Sustainability

Corporate Governance

Basic Approach
Through the realization of effective corporate governance, we aim to prevent situations that would harm corporate value, such as violation of laws and regulations, fraud or misconduct, and to strive for sustainable growth and improvement of corporate value over the medium to long term. We have positioned corporate governance as an important mechanism for decision-making that is transparent, fair, prompt and resolute in order to meet the expectations of stakeholders such as shareholders, customers, other business partners, our officers and employees, and society.
To ensure the confidence of shareholders, we consider it important to conduct flexible and rational decision-making and business execution and to enhance the functions for monitoring and supervising management. To this end, we appoint multiple outside directors and outside Audit and Supervisory Board members, and take care to ensure the independence of the Audit and Supervisory Board and the effectiveness of audits by the members.
To expedite decision-making, the Fuji Oil Group shifted its management structure to a pure holding company structure through an incorporation-type company split, and separates management from execution, thereby promoting delegation of authority to its regional headquarters, which are operating companies. Meanwhile, as the global headquarters, Fuji Oil Holdings is engaged in formulating strategies for group management and for managing group subsidiaries.

Holding Company Structure

On October 1, 2015, the Fuji Oil Group shifted its management structure to a holding company structure under a pure holding company. Under this new structure, we aim to enhance our strategic functionality, achieve sustainable growth, and increase our earning capacity.

Purposes of the holding company structure

  • 1 Enhancing the Group’s strategic functionality

    We will implement strategies, especially global strategies, that enable the entire Group to achieve sustainable growth, with Fuji Oil Holdings as the core.

  • 2 Strengthening governance

    As centralized oversight becomes more important due to the increasing diversity in employee nationalities and other factors, we will strengthen governance functions, primarily in Fuji Oil Holdings.

  • 3 Hitozukuri (fostering people)

    People devise strategies and implement governance. Believing it important to recruit people on a global basis and develop them optimally based on Group-wide allocation, we will change the way we evaluate people and the way we work.

  • 4 Creating new businesses

    To realize our desired vision for "How we want to be in 2030", we will implement a business expansion strategy, including M&A, and a growth strategy to create new businesses by making technological innovations.

Fuji Oil Group conceptual diagram

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Establishment of the "Fuji Oil Group Management Philosophy"

The Fuji Oil Group Management Philosophy states principles of action that should be observed by all group managers and employees around the world in order for our group to achieve sustainable growth, inheriting the DNA of our foundation and fulfilling our social responsibilities.

Fuji Oil Group Management Philosophy

graph

Background to the establishment of the Group Management Philosophy

In order for the Fuji Oil Group to continue to grow sustainably, it is not sufficient that we simply maintain our current business, we must further expand our business globally while focusing on group management. To conduct global management, we needed to foster a corporate culture of challenge and innovation, while keeping the ability to unify organizations. Given these circumstances, we were keenly aware that we should embark on innovation, and innovation required us to reorganize the universal philosophies that form the basis of our group and to share them across nationalities and generations. Thus, we established the Fuji Oil Group Management Philosophy.

The establishment process

We selected representatives with a strong passion for the growth of our group from individual operation bases, and over about six months from March 2015, held a series of discussions about what the Fuji Oil Group is, what it should aim at, and what values it should share. We then conducted a questionnaire-based survey to form a consensus transcending nationalities, generations, occupational categories and official positions, and built up the Management Philosophy through concerted efforts.

Corporate Governance Structure

Board of Directors

As stipulated in the rules of the Board of Directors, meetings of the Board of Directors are held once a month in principle, and extraordinary meetings are held from time to time as necessary. Matters stipulated by laws and regulations and other important matters are deliberated and resolved, and the status of the directors’ execution of duties is reported.

Management Council

Important matters relating to management are fully deliberated and overseen by the Management Council, an advisory body to the representative directors. The main members are the president and director and managing executive officers, and meetings are held once a month in principle. This has established and enhances a system that enables compliance with laws and regulations and the efficient execution of duties by contributing to the decision-making of the president and the Board of Directors.

