. of both Independent Directors who are and who are not Audit and Supervisory Committee Members) while aiming to make improvements when necessary, so that Independent Directors can freely share recognition and exchange opinions on matters and issues on the executive side, leading to monitoring discussions at the Board of Directors meetings.

Independent Directors

Policies on Appointment and Standards for Independence of Independent Directors

Sojitz places importance on the independence of Independent Directors. Sojitz has formulated its own Independence Standards for Independent Directors, in addition to the provisions of the Companies Act and standards for independence of officers set by financial instruments exchanges. Sojitz confirms that all our Independent Directors meet these standards.

＜Standards Concerning the Appointment of Candidates for Independent Director＞
Sojitz appoints Independent Directors from those with a wide range of knowledge, deep insight, excellent character, mental and physical health conditions, and abundant experience in industries and administrative fields, such as those who have management experience in business corporations and government agencies, and who have objective and specialist viewpoints toward world affairs, social and economic trends, and corporate management. Sojitz also ensures the diversity of the candidates’ gender, age, and internationality from the perspective of reflecting the viewpoints of a variety of stakeholders in the supervision of business activities.

＜Independence Standards for Independent Directors＞
Sojitz judges Independent Directors to be independent by confirming that they do not fall under any of the following conditions, in addition to the independence standards prescribed by financial instruments exchanges.

• A major shareholder of Sojitz (a shareholder holding 10% or more of Sojitz’s total voting rights) or a member of business personnel thereof
• A major creditor to Sojitz (a creditor from whom Sojitz owed an amount exceeding 2% of consolidated total assets in the most recent fiscal year) or a member of business personnel thereof
• A major business partner of Sojitz (a business partner whose transaction amount with Sojitz exceeded 2% of Sojitz’s annual consolidated revenue in the most recent fiscal year) or a member of business personnel thereof
• A party whose major business partner is Sojitz (an entity whose transaction amount with Sojitz exceeded 2% of its annual consolidated revenue, etc. in the most recent fiscal year) or a member of business personnel thereof
• An attorney, certified public accountant, certified tax accountant, consultant or other professional who received money or other property from Sojitz for his/her services as an individual, in an amount exceeding ¥10 million annually on average over the past three fiscal years, other than remuneration of Director or Audit and Supervisory Board Member (if such money or property was received by an organization, such as a corporation or partnership, this item refers to a person who belongs to the organization that received money or other property from Sojitz in an amount exceeding ¥10 million annually on average over the past three fiscal years or in an amount of 2% of the annual gross income or annual consolidated revenue, etc. of the organization, whichever the greater)
• A person who receives donations or grants from Sojitz in an amount exceeding ¥10 million annually (if such donations or grants are received by an organization, such as a corporation or partnership, this item refers to a member of business personnel of the organization)
• A person who serves as Sojitz’s Accounting Auditor or a person who is engaged in auditing Sojitz’s activities as an employee of the Accounting Auditor
• A person who has fallen under any of the above items 1. to 7. in the past three years
• A spouse or relative within the second degree of kinship of a person falling under any of the above items 1. to 8. (limited to the person holding the position of officer or other important positions)
• A spouse or relative within the second degree of kinship of a member of business personnel of Sojitz or any of its consolidated subsidiaries (limited to the person holding the position of officer or other important positions)
• A person with concerns about his/her independence, such as having constant and substantial conflict of interest with general shareholders as a whole in performing the duties of Independent Director

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Advisory Bodies to the Board of Directors (Nomination Committee, Remuneration Committee)

Sojitz has established the following advisory bodies to the Board of Directors.

＜Activities in FY2024＞

Total amount of remuneration by officer classification, total amount of remuneration by type of remuneration and number of company officers subject to payment

(Millions of Yen)

• Figures are rounded down to the nearest million yen.
• Based on the resolution of the 21st Ordinary General Shareholders’ Meeting held on June 18, 2024, Sojitz transitioned to a Company with Audit and Supervisory Committee, effective on the same date. As of the end of FY2024, there were 7 Directors and 4 Directors who are Audit and Supervisory Committee Members. The total amount of remuneration of Directors includes that for 2 Directors who retired due to expiration of their term of office at the conclusion of the Ordinary General Shareholders’ Meeting held on June 18, 2024 and the remuneration for the period before the transition to a Company with Audit and Supervisory Committee for 2 Directors who were newly appointed as Directors who are Audit and Supervisory Committee Members. The amount of remuneration for Audit and Supervisory Board Members includes the remuneration for the period before the transition to a Company with Audit and Supervisory Committee.
• Regardless of whether before or after the transition to a Company with Audit and Supervisory Committee, as the Board of Directors confirmed that the amounts of remuneration for individual Directors for FY2024, including the target of each evaluation indicator, based on the Executive Remuneration Policy, basic remuneration (fixed remuneration) by rank, the calculation method for performance-linked remuneration (short-term), and the calculation method for performance-linked remuneration (medium- to long-term) were consistent with the determination policy described in below, the details of such remuneration were judged to be in line with the policy.
• The performance-linked remuneration (medium- to long-term) is a share remuneration system based on the Board Incentive Plan (BIP) Trust. The total amount of the aforementioned share remuneration represents the amount reported as expenses for FY2024 associated with the share delivery points regarding the BIP Trust, including the persons who are scheduled to retire in FY2024.

Each year, we conduct a quantitative assessment of each lot of listed shares that we continue to hold as cross-shareholdings to ensure that dividends or related profit earned from those shares exceed the shares’ equity cost (weighted average cost of capital). We also conduct a qualitative assessment, looking at whether the shares help improve our corporate value. Based on these assessments, we examine the value of retaining these holdings. We retain those holdings that are deemed to be worthwhile, seeking ways to achieve greater impact and benefit from those shares. Meanwhile, for those shares which are deemed to lack significant value, we set a deadline to improve their value, or, if there is no indication these shares will improve, we examine the possibility of divestiture. The Board of Directors and the Management Committee conduct such assessments for each lot of shares held as cross-shareholdings.

Based on the significance of holding shares of listed companies, we exercise our voting rights based on whether or not they contribute to sustainable growth and improved corporate value over the medium- to long-term for both Sojitz and the investee. We also have a system of monitoring the status of exercise of voting rights.