Corporate Governance

Basic Approach

In order to deserve the trust of our shareholders and other stakeholders, the Company’s fundamental approach to corporate governance is not just to ensure compliance with laws and regulations and our Articles of Incorporation, but also to fulfill our social responsibilities based on corporate ethics and to contribute to society while continuously improving enterprise value through efficient and transparent management. We see this as a top management priority. The azbil Group has established its long-term targets (to achieve by FY2030) and a medium-term plan (FY2021-FY2024), whose aim is to contribute “in series” to a sustainable society and achieve growth through providing automation-related products and services. Guided by the Group philosophy of “human-centered automation”, we will secure our own medium- and long-term development while implementing sustainable enhancement of enterprise value. At the same time, we recognize that it is corporate governance which provides the foundation for such sustainable enhancement of enterprise value, and so improving corporate governance is a key issue for management. We are therefore working to strengthen the supervisory and auditing functions of the Board of Directors, enhance the transparency and soundness of management, and clarify responsibilities for business execution. To facilitate this, we have recently transitioned from being a company with an audit & supervisory board to a company with a three-committee board structure, following the approval of a proposal to amend our Articles of Incorporation at the 100th Ordinary General Meeting of Shareholders held on June 23, 2022.

Azbil Corporation's report on corporate governance (full text) is available here.

Basic Policy for Corporate Governance

(1) Ensuring shareholder rights and neutrality
So as to substantively ensure the rights of our shareholders, Azbil Corporation will adopt appropriate measures in accordance with the law and other regulations, and give due consideration to foreign and minority shareholders, thus creating an environment in which all shareholders can properly exercise their rights equally.

(2) Cooperation of stakeholders other than shareholders
In order to achieve sustainable growth and increase enterprise value over the medium to long term, we believe that the Company must be strongly aware of its corporate social responsibility and conduct management that is appropriate for our various stakeholders. For this purpose, we have adopted “human-centered automation” as our Group philosophy to realize safety, comfort and fulfillment in people’s lives and contribute to the global environment. To this end, we have instituted Guiding Principles for azbil Group Business and established the azbil Group Code of Conduct to provide specific guidelines for all officers and employees of the Company and the azbil Group. Also, we have set the essential goals of the azbil Group for the SDGs (basic goals and targets) toward achieving the UN’s SDGs. With these SDGs as our new guidepost, we aim to connect our philosophy, Guiding Principles, Code of Conduct, and management strategy, leading “in series” to a sustainable society, and to realize a balance between resolving social issues and sustainable growth. As regards achieving diversity in human resources, we are actively working to promote the advancement of female employees based on the recognition that having diverse values within a company is essential when it comes to achieving sustainable growth.
With regard to the internal reporting system, we believe it is important to (a) encourage employees to use this system by dispelling any concerns that in so doing they might be put at a disadvantage, and (b) ensure that the information thus conveyed is used appropriately. We have therefore established a user-friendly reporting & consultation system—the CSR Hotline—which ensures that the information received is reported to the president & CEO, Audit Committee members, and outside directors.

(3) Ensuring appropriate disclosure of information and transparency
The Company strives to disseminate information so as to ensure transparency and fairness in decision-making, thus realizing effective corporate governance. Specifically, in order to ensure that all stakeholders have a proper understanding of financial information—such as the Company’s financial position and business results—as well as non-financial information—such as management strategy, management planning, management issues, and information relating to risk and governance—we actively disclose information on a voluntary basis in addition to the information stipulated by law. The Company also discloses policies and procedures regarding the appointment of directors and corporate executives, (shikkoyaku), as well as the selection and dismissal of senior executives including the CEO, and policies for deciding on the remuneration for directors and corporate executives. We will continue to strive to increase the scope of information covered by these disclosures and ensure transparency. In addition, we are taking appropriate measures to ensure proper audits by the independent accounting auditor: the Company provides sufficient time for audits to be conducted, arranges for the ACCOUNTING AUDITOR to interview the president & CEO and the officer in charge of finance on a regular basis, and continuously conducts quarterly report meetings between the accounting auditor, the Audit Committee, and the Internal Audit Department.

