Corporate Governance Measures

Basic Policy

The Shimadzu Group is working to establish and improve systems for ensuring corporate governance, which is considered a core basis of corporate management.
Corporate governance provides a basis for achieving management transparency and fairness, and enabling quick and bold decision-making and measures to increase the vitality of management.
The Corporate Governance Policy (hereinafter “CG Policy”) was established in December 2015 as a declaration of Shimadzu’s stance regarding actually implementing the Corporate Governance Codes (hereinafter “CG Codes”) in practice. In addition to improving corporate governance measures, Shimadzu is also committed to improving the effectiveness of governance practices by periodically reviewing the CG Policy with respect to changes in the circumstances of such measures or external conditions.

Corporate Governance Policy

  1. Appropriate Cooperation with Stakeholders
  2. Securing the Rights and Equal Treatment of Shareholders
  3. Ensuring Appropriate Information Disclosure and Transparency
  4. Dialogue with Shareholders
  5. Responsibilities of the Board of Directors, etc.

Corporate Governance Measures

With regard to the CG Code, we continue to be fully compliant with all Basic Principles, Principles, and Supplementary Principles, including items applicable only to the prime market.
Shimadzu’s major corporate governance initiatives for FY 2022 are as follows.

CG Policy

CG Report

Implementing Sustainability Management Initiatives

Under the Shimadzu Group Sustainability Charter and the Sustainability Management Implementation Policy, KPIs have been set for each department, and the Group’s sustainability management initiatives have begun to be fully implemented.
As part of these efforts, in May 2022, we revised the existing Corporate Code of Ethics and established the Shimadzu Group Corporate Code of Ethics as common rules for the entire Group in order to ensure thorough legal compliance and further improve corporate ethics throughout the Shimadzu Group. Shimadzu has also compiled a “Shimadzu Group Corporate Ethics Code of Conduct Handbook” that outlines the code of conduct that all Shimadzu Group employees must follow in their day-today work in order to spread awareness of corporate ethics and compliance throughout the Group.
Furthermore, in June 2022, we established the Regulation for Sustainability Management of SHIMADZU Group to clarify the framework and organizational structure for promoting initiatives related to sustainability management.
The Shimadzu Group Sustainability Meeting is now positioned as the highest deliberative body for sustainability management and promotes Shimadzu Group-wide efforts for sustainability management, including the existing Risk Management and Corporate Ethics Board and Environmental Meeting.

Expanded Goal-Setting for Diversity

With respect to ensuring diversity of core human resources, targets have been set and announced for foreign nationals and mid-career hires in addition to the previously announced targets for female managers. Target values for each item are as follows.

Ensuring Diversity among Core Human Resources (Managers) (Non-Consolidated Targets)

  FY 2026 FY 2030
Female More than 6% or more than 60 people More than 12% or more than 90 people
Foreign investors 3 or more 5 or more
Mid-career hires More than 20% or more than 180 people More than 23% or more than 200 people

Strengthening Group Governance

In February 2023, we established the “Shimadzu Group Management Basic Regulation” to set forth our basic approach to group management and guidelines to be followed. In this way, the Shimadzu Group is working together to establish a system that ensures appropriate and efficient group management for sustainable growth.

Criteria for Independence of Outside Directors and Audit & Supervisory Board Members

If none of the following apply, Outside Directors and Outside Audit & Supervisory Board members (including candidates) shall have independence from Shimadzu, with no risk of a conflict of interest with general shareholders.