Nomination and Compensation Advisory Committee

In October 2015, we established the Nomination and Compensation Advisory Committee as an advisory body to the Board of Directors for transparency in the processes of officer appointments and executive compensation decisions. The committee is composed of three members: outside director Kazuhiro Mishina, who is the current chairperson; outside director Noriko Taji; and the president. Meetings were held a total of 10 times during the 89th term (April 1, 2016 - March 31, 2017).

ESG Committee

The ESG Committee proposes and reports on important ESG (Environment, Social, Governance) issues to the Board of Directors, and has subcommittees for Safety, Quality and Environment, Human Resources Development, Sustainable Procurement, and Risk Management and Compliance.

From FY 2017 onward, the committee plans to reflect external viewpoints to a greater extent in our ESG activities by conducting dialogue with outside experts, held with the aim of further enhancing the effectiveness of our initiatives.

Audit and Supervisory Board

The Audit and Supervisory Board, which held 12 meetings during the 89th term, discusses and decides on audit policies and audit plans, and reports, resolves and decides on other important matters relating to auditing.

Corporate Governance Structure (As of June 22, 2017)

graph

Committee Composition and Chairpersons (As of June 22, 2017)

Total number of members Internal directors Independent outside directors Audit and Supervisory Board members Chairperson
Board of Directors 12 6 2 4
(including 2 outside members)
President
Nomination and Compensation Advisory Committee 3 1 2 - Independent outside director
ESG Committee 3 3 - Observer Internal director (in charge of Corporate Governance)

Outside Directors and Outside Audit and Supervisory Board Members

We have two outside directors and two outside Audit and Supervisory Board members.

Other than meeting the requirements for independence stipulated by the financial instruments exchange on which our company is listed, we have no special provisions regarding independence for appointing outside directors and outside Audit and Supervisory Board members. However, our basic consideration in making appointments is that there be no concerns of conflict of interest with general shareholders in fulfilling the functions and roles of objective and appropriate supervision and auditing based on experience and expert knowledge.

Outside directors and outside Audit and Supervisory Board members make suggestions and proposals to ensure the adequacy and appropriateness of the Board of Directors’ decision-making and the status of the directors’ execution of duties. They attend meetings of the Board of Directors and state their opinions on deliberations and decisions on agenda items.

Outside Audit and Supervisory Board members exchange opinions at Audit and Supervisory Board meetings, and strive for mutual cooperation through methods including regular liaison meetings with internal audit personnel and accounting auditors, exchanging information and receiving reports, and sharing issues.

Appointment criteria for outside directors

  • The appointment criteria for an outside director shall be to have the depth and breadth of knowledge and experience necessary to deliberate on proposals at Board of Directors meetings, or to have the requisite experience and insight in his or her own field of expertise to perform the functions of management supervision.
  • For our company, which operates in a wide range of business areas, problems such as conflicts of interest may arise in individual commercial transactions with an outside director or a company or other enterprise with which an outside director is affiliated. Conflicts of interest shall be handled appropriately through the operations and procedures of the Board of Directors.
Name Kazuhiro Mishina
Supplementary Explanation of Suitability Mr. Mishina is a professor at the Graduate School of Business Administration, Kobe University.
In previous fiscal years, our company has made donations to Kobe University, where Mr. Mishina is a professor, for the purpose of supporting research, but the amounts were small at less than ¥1 million per year, and do not affect his independence.
He has been designated as an independent officer based on the provisions of the relevant stock exchanges.
Reasons for Appointment Mr. Mishina has been active for many years at the forefront of research in corporate economics, including management strategy and managerial theory. Our company believes that we can maintain objective, impartial and fair supervision of our business execution by having him attend Board of Directors meetings to monitor and supervise management from an independent, objective viewpoint using his highly specialized learning and extensive experience.
Since there is no special relationship of interest between Mr. Mishina and our company, we have judged that there is no likelihood that a conflict of interest will arise with general shareholders, and have therefore designated him as an independent officer.
Name Noriko Taji
Supplementary Explanation of Suitability Ms. Taji is a professor at Faculty of Business Administration and Graduate School of Business Administration, Hosei University.
She has been designated as an independent officer based on the provisions of the relevant stock exchanges.
Reasons for Appointment Ms. Taji has been active for many years at the forefront of research in multifaceted fields of expertise necessary for corporate management including business models, launching business start-ups, innovation management for Japanese companies, managing business start-ups, product development theory and global management theory. Our company believes that we can maintain objective, impartial and fair supervision of our business execution by having her attend Board of Directors meetings to monitor and supervise management from an independent, objective viewpoint using her highly specialized learning and experience.
Since there is no special relationship of interest between Ms. Taji and our company, we have judged that there is no likelihood that a conflict of interest will arise with general shareholders, and have therefore designated her as an independent officer.