(4) Responsibilities of the Board of Directors
The basic mission of the Board of Directors is to put in place an appropriate corporate governance system and to implement this so as to achieve sustainable growth for the Company and enhance its enterprise value. The Board Rules stipulate that basic management strategy and management plans are important items for deliberation, and following discussions that are unrestricted, robust and constructive, the Board will make appropriate decisions. Moreover, to ensure transparency and fairness in management, the Company will ensure timely disclosure and systems for internal control and risk management. At the same time, the Audit Committee, in cooperation with the Internal Audit Department, will provide appropriate audits and opinions on management.
The Company recognizes that independent outside directors play a key role in ensuring that the Board properly fulfills its functions and responsibilities, and thus it has appointed eight independent outside directors with a broad range of experience in corporate management and supervision, as well as considerable expertise and knowledge. Drawing on their diverse backgrounds, these independent outside directors adopt a wide range of perspectives to fulfill their responsibilities, offering advice on improving enterprise value, supervising management, etc. For the Board of Directors to effectively fulfill its roles, the Company believes that, in appointing directors, it is important to promote diversity, taking into consideration the balance of knowledge and experience, and also to ensure transparency and objectivity in the selection process.
Giving due consideration to such management strategies as the realization of the medium-term plan, the Company has set out what skill sets are expected of its directors and has confirmed the requisite independence, diversity, and anticipated skills (skills matrix) of its current Board.
Regarding succession planning for the Company’s senior management, the Nomination Committee will discuss the ongoing training and selection of successors; record the results of those discussions as well as the process of deliberation; and regularly report to the Board of Directors on details of their deliberations. The Company thus ensures that succession planning is implemented in an appropriate and objective manner, that the Board is proactively involved in succession planning, and that the training of potential successors is conducted systematically, with sufficient time and resources.
As of June 23, 2022, the total number of directors is twelve (12), with outside directors accounting for more than half of the Board of Directors. The Board composition demonstrates ample diversity, including that of nationality and gender.

(5) Dialogue with shareholders
In addition to fulfilling corporate accountability, we strive to develop means and initiatives to promote a constructive dialogue with shareholders and investors in order to contribute to sustainable growth and the enhancement of enterprise value over the medium to long term. As regards the publishing of management strategy and plans, we disclose basic policies such as our profit plan, and we strive to provide clear explanations of the qualitative and quantitative targets (sales figures, operating income, ROE, etc.) in the medium-term plan and others, as well as how our strategy is designed to achieve those targets.