(1)  Major supplier of Shimadzu (a company that received payments from Shimadzu equivalent to 2% or more of their annual consolidated sales revenue during the previous fiscal year) or an executive officer of that company
(2)  Major customer of Shimadzu (a company that paid Shimadzu the equivalent of 2% or more of Shimadzu’s annual consolidated sales revenue during the previous fiscal year) or an executive officer of that company
(3)  Consultant, accounting expert, or legal expert (including persons affiliated with a corporation, association, or other organization that received applicable assets) who receives any large monetary or asset compensation from Shimadzu other than the designated director compensation (monetary or asset compensation equivalent to 10 million yen or more, excluding the director compensation, received during the previous fiscal year)
(4)  Persons for which any of the conditions (1) to (3) applied within the past year
(5)  Relatives within a second-degree kinship to a person indicated in 1. to 3. below (excluding those without significance).
  1. A person indicated in (1) to (4)
  2. An executive officer of a Shimadzu subsidiary (including directors who are not executive officers when Outside Audit & Supervisory Board members are assigned as independent directors)
  3. A person that served as an executive officer indicated in 2. or as a Shimadzu executive officer within the last year (including directors who are not executive officers when Outside Audit & Supervisory Board members are assigned as independent directors)

Appointment and Compensation Committee

Shimadzu established the Appointment and Compensation Committee as an optional advisory body to the Board of Directors for the purpose of strengthening the independence, objectivity, and accountability of the Board of Directors.
This committee resolves and deliberates on matters related to appointments and compensation in accordance with the committee rules. During the fiscal year under review, the committee’s specific deliberations included the items in the table below. The committee met six times during FY 2022.

■Main Activities of the Appointment and Compensation Committee during the Last Fiscal Year

Appointment Activities
  • Policy for the next structure of corporate officers
  • Succession Plan for the next president and CEO
  • Candidates for outside directors
  • Executive changes
Compensation Activities
  • Fixed compensation and short-term performancelinked compensation for the current fiscal year
  • Executive compensation matters and revisions

Evaluating the Effectiveness of the Appointment and Compensation Committee

In addition to evaluating the effectiveness of the Board of Directors, a survey about the effectiveness of the Appointment and Compensation Committee has been conducted annually since 2019, the year after the committee was established.
Survey questions primarily involve (1) training plan for CEO successors, (2) incentives for managers, (3) committee operation, and (4) implementation of expected roles and responsibilities of the Committee. Evaluation results have been generally positive.

Composition of Appointment and Compensation Committee

The Appointment and Compensation Committee is composed of Representative Directors and Outside Directors, with a majority of the members Outside Directors. In principle, the chairperson is an independent outside director, thereby enhancing independence regarding appointment and compensation.

Name Appointment and Compensation Committee
Outside Directors 4
Internal Directors 2
Members 6

Members of the Appointment and Compensation Committee

Chairman:  :  Hiroko Wada (Outside Director)
Members  :  Nobuo Hanai (Outside Director)
Yoshiyuki Nakanishi (Outside Director)
Nami Hamada (Outside Director)
Teruhisa Ueda (Representative Director, Chairman of the Board)
Yasunori Yamamoto (President & CEO)

Policy on Method for Deciding Director and Audit & Supervisory Board Member Compensation

Shimadzu’s executive compensation regulations stipulate the procedures for determining the compensation of directors, Audit & Supervisory Board members, and executive officers with specific duties, as well as the compensation structure. In addition, a“ Policy on Method for Deciding Director and Audit & Supervisory Board Member Compensation” is also established upon resolution by the Board of Directors based on the deliberations and reports of the Appointment and Compensation Committee.
Compensation for Directors and executive officers with specific duties is decided by Appointment and Compensation Committee members appointed by the Board of Directors within the range decided at the Annual Shareholders’ Meeting. The results are then reported to the Board of Directors. Compensation for Audit & Supervisory Board members is decided through discussion with the Audit & Supervisory Board members.

Director and Audit & Supervisory Board Member Compensation System

Compensation for directors (excluding outside directors) and executive officers with specific duties (collectively referred to as“ Director or Officer” below) comprises a fixed base compensation amount plus a variable amount linked to variations in short-term performance and stock compensation linked to variations in medium-/long-term performance, while also taking into consideration the management duties of the Director or Officer with respect to expanding our business results during each fiscal year and increasing medium- and long-term corporate value.
Compensation for Outside Directors only includes a fixed compensation amount, and compensation levels are decided based on the expected roles and duties of each Outside Director.
Compensation for Audit & Supervisory Board members only includes a fixed compensation amount decided based on their expected roles and duties.