Appointment criteria for outside Audit and Supervisory Board members

  • An outside Audit and Supervisory Board member shall have the requisite experience and insight in his or her field to perform an audit function, and shall be appointed from among candidates who are able to attend relevant meetings, including those of the Board of Directors and the Audit and Supervisory Board, after obtaining the consent of the Audit and Supervisory Board.
  • Our company shall give consideration to ensuring independence befitting the purpose for selecting an outside Audit and Supervisory Board member, which is to maintain the soundness and transparency of management by conducting audits from an impartial and objective point of view.
Name Minoru Matsumoto
Supplementary Explanation of Suitability Mr. Matsumoto has previously been engaged in the execution of business at KPMG AZSA LLC.
He has been designated as an independent officer based on the provisions of the relevant stock exchanges.
Reasons for Appointment Mr. Matsumoto has knowledge of finance and accounting as a certified public accountant, and our company believes that we can maintain an objective, impartial and fair auditing system by having him monitor and supervise our company’s management as an outside Audit and Supervisory Board member.
Since there is no relationship of interest between Mr. Matsumoto and our company, we have judged that there is no likelihood that a conflict of interest will arise with general shareholders, and have therefore designated him as an independent officer.
Name Kouichi Kusao
Supplementary Explanation of Suitability Mr. Kusao is an attorney at law at Kusao Law Office.
He has been designated as an independent officer based on the provisions of the relevant stock exchanges.
Reasons for Appointment Mr. Kusao is an expert in corporate law with specialized knowledge as an attorney at law. He is an outside audit and supervisory board member at multiple companies and has extensive experience and a high level of insight, and our company believes that we can maintain an objective, impartial and fair auditing system by having him monitor and supervise our company’s management as an outside Audit and Supervisory Board member.
Since there is no relationship of interest between Mr. Kusao and our company, we have judged that there is no likelihood that a conflict of interest will arise with general shareholders, and have therefore designated him as an independent officer.

Response to the Corporate Governance Code

The Fuji Oil Group’s basic policy for corporate governance is to ensure highly transparent and sound management and to continue to increase shareholder value.

The Corporate Governance Code was put into effect by the Tokyo Stock Exchange on June 1, 2015. In response, we checked how we were implementing corporate governance in light of the Corporate Governance Code, and identified issues to be addressed. The Board of Directors then resolved to approve the Fuji Oil Holdings Corporate Governance Guidelines, and submitted a Corporate Governance Report in November the same year. Of the 11 items in the report submitted at that time, eight items were disclosed in compliance with the Corporate Governance Code, and the remaining three items were not disclosed, with only explanations being provided. However, during FY 2016 we were able to comply with "Principle 3.1 (v): Explanation with respect to individual appointments and nominations of director and kansayaku candidates" and "Supplementary Principle 4.11.3: Analysis and evaluation of the effectiveness of the board of directors as a whole." As a result, as of March 31, 2017, the remaining item for which only an explanation was provided is "Principle 1.4: Cross-Shareholdings." We explained that we are sequentially eliminating our cross-shareholdings.