(6) Overview of corporate governance system and reasons for adopting the system
The azbil Group has established its long-term targets (to achieve by FY2030) and a medium-term plan (FY2021-FY2024), whose aim is to contribute “in series to a sustainable society and achieve growth through providing automation-related products and services. Guided by the Group philosophy of “human-centered automation”, we will secure our own medium- and long-term development while implementing sustainable enhancement of enterprise value. At the same time, we recognize that it is corporate governance which provides the foundation for such sustainable enhancement of enterprise value, and so improving corporate governance is a key issue for management. We are therefore working to strengthen the supervisory and auditing functions of the Board of Directors, enhance the transparency and soundness of management, and clarify responsibilities for business execution. To facilitate this, we have recently transitioned from being a company with an audit & supervisory board to a company with a three-committee board structure, following the approval of a proposal to amend our Articles of Incorporation at the 100th Ordinary General Meeting of Shareholders held on June 23, 2022. Accompanying this transition to a company with a three-committee board structure, three committees have been established—Nomination Committee, Audit Committee, and Remuneration Committee—each consisting of a majority of outside directors. By substantially transferring business execution authority from the Board of Directors to executive officers with clear legal responsibilities, we are promoting a well-defined separation of supervisory and executive functions and ensuring a business execution system based on flexible and efficient decision-making, while at the same time enhancing the objective supervision of management. Furthermore, as a company with a three-committee board structure, to ensure the effectiveness of monitoring by the Board of Directors, we have established a forum for providing information to directors and exchanging opinions with corporate executives in the form of a Liaison Meeting for Directors and Corporate Executives. At the same time, we are continuing the system for executive officers charged with business execution, aiming to enhance the quality and speed of decision-making.
In principle, the Board of Directors meets once a month. As the highest decision-making body of management, it examines and discusses important management matters, indicates major directions, and supervises the appropriate execution of operations so as to reflect the opinions of stakeholders. For the execution of business operations, we have established the Management Committee—an advisory body at the level of management execution that assists the president & CEO in decision-making, and which consists of corporate executives and executive officers with titles. A representative of the Audit Committee attends to ensure the effectiveness of monitoring. In principle, this meets twice a month with the aim of strengthening business promotion capabilities through prompt decision-making and thorough execution.
As of June 23, 2022, 12 directors have been appointed. Four of these (Hirozumi Sone, Kiyohiro Yamamoto, Takayuki Yokota, and Hisaya Katsuta) are directors with experience of the Company’s business, management and auditing. The other eight (Takeshi Itoh, Waka Fujiso, Mitsuhiro Nagahama, Anne Ka Tse Hung, Minoru Sakuma, Fumitoshi Sato, Shigeaki Yoshikawa, and Tomoyasu Miura) are independent outside directors who, as well as being independent, have a wide range of experience and considerable expertise and knowledge. Demonstrating ample diversity, including that of nationality and gender, they represent a majority of the Board of Directors. These independent outside directors are committed to enhancing the Company’s enterprise value by providing appropriate supervision and advice when decisions are made at Board meetings, and they regularly exchange opinions with corporate executives and others at Liaison Meetings for Directors and Corporate Executives. Regarding Board effectiveness, after soliciting the members’ own assessments and opinions, the Board discusses evaluations of the current status and issues, aiming to further improve its effectiveness. An external organization was commissioned to evaluate the effectiveness of the Board of Directors in FY2021 to ensure a more objective verification process. Moreover, giving due consideration to such management strategies as the realization of the medium-term plan, the Company has set out what skill sets are expected of its directors and has confirmed the requisite independence, diversity, and anticipated skills (skills matrix) of its current Board.
As a company with a three-committee board structure, we have established statutory committees so as to strengthen corporate governance.
(Nomination Committee)
The Nomination Committee is responsible for deciding proposals for the election/dismissal of directors to be submitted to the General Meeting of Shareholders; for selecting/dismissing members of statutory committees (Nomination, Audit, and Remuneration); for selecting/dismissing corporate executives; and for deliberating matters related to succession planning. Nomination Committee members are selected from among the directors by a resolution of the Board of Directors; similarly, the chairperson is selected from among the outside directors by a resolution of the Board. The content of Committee deliberations and resolutions are reported to the Board of Directors in a timely and appropriate manner by a member of the Nomination Committee appointed for the purpose by the Committee.
(Audit Committee)
The Audit Committee is responsible for auditing the execution of duties by corporate executives and directors; for preparing audit reports; for drawing up detailed proposals for the election, dismissal, or non-reappointment of the accounting auditor; and for promoting systematic auditing. Audit Committee members are selected from among the directors by a resolution of the Board of Directors; similarly, the chairperson is selected from among the outside directors by a resolution of the Board. The content of Committee deliberations and resolutions are reported to the Board of Directors in a timely and appropriate manner by a member of the Audit Committee appointed for the purpose by the Committee.
(Remuneration Committee)
The Remuneration Committee is responsible for determining policies related to the remuneration system for corporate executives and directors; for determining individual remuneration; and for deliberating on the establishment, revision, or abolition of remuneration systems as well as other matters related to executive remuneration. Remuneration Committee members are selected from among the directors by a resolution of the Board of Directors; similarly, the chairperson is selected from among the outside directors by a resolution of the Board. The content of Committee deliberations and resolutions are reported to the Board of Directors in a timely and appropriate manner by a member of the Remuneration Committee appointed for the purpose by the Committee.