Classification Directors
Audit &
Fixed Compensation From the perspective of deciding compensation based on objective information, while also providing a level that is sufficient to enable recruiting talented human resources, compensation is decided based on the candidate’s current position and intended role, using the compensation offered by similar companies (group of benchmark companies of a similar size and in a similar type of business), to be determined by a survey performed by an outside specialist company, as an important reference level.
Short-Term Performance-Linked Compensation Compensation is decided based on overall consideration of the year-on-year growth rate of consolidated net sales and operating income, an evaluation of the performance of the specific department the executive officer with specific duties is in charge of, and a personal evaluation.
Medium-/Long-Term Performance-Linked Stock Compensation For directors, for example, the number of shares provided for each position is decided in the final year of the medium-term management plan based on the degree to which specified performance targets were achieved. Compensation can vary within the 50 to 200% range, given the target achievement degree is determined based on target values for consolidated net sales and operating income as performance indicators. If a director or other employee commits a serious violation of their job duties or company regulations, they will forfeit their right to benefit from scheduled issues of stock and a system is established to charge a monetary amount equivalent to the stock value provided.

■Director and Audit & Supervisory Board Member Compensation Status (FY 2022)

Classification Number of Applicable Directors and Audit & Supervisory Board Members Fixed Compensation (million yen) Compensation Linked to Performance (million yen) Total (million yen)
Compensation Linked to Short-Term Performance Stock Compensation Linked to Medium-/Long-Term Performance2 Recorded as Expense
Directors (Internal) 6 197 167 8 372
Audit & Supervisory Board Members (Internal) 2 53 - - 53
Outside Directors 4 46 - - 46
Outside Corporate Auditors 2 20 - - 20
Total 14 316 167 8 492

Board of Directors

Activities of the Board of Directors

The Board of Directors discusses, resolves, and reports on important matters in accordance with laws and regulations, the Articles of Incorporation, and the rules of the Board of Directors. The following is a summary of specific matters considered by the Board of Directors during the fiscal year under review, other than items related to the Companies Act and the Corporate Governance Code.

Major Matters Discussed by the Board of Directors during the Last Fiscal Year

  • Review of performance targets for the Medium-Term Management Plan (FY 2020-FY 2022)
  • Formulation of the new Medium-Term Management Plan (FY 2023-FY 2025)
  • Acquisition of Nissui Pharmaceutical Co., Ltd.
  • Shimadzu’s response to the report from the external investigative committee on the inappropriate conduct of Shimadzu Medical Systems Corporation in relation to the maintenance and inspection of X-ray systems
  • Establishing Regulation for Sustainability Management of SHIMADZU Group
  • Establishing Shimadzu Group Management Basic Regulation
  • Disclosure of human capital information
  • Shimadzu’s business in Russia
  • Impact of limited availability of parts and materials

Evaluating the Effectiveness of the Board of Directors

Every year, we analyze and evaluate the effectiveness of the directors and auditors who make up the Board of Directors. For this year’s evaluation we conducted individual interviews with all directors and corporate auditors in cooperation with an external research organization, as well as the traditional questionnaire survey. Based on these results, the Board of Directors held discussions focusing on areas in need of improvement. The following is a summary of the results of the effectiveness evaluation based on discussions at the Board of Directors meetings.

The findings were generally positive. The Board of Directors takes necessary and sufficient action to engage in deliberations on medium-term management plans and M&A projects. In addition, a notable strength of Shimadzu’s Board of Directors that deserves special mention is that it maintains an atmosphere in which outside directors can freely express their opinions and discuss issues from a variety of perspectives. On the other hand, since expectations for the Board of Directors are increasing significantly under the Corporate Governance Code, there are challenges in the selection of materials and agenda items to ensure effective discussions, and efforts to improve this will continue.

