JGC's priority management goal is to achieve sustained improvement in corporate value. To realize that goal, we need a
corporate governance system that ensures fair, transparent and efficient management in order to win and retain public trust.
JGC is also working to strengthen compliance in accordance with the values of the JGC Group, which stress upholding high
ethical principles and acting with honesty. Going forward, we will continue to engage with shareholders and investors while
also monitoring the effectiveness of the Board of Directors, designing appropriate executive remuneration systems and
We will also further enhance corporate governance to support sustained growth in corporate value in response to the Corporate Governance Code, which was revised on June 1, 2018.
Corporate Governance Framework
JGC is a company with a Board of Directors and an Audit & Supervisory Board. We have also introduced an executive officer system to clarify responsibility and authority in business execution and to improve the speed and efficiency of decision-making and business execution. To reinforce management oversight and enhance transparency, we have appointed outside directors and outside audit & supervisory board members who satisfy the criteria for independent officers. The main elements of JGC's corporate governance system are described below.
- Board of Directors
- The Board of Directors has 11 directors, including two outside directors. The Company's five audit & supervisory board members, including three outside members, also attend meetings, which are held once a month in principle.
- Audit & Supervisory Board
- The Audit & Supervisory Board has five members, including three outside audit & supervisory board members. In principle, meetings are held once a month.
- Nominating Committee and Remuneration Committee
- Outside directors sit on the Nominating Committee and the Remuneration Committee to enhance fairness and transparency in decisions related to executive appointments and compensation. In principle, the committees meet once a year.
- Operations Steering Committee
- In principle, the Operations Steering Committee meets twice a month to discuss items related to business execution by JGC and the JGC Group. The committee is made up of members appointed by the president. Audit & supervisory board members also attend meetings.
- Strategy Committee for EPC/Business Investment Projects
- In principle, the council meets once a month to discuss tender strategies related to JGC's and the JGC Group's EPC project and business investment. The council mainly comprises directors and executive officers.
- Investment and Loan Committee
- In principle, the committee meets once a month to discuss JGC's and the JGC Group's investments and loans. The committee mainly comprises directors and executive officers.
- Independent Auditor
- The certified public accountants (CPA) who audit JGC's accounts are Michitaka Shishido and Yoshinori Saito of KPMG AZSA LLC. Four other CPAs and eight other individuals assist in carrying out these audits.
Corporate Governance System
- *"-" denotes "Direct" and "Report"
Status of Internal Control System
JGC's Board of Directors determines the basic principles of the internal control system and revises them as necessary. The Internal Auditing Office monitors, evaluates and improves the effectiveness of the internal control systems of JGC and the JGC Group and conducts separate audits as necessary. We have also formulated rules assigning management authority, which regulate the duties and authority of executives and employees, resulting in clear lines of responsibility in corporate management and business execution. We have also formulated and implemented management rules for Group companies to ensure efficient and appropriate operations across the Group.
The basic principle of executive remuneration at JGC is to attract
the necessary management personnel to increase JGC's global
competitiveness as an engineering company and to deliver sustained
growth in corporate value. In line with that principle, remuneration
received by executives is decided within the limits approved at the 113th
Ordinary General Meeting of Shareholders held on June 26, 2009.
Currently, the combined upper limits are ¥690 million for directors and
¥88 million for audit & supervisory board members.
Remuneration for directors comprises fixed remuneration and performance-based remuneration. The fixed portion is determined by the position and duties of the director. The performance-based portion is paid from a total pool of up to 1 % of net income for each fiscal year and is designed to incentivize directors to improve the Company's earnings. In the mainstay EPC business, it typically takes several years for projects to be delivered from the time orders are received. Given the nature of the EPC business, we take into account medium- to long-term improvements in corporate value when evaluating operations supervised by each director and their contribution to earnings in each fiscal year. To ensure objectivity in performance evaluations, the contribution to earnings is discussed and decided by the Assessment Committee, which includes outside directors. Outside directors receive only fixed remuneration to ensure they appropriately oversee management from a standpoint that is independent of business execution.
Audit & supervisory board members also receive only fixed remuneration due to the Audit & Supervisory Board's position as an independent body overseeing the executive actions of directors to ensure the appropriate operation of the corporate governance system.
Breakdown of Executive Remuneration
- *1The figure for fixed remuneration above includes remuneration for one who stepped down at the conclusion of the 121th Ordinary General Meeting of Shareholders held on June 29, 2017.
- *2As of the end of fiscal 2017, the Board of Directors comprised 11 directors (including two outside directors) and the Audit & Supervisory Board comprised five audit & supervisory board members (including three outside audit & supervisory board members).