Playing a central role in this is the Board of Directors, which has a total of 12 directors as of June 23, 2022; outside directors now represent a majority of the Board, whose composition demonstrates ample diversity, including that of nationality and gender.

Corporate Governance Framework (As of June 23, 2022)

Changes to Improve Corporate Governance

We strive to strengthen and enhance corporate governance to ensure fairness, transparency and objectivity of the management.

Overall Balance and Diversity of the Board of Directors

In a rapidly changing business environment, we believe that the Company needs a Board of Directors that offers diversity and provides a good overall balance of knowledge and experience that will contribute to the enhancement of enterprise value over the medium to long term. Based on this fundamental principle, as of June 23, 2022, the Board of Directors consists of four (4) directors with executive experience in the Company’s business and management and eight (8) independent outside directors with wide-ranging experience, extensive expertise and professional knowledge. Of the twelve (12) directors, two (2) are women (one of whom is a foreign national). Also, we have established the skill sets expected of the directors with respect to the realization of the Company’s medium-term plan and other management strategies, and we have confirmed the independence, diversity, and expected skills of the current entire Board of Directors.
As of June 23, 2022, the total number of directors is twelve (12), with outside directors accounting for more than half of the Board of Directors. The Board composition demonstrates ample diversity, including that of nationality and gender.

Improving the Effectiveness of the Board of Directors

The Company’s Board of Directors makes appropriate decisions through open and constructive discussions and strives to enhance enterprise value over the medium to long term. As in the previous year, to ensure that the Board continues to properly fulfill its roles and responsibilities, identifying issues and opportunities for improvement to develop future initiatives for enhancing effectiveness, we have asked all the directors and the Audit & Supervisory Board members to give their own assessments and opinions regarding the following: (1) the size and composition of the Board of Directors; (2) the operation of the Board; (3) the support system provided for outside directors and outside Audit & Supervisory Board members, and communication with them; (4) the Board’s decision-making process; (5) the content of reports from the Nomination and Remuneration Committee to the Board and the process for appointing directors and Audit & Supervisory Board members; and (6) initiatives aimed at transition to a company with three committees and executive remuneration system. In addition to exchanging opinions on current effectiveness and issues, Board members have engaged in constructive discussions regarding what future action should be taken.
As a result, we have confirmed that the size, composition, and operation of the Board of Directors are all appropriate; that a system has been established to make important management decisions and supervise business execution; that both the reporting of the Nomination and Remuneration Committee to the Board and the process for appointing directors and Audit & Supervisory Board members are conducted appropriately; that Board members, including outside directors, with diverse experience and expertise, have a clear understanding of their roles and are fully able to participate in open, lively, and constructive discussions—with sufficient opportunities for communication—even when meetings are held online. Consequently, we have determined that the overall effectiveness of the Board is appropriately ensured. Furthermore, an external organization was commissioned with evaluating the effectiveness of the Board of Directors in FY2021 to ensure a more objective verification process. In FY2021, in addition to deliberations in Board meetings, discussions regarding the medium-term plan also took place on more than 10 occasions, including at non-Board forums arranged to exchange opinions. The members have reviewed the plan and discussed business strategies to achieve long-term growth and long-term targets; topics have included overseas business development, DX and related businesses, and sustainability initiatives. In addition, deliberations and discussions on our transition to a company with a three-committee board structure were included in the aforesaid evaluation of Board effectiveness.
As well as communicating and discussing the progress of the medium-term plan, the Board members have a shared recognition that it is necessary to make further progress with discussions on business management and corporate governance, including compliance; to improve communication with the executive side as well as between committees, following the transition to a company with a three-committee board structure; and to strive to exercise supervisory functions so that the full potential of this transition can be realized.
We will continue with our initiatives to enhance the effectiveness of the Board of Directors so as to achieve sustainable growth and increase enterprise value over the medium to long term.