Fuji Oil Holdings Corporate Governance Guidelines

Reasons for Non-Compliance with the Principles of the Corporate Governance Code

Principle 1.4 Cross-Shareholdings

Our company currently holds listed shares as cross-shareholdings. As of March 31, 2017, the number of cross-held stock issues is 28, of which 14 are not mutual shareholdings but are held by our company alone. After submitting a Corporate Governance Report on November 6, 2015, we examined the rationality of the purposes in cross-shareholdings for reasons other than investment in line with the intent of the Corporate Governance Code and the Fuji Oil Holdings Corporate Governance Guidelines, giving consideration to specific business benefits such as maintaining and strengthening business partnerships and transactions and share stability, and are sequentially selling the stock issues we are able to sell. At the end of the fiscal year, the Board of Directors also reported on the stocks sold within that fiscal year and reviewed the status of cross-shareholdings, and concurrently formulated criteria for judging the rationality of continued holding. The three criteria are transaction value, dividends and net unrealized gains.

We plan to continue eliminating cross-shareholdings while judging whether to continue ownership by comprehensively taking into account specific business benefits, based on these three criteria.

We have not established a uniform standard for exercise of voting rights of cross-shareholdings, but comprehensively consider factors including whether or not a proposal can be expected to facilitate the efficient and sound management of the issuing company and improve its corporate value, in addition to whether or not the proposal conforms to our own shareholding policy.

In FY 2016, we sold our cross-shareholdings in four stocks. In the future, we plan to continue eliminating cross-shareholdings after further examination of the possibility of doing so.

Officer Compensation

For officers of our company, remuneration of directors is decided by resolution of the Board of Directors based on the report of the Nomination and Compensation Advisory Committee, and remuneration of Audit and Supervisory Board members is decided by discussion among the members, within the total amount of remuneration previously resolved at the General Meeting of Shareholders.

Remuneration of directors consists of fixed monthly compensation and bonuses linked to individual and corporate performance. In October 2015, we established the Nomination and Compensation Advisory Committee, consisting of the three members Kazuhiro Mishina, an outside director, as chairperson, Noriko Taji, an outside director, and the president. The committee proactively exchanges opinions with the Board of Directors following repeated discussions of officer compensation. In setting standards for each item, annual salaries are stipulated according to position and responsibilities using survey data from external specialist organizations, and increases or decreases in bonuses are determined using business performance indicators such as consolidated ordinary profit.

Remuneration of Audit and Supervisory Board members is fixed monthly compensation only, decided by discussion among the members using survey data from external specialist organizations so that the level is commensurate to the position and responsibilities.

Outside directors and outside Audit and Supervisory Board members receive fixed compensation only.

Total remuneration by officer classification, total remuneration by type and number of eligible officers

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Officer classification Total remuneration
(millions of yen)
Total remuneration by type (millions of yen) Number of eligible officers (persons)
Basic compensation Stock options Bonuses Retirement bonus and amount of retirement bonus allowance carried over
Directors
(excluding outside directors)
297 260 37 8
Audit and Supervisory Board members
(excluding outside Audit and Supervisory Board members)
39 39 3
Outside officers 35 35 5
  • The above includes compensation for two directors who retired at the conclusion of the 88th Ordinary General Meeting of Shareholders.
  • The above does not include officer bonuses based on the resolution of the 88th Ordinary General Meeting of Shareholders.
  • The above includes officer bonuses for FY 2016.
  • The above total remuneration of directors does not include the portion of salary received as an employee of our company.
  • Director compensation as of the end of FY 2016 has been set at no more than a total of ¥600 million for the year by resolution of the Ordinary General Meeting of Shareholders held on June 26, 2012 (of which, outside directors shall receive no more than a total of ¥30 million for the year; including directors’ bonuses but not including the portion of salary received as an employee of our company).
  • The amount of compensation for Audit and Supervisory Board members has been set at no more than a total of ¥100 million for the year by resolution of the 89th Ordinary General Meeting of Shareholders held on June 22, 2017.