Executive Compensation

Along with the transition to a company with a three-committee board structure, the Remuneration Committee, which is chaired by an outside director, has formulated a policy for determining executive remuneration suited to the new corporate structure. In conjunction with this revision of the executive remuneration system, which now includes a stock compensation plan, the company has disclosed its new remuneration policy.

Remuneration Policy of Azbil Corporation
Guided by the azbil Group philosophy of “human-centered automation,” Azbil Corporation (“the Company”) aims to contribute “in series” to a sustainable society by providing automation-related products and services.
With regard to our executive remuneration system, in order to add impetus to the realization of our long-term targets (to achieve by FY2030) and the medium-term plan (FY2021-FY2024), we will further increase both the corporate executives’ awareness of the need to contribute to enhancing enterprise value and their motivation to maximize shareholder value, as well as ensuring that directors who are not responsible for business execution can share value with our shareholders. With this system, we will promote initiatives to contribute “in-series” to a sustainable society.
■The azbil Group philosophy
The azbil Group philosophy is to realize safety, comfort and fulfillment in people’s lives and contribute to global environmental preservation through “human-centered automation.” To achieve this,
• We create value together with customers at their site..
• We pursue our unique value based on the idea of “human-centered.”.
• We think towards the future and act progressively.
■Basic policy regarding executive remuneration
Aiming to realize the Group’s philosophy, we have adopted the following basic policy for the remuneration of Company officers to motivate them not only as regards short-term performance but also to achieve medium- and long-term performance goals and to enhance enterprise value.
• Taking into consideration the nature of the Company’s business, the remuneration should encourage awareness of the necessity to enhance enterprise value from a medium- to long-term perspective and further promote value sharing with our shareholders.
• The remuneration should contribute to securing talented management personnel to realize the Company’s management philosophy and achieve medium- to long-term performance goals.
• The remuneration system should be highly independent and objective, and should enable us to fulfill our duty of accountability to the Company’s stakeholders.
■ Remuneration levels
Remuneration levels for the Company’s officers (corporate executives and directors) shall be set by resolution of the Remuneration Committee, after it has verified their appropriateness using data supplied by an external research agency. Also, the Committee shall review remuneration levels as necessary in response to changes in the external environment.
■ Remuneration structure
The remuneration structure for our corporate executives (including corporate executives who concurrently serve as directors, similarly hereinafter) comprises basic remuneration, which is a fixed remuneration paid monthly based on their roles and responsibilities; bonuses as short-term incentives; and stock-based compensation as a medium- to long-term incentive. In order to ensure a remuneration structure that motivates officers to achieve our medium- and long-term performance targets and enhance enterprise value, the incentive component of their remuneration has been increased, and the combined remuneration for corporate executives will be typically determined thus: basic remuneration 56%, bonus (base amount) 33%, stock-based compensation (base amount) 11%. The remuneration for directors (not including directors who concurrently serve as corporate executives, similarly hereinafter) comprises basic remuneration and stock-based compensation.
● Corporate executives
(1) Basic remuneration
• Basic remuneration is paid as a fixed monthly monetary remuneration based on the position, responsibilities, and roles of the officer.
(2) Bonus
• A bonus is paid as performance-linked monetary remuneration that takes into consideration the Company’s performance and non-financial metrics for the single fiscal year.
• As regards the financial metrics, to improve enterprise value over the medium to long term, we use sales and operating income, the Company’s main management indices, as key performance indicators (KPIs). The amount of the bonus will fluctuate according to the degree by which these targets have been achieved, while taking also into consideration non-financial metrics.
• The non-financial metrics are based on the degree of achievement of the various roles of the corporate executive, such as implementing measures to realize the medium-term plan, engagement in CSR management, and the development of human resources (succession training). The Remuneration Committee determines the amount of remuneration based on such evaluation.
• Taking into account both financial and non-financial metrics, the final amount paid as a bonus will vary between 0% and 150%.
• The remuneration is designed so that the higher the officer’s position, the higher the weighting of financial metrics. As an example, the KPIs and their respective evaluation weightings for the president and CEO are as follows.
BonusKPI (3) Stock-based compensation
• In principle, stock-based compensation is paid to the corporate executive following retirement from the current position, with the aim of continuously enhancing enterprise value while sharing value with the shareholders.
• A base amount for stock-based compensation is set for each position. Of this, 50% is performance-linked and the remaining 50% is non-performance-linked.
• As regards KPIs, the performance-linked component uses relative TSR—a metric that evaluates total shareholder return relative to the Tokyo Stock Exchange Stock Price Index (TOPIX)—designed to ensure that officers and shareholders have a shared interest; and operating income margin, a metric set forth in the Company’s medium-term plan. As a non-financial metric, we use effective CO2 reduction at customers’ sites, which is one of the essential goals of the azbil Group for the SDGs. The performance-linked component will vary between 0% and 150% depending on how much the targets have been achieved during the period covered by the mid-term plan. The evaluation weightings for each KPI are as follows.
StockKPI • As a way to further encourage value sharing with shareholders, the non-performance-linked component is paid as stock-based compensation with vesting of a fixed number of shares.
• Stock-based compensation is paid through a trust-type stock compensation plan. Under this plan, points corresponding to an officer’s position are awarded annually, and Company shares equivalent to the number of points accumulated are transferred from the trust to the plan-eligible person following retirement from the current position.
● Directors
(1) Basic remuneration
• Basic remuneration is paid as a fixed monthly monetary sum based on the responsibilities pertaining to the position.
(2) Stock-based compensation
• In principle, stock-based compensation is paid to the director following retirement from the current position, with the aim of continuously enhancing enterprise value while sharing value with the shareholders.
• A base amount of stock-based compensation is determined, which is entirely non-performance-linked.
• Stock-based compensation is paid through a trust-type stock compensation plan. Under this plan, a certain number of points are awarded annually to those eligible, and Company shares equivalent to the number of points accumulated are transferred from the trust to the plan-eligible person following retirement from the current position.
■Process for determining remuneration
• The Remuneration Committee determines the remuneration of directors and corporate executives. The majority of the members of the Remuneration Committee, including the chairperson, are outside directors, which ensures objectivity and transparency.
• The Remuneration Committee has the authority to determine the remuneration details of individual directors and corporate executives of the Company. It arrives at evaluation decisions based primarily on (1) the policy regarding the determination of remuneration details for individual directors and corporate executives; (2) the remuneration details for individual directors and corporate executives; and (3) in the case of corporate executives, the degree of achievement of both company-wide performance targets and the individual targets set for each corporate executive for the purpose of determining performance-based remuneration.
• In the event of a substantial change occurring in the Company’s external environment, the Remuneration Committee may take exceptional measures after carefully deliberating on the appropriateness of the target values, and calculation methods used, for determining performance-linked remuneration.
■Non-payment of stock-based compensation
• If it is determined that an officer is responsible for a serious misconduct or violation, the Company can deny all or part of the Company’s shares, etc. that were to be transferred to said officer under this plan.
■Disclosure policy
• Details of the executive remuneration system are compiled and disclosed—in accordance with our disclosure policy, applicable laws and regulations—promptly and proactively through the annual Securities Report, reference materials for the General Meeting of Shareholders, Business Report, Corporate Governance Report, Company website, etc. The Company implements a policy of active engagement with shareholders and investors.