Compliance

Group Management Philosophy and compliance

The Fuji Oil Group complies with laws and regulations, as well as internal policies and rules, as a matter of course, and views acting with a strong sense of ethics in daily business operations as crucial to meeting the expectations and needs of society (i.e. stakeholders). This basic concept of compliance is included in the Fuji Oil Group Management Philosophy, which was formulated when the Group shifted to a holding company structure in October 2015.

Efforts for compliance

ESG Committee and compliance

The ESG Committee has been voluntarily established as an advisory body of the Board of Directors. The committee consists of the Safety, Quality and Environment Subcommittee, the Human Resources Development Subcommittee, the Sustainable Procurement Subcommittee, and the Risk Management and Compliance Subcommittee. Regarding promotion of compliance, the Risk Management and Compliance Subcommittee poses challenges and reports them at a management level.

In FY 2016, we were involved in various activities aimed at contributing to spreading and raising the awareness of compliance. The following are representative examples of the measures implemented.

(1) Group training about important laws and regulations and compliance was conducted at individual group companies.
(2) Activities were conducted to inform employees about the hotline system (Fuji Oil Group Compliance Helpline) for group companies outside Japan and to promote its use.
(3) The Fuji Oil Group Business Ethics Guidelines were revised in line with the intent of the Fuji Oil Group Management Philosophy.
(4) Information was provided on an ongoing basis to employees on the compliance intranet portal site, the contents of which were updated periodically (monthly).
(5) A compliance awareness survey was conducted (starting with Japan).

Compliance education

We have continuously offered compliance training to employees to convey our basic concept of compliance and examples of law violation for case study. In 2016, more than 30 compliance training seminars were conducted at individual departments and group companies in Japan. At the regional headquarters in China, local lawyers were invited to conduct training to raise awareness of reducing the risk of violating laws and regulations.

Whistleblower hotlines

In Japan, Fuji Oil Group Whistleblower Hotlines have been set up, in which compliance-related issues of employees of Fuji Oil Holdings, its group companies, and some subcontracting companies in Japan are addressed by internal staff members or external parties (lawyers). A hotline system for employees at group companies outside Japan (Fuji Oil Group Compliance Helpline) is also available.

Implementation of fair and equitable trade

In addition to the CSR Procurement Guidelines (2nd edition), guidelines that are designed to prevent us from using our dominant position to compel business partners to offer benefits have been established to maintain a healthy and proper relationship with suppliers and outsourcing companies. These guidelines are not only posted on the intranet, but also are dealt with in department training and compliance training to keep every employee informed. In addition, to promote compliance with the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors, we carry out education and training on conducting fair transactions with business partners, including participation in external study sessions by related departments and implementation of internal study sessions.

Fuji Oil Group Business Ethics Guidelines

We revised the Fuji Oil Group Business Ethics Guidelines, which explain our principles of action in the Fuji Oil Group Management Philosophy using representative case studies encountered in various daily duties, and have started distribution to all employees in booklet and PDF form. The guidelines are also being made available in eight languages.

Implementation of compliance awareness survey

We conducted a compliance awareness survey covering all employees of Fuji Oil Holdings and Fuji Oil Co., Ltd. to understand the current status of compliance and identify issues. Based on the results of the survey, we plan to conduct a meeting to report on the results of the survey to officers, provide feedback to departments using a risk-based approach and make improvements to issues of high importance that have been identified as themes for the next fiscal year. We also plan to expand the same compliance awareness survey to regions outside Japan from FY 2017 onward.

Other efforts for compliance with laws and regulations

We have a basic anti-bribery policy and related regulations, and conduct group-based training according to local needs for greater thoroughness.

At the regional headquarters in China, Fuji Oil Holdings compliance officers conducted compliance training and a lawyer at a local law firm conducted anti-bribery training.

Communication with Shareholders and Investors

We are actively promoting information disclosure to shareholders and investors to maintain management transparency and achieve accountability.