Contribution of Outside Directors

In addition to the requirements for independent officers stipulated by the Tokyo Stock Exchange, we follow criteria for independence that we have formulated when appointing outside officers as prescribed by the Companies Act. Candidates deemed capable of providing constructive suggestions and accurate observations and advice concerning the company’s business and the improvement of enterprise value in the medium and long terms are appointed as outside directors. Our outside directors, from their diverse perspectives, are active in asking questions and giving suggestions at Board of Directors meetings, thereby contributing to sustainable corporate growth and the enhancement of enterprise value over the medium and long terms.

Reasons for Appointing Outside Directors and Their Attendance Record in FY2021

Takeshi Itoh

In addition to management experience and experience as an analyst in investment banks and investment advisory companies, etc. in Japan and abroad, with his long-term overseas work experience and experience in the consulting business including fundraising and M&A advice, he has a record of superior performance in advanced corporate analysis. In addition, by utilizing his experience as executive officer in investment management companies in Japan and abroad, at Board of Directors meetings of the Company, he not only supervises business execution but also proactively offers his opinions based on his advanced knowledge and experience, and also from the perspective of the capital markets, as an expert in the fields of international financing and investment, to increase the transparency and fairness of management. In these ways, he fulfills such appropriate roles as supervision and advising, etc. on business execution and the Company judges he can continue contributing to raising the standard of the Company’s management going forward.

Attendance record: Board of Directors meetings 12 of 12

Waka Fujiso

She possesses extensive knowledge and experience that she gained mainly during her activities over many years as a public prosecutor, and, after retiring from the position of public prosecutor at the Supreme Public Prosecutors Office, during her service as a council member at a government agency at which time she also taught at a law school. At Board of Directors meetings of the Company, she not only supervises business execution, but also proactively offers opinions from the perspectives of sustainability, diversity and CSR, based on her extensive knowledge as a legal expert, aiming at more thorough compliance management and risk management as well as the enhancement of management transparency and fairness. In these ways, she fulfills such appropriate roles as supervising and giving advice on business execution and the Company judges she can continue contributing to raising the standard of the Company’s management going forward.

Attendance record: Board of Directors meetings 12 of 12

Mitsuhiro Nagahama

He possesses broad knowledge and extensive experience in corporate management, financial/securities sectors and global business, as he has successively served in important posts at financial institutions. He was appointed as an outside member of the Audit & Supervisory Board in 2015, and has audited the Company’s overall business with his outstanding insights on corporate governance and company management, contributing to the improvement of the Company’s corporate governance and internal control from an independent perspective. Furthermore, he has not only supervised business execution as an outside director since 2019, but also proactively offered opinions to enhance management transparency and fairness from the perspective of the capital markets and based on a global perspective. In these ways, he fulfills such appropriate roles as supervising and giving advice on business execution and the Company judges he can continue contributing to raising the standard of the Company’s management going forward.

Attendance record: Board of Directors meetings 12 of 12

Anne Ka Tse Hung

She worked at an international law office as a partner attorney, and supported the conclusion of international transaction agreements for Japanese companies in addition to overseas corporate matters. She also has ample business experience with Japan-based companies, is familiar with Japanese business customs, and possesses knowledge in the industry to which the Company belongs. At Board of Directors meetings, she draws on her expert knowledge of international business not only to supervise business execution, but also to proactively offer opinions based on her approach to investment for international business growth and a global perspective. In these ways, she fulfills such appropriate roles as supervising and giving advice on business execution and the Company judges she can continue contributing to raising the standard of the Company’s management going forward.

Attendance record: Board of Directors meetings 12of 12

Minoru Sakuma

He has successively served in important posts at policy-based financial institutions, and in addition to his broad knowledge of international finance and extensive overseas experience, he has management experience at investment corporations and experience as an outside member of the Audit & Supervisory Board at a company with worldwide operations. In 2019, he assumed the post of outside member of our Audit & Supervisory Board, and audited Azbil Corporation’s business in general, contributing to an improvement in the Company’s corporate governance and internal control from an independent perspective. In addition, in the Company’s meetings of the Board of Directors, he asks questions regarding the appropriateness of the Company’s business and financial strategies, and from the perspective of enhancing the Group’s overall corporate governance. Moreover, he has knowledge of finance, accounting, and legal affairs, as well as knowledge of global business, and the Company judges he can contribute to raising the standard of the Company’s management.

Attendance record : Board of Directors meetings 12 of 12

Fumitoshi Sato

He has successively served in important posts at the Bank of Japan, and in addition to his broad knowledge in the financial sector and extensive experience, he has work experience in the management division at an operating company in the manufacturing industry—overseeing accounting, legal affairs, and human resources—and management experience as a director. In 2019, he assumed the post of outside member of our Audit & Supervisory Board, and audited the Company’s business in general, contributing to the improvement of the Company’s corporate governance and internal control from an independent perspective. In addition, in the meetings of the Company’s Board of Directors, he asks questions regarding the appropriateness of the Company’s business and financial strategies, and from the perspective of risk management and corporate governance enhancement. Moreover, he has knowledge of finance, accounting, and legal affairs, as well as knowledge of corporate management, and the Company judges that he can contribute to raising the standard of the Company’s management.

Attendance record : Board of Directors meetings 12 of 12

Shigeaki Yoshikawa

He has held key positions in a general trading company with global operations, and has broad knowledge and abundant experience regarding overseas business development and business portfolio strategies, as well as corporate management experience, etc., at a think-tank consulting firm. The Company judges that as an outside director of the Company he can fulfill such appropriate roles as offering objective suggestions and advice for the enhancement of management transparency and fairness from wide-ranging perspectives as well as supervising business execution for the Board of Directors, utilizing his extensive experience and insight into overseas business, as well as his knowledge of marketing and sales.

Tomoyasu Miura

He has held key positions at a think-tank consulting firm and possesses extensive knowledge and experience in a wide range of fields, such as IT, technology innovation, and new business creation, as well as abundant experience in the development of HR management at a public interest incorporated foundation. The Company judges that as an outside director of the Company he can fulfill such appropriate roles as offering objective suggestions and advice for the enhancement of management transparency and fairness from wide-ranging perspectives as well as supervising business execution for the Board of Directors, utilizing his abundant knowledge of the IT and technology domains, his experience of new business creation, and his experience in human resource development.

Comment by an Outside Director

Azbil corporate governance, present and future

Azbil is a trail blazer among Japanese listed companies in the sphere of corporate governance. Despite the pandemic having lasted longer than most would have predicted, because of the well-established supportive and transparent environment among the Azbil board members, the board was able to push ahead on many agenda items in 2021 and took its corporate governance standard to a new level.

After extensive deliberations and preparations in May 2021, Azbil unveiled its new medium-term management plan, setting concrete new indicators for its long term comprehensive Sustainability Development Goals to be implemented through to 2030. The 4 goals are essentially; (1) Environment and Energy – preserving the Earth’s environment and solving energy-related problems through co-operative creation; (2) New Automation – creating a safe and comfortable society through new automation; (3) Supply Chain, Social Responsibility – fulfilling our responsibilities to society across our supply chain and contributing to local communities; (4) Health and Well-being Management, An Organization That Never Stops Learning – strengthening our foundations to solve societal problems through health and well-being management and fostering continuous learning. The new indicators set to realize these goals include ambitious targets such as cutting 340,000 tons of CO2 in Azbil’s business by 2030 and making all manufactured products to be recyclable by 2030.
On the structural side, the board has also initiated various studies, utilizing both internal and external expertise, to ensure that Azbil always has the optimum board structure. Through intensive deliberations among board members throughout FY 2021, the board completed its study and designed a new board structure to be proposed for the use in the new financial year. This reform, which splits the board into three committees , will ensure the board is nimble and transparent, capable of responding and making swift decisions in response to the ever-changing environments in a very turbulent time of the world.
The Nomination and Remuneration Committee, which is chaired by an independent outside director, consists of a majority of independent outside directors. This is to ensure fairness, objectivity, and transparency in processes involving the nomination and compensation of officers. The Committee conducts in-depth deliberations in the same manner as the Board of Directors.
While it is true that the spread of Covid-19 has led to major constraints on corporate governance, we still strive to ensure deliberations of a high caliber, employing, in tandem, a web conference system—featuring robust IT security—for meetings of the Board of Directors, briefings, and other meetings. We believe that this arrangement means that our deliberations maintain an adequate level of effectiveness.

With these new strategies put in place, Azbil is well prepared to become a Prime Member of the Tokyo Stock Exchange which took place on April 4, 2022.

Outside Director
Anne Ka Tse Hung