To facilitate direct communication between shareholders and top-level management, we held an informal gathering of shareholders after the General Meeting of Shareholders in June 2016. We are also trying to disclose information to shareholders who cannot participate in the General Meeting of Shareholders or events in a timely and fair manner. Specifically, we are working to improve the way we outline our business activities on our website or in notices of the General Meeting of Shareholders and handouts. We disclose notices of the General Meetings of Shareholders on the Timely Disclosure network (TDnet) and our website before dispatching them. An English version of each notice is also made available on our website. Regarding voting rights, we have adopted an electronic voting rights exercise system.

For institutional investors, we hold briefing sessions on the second-quarter and year-end settlements of accounts and conference calls on the days of the first-quarter and third-quarter earnings announcements, and the management team also proactively engages in dialogue through interviews after earnings announcements. We are also exchanging views with investors by holding small meetings under themes of high relevance to investors, such as the mid-term management plan and domestic business, with the participation of top-level management. Since 2016, we have been conducting overseas IR activities, and we are thus promoting IR both inside and outside Japan.

Messages from Outside Directors

I will emphasize building a foundation to accomplish the new Mid-Term Management Plan.

Kazuhiro Mishina
  • Kazuhiro Mishina
  • Professor, Graduate School of Business Administration, Kobe University

The basic route for Fuji Oil was determined from the time it shifted to a holding company structure in October 2015. However, it still lacks the strong physique necessary to realize the ideal it envisioned in this transition. The new Mid-Term Management Plan looks head-on at this inadequacy and emphasizes building a foundation to rectify it.

I endeavored to correct biases in the process of formulating the plan. At points when people in the company were apt to look inward and give precedence to an internal line of reasoning, I took the liberty of interjecting my thoughts to influence them to look to regions other than Japan. It was worthwhile, as we are finally seeing a path to raising the status of operations in the United States from a manufacturing base to a business base.

The crucial point in accomplishing the new Mid-Term Management Plan will be the extent to which we can draw forth the energy and ingenuity of our key personnel. Toward that end, in FY 2016 I focused my efforts on the Nomination and Compensation Advisory Committee and worked out a new compensation system for internal directors and executive officers. More work remains to check conformity with the Companies Act and tax laws, so unfortunately implementation will be delayed to FY 2018, but I expect the new compensation system to support globalization within the company.

In FY 2017, we must make sure of our planning to inculcate the approach of the new compensation system among the employee organization. Also, we must take an in-depth look at the other half of the responsibilities of the Nomination and Compensation Advisory Committee, namely nominations. Even with the advent of the Trump administration, the trend toward globalization will not cease. I believe that Fuji Oil has no time for slacking off toward its immediate goal of securing its place within the global village.

We will promote various reforms while making efforts to promote diversity.

Noriko Taji
  • Noriko Taji
  • Professor, Faculty of Business Administration, and Graduate School of Business Administration, Hosei University

In FY 2016, we announced major reforms to overhaul the nomination and compensation system for management. It is natural for shareholders and other stakeholders to focus on these reforms, but we are also accelerating middle management and workplace reforms. The Fuji Oil Group is a food products enterprise that handles both B-to-B and B-to-C operations. Unless we increase diversity, we will not be able to create products that resonate with consumers mentally and physically. Diversity management deals not only with engaging women, disabled people and non-Japanese, but also with work-life balance for enjoying both work and personal life. Fuji Oil’s Excellence Award from the mayor of the City of Osaka as a leading company in promoting women’s empowerment was gratifying, and I have also been able to hear workplace opinions. I was surprised at the many times I was told that employees rarely quit in mid-career. In contrast to companies with dubious human resource practices, Fuji Oil shines out brightly. The number of female employees who are raising children is on the rise, and many men also attend open-participation study meetings for women. When I saw this forum where female employees working on the front lines of development, marketing and sales spoke emphatically about where they see their careers a decade from now, I was reminded of university management. Just as universities that attract female students are the ones that will survive in a society with a declining birthrate, businesses also need appealing features that attract women as new graduates and mid-career hires. The logic that leads male university students who are looking for jobs to assume "a company that is good for women will also be good for men" holds water in business. We will also work to support middle management to spur this kind of positive feedback.

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