Criteria for Evaluating Effectiveness FY 2022 (Applicable year: FY 2021)
Composition of the Board of Directors Although the size of the Board of Directors (12) and its composition (half being outside directors) were positively rated, we will continue to discuss the composition of the Board so that it will contribute to monitoring strategy and strengthening governance. In addition, we will increase opportunities for discussion between our Executive and Board members in order to deepen the Board’s discussions and better facilitate business operations.
Operation of Board of Directors Meetings The evaluation showed that there is room for improvement in the allocation of time for discussions. There is a need to ensure effective discussion based on concise materials that clarify the discussion points, and to allow more time to discuss important items on the agenda.
Roles and Responsibility of the Board of Directors The evaluation showed that the roles and responsibilities of the Board of Directors are being adequately fulfilled. Monitoring of business strategy and M&A deals, group governance, and risk management were identified as themes that require continued focus. We will continue to work on these as important themes.
Self-Assessment by Directors All directors were aware of their expected roles and engaged in lively discussions, drawing on their diverse backgrounds, resulting in a positive rating.
Support for and Cooperation with Directors and Audit & Supervisory Board Members Adequate sharing of information and awareness between outside directors and corporate auditors is being carried out appropriately. Opportunities for candid exchange of opinions between outside directors and accounting auditors, which was an issue last year, have been improved, and cooperation with the internal audit department was also assessed positively.
Dialogue with Shareholders and Investors The assessment indicated that there are issues in providing information to outside directors regarding the company’s dialogue with institutional investors. We will promote the sharing of information on IR activities on the executive side and ensure that outside directors and institutional investors have opportunities to meet.

Review of Issues and Efforts to Address Last Year’s Items of Concern

Cooperation between outside directors and accounting auditors has improved. The medium-term management plan was evaluated positively after careful discussion of the phases of the plan. In the future, we will work to prepare materials with clear talking points for more efficient discussions.


1.Policy on Cross-Shareholdings

Shimadzu holds stocks that Shimadzu judges will result in increasing medium- and long-term corporate value, from a management strategy perspective. Each year, the Board of Directors verifies the appropriateness of holdings, by confirming whether the overall scale of cross-shareholdings is appropriate and then confirming whether the holdings of individual stocks are appropriate for the given objectives for holding the respective stocks and whether the benefits and risks from holding the stocks are commensurate with the corresponding cost of capital and other factors. Holdings of stocks not consistent with the crossshareholding policy will be reduced. During the Board of Directors meetings held during FY 2022, the board confirmed the qualitative significance of holding each stock and quantitative aspects of each stock, such as a comparison of total shareholder return versus cost of capital. As a result of this verification, the Company sold those stocks for which the significance of holding was deemed as not necessarily sufficient during the fiscal year ended March 31, 2023.

2.Stocks Held by Shimadzu for Reasons other than Net Investment Purposes

As of March 31, 2023, the number of stocks held for purposes other than net investment was 1.9% of consolidated total assets and 2.8% of consolidated net assets. The number and value of stocks included on the consolidated balance sheet are indicated below.

Number of Stocks(Stock types)

  FY 2019 FY 2020 FY 2021 FY 2022
Unlisted Stocks 30 30 30 30
Stocks Not Unlisted 36 30 24 22

Value of Stocks Included on Balance Sheet(Million yen)

  FY 2019 FY 2020 FY 2021 FY 2022
Unlisted Stocks 525 519 612 1,530
Stocks Not Unlisted 10,418 11,907 11,405 10,426

3.Shareholder Voting Criteria

Shimadzu exercises voting rights for all crossshareholdings subject to a vote if it is judged that doing so would increase shareholder value. To ensure we exercise our voting rights appropriately, we check the content of each proposal being voted on based on decision criteria specified for each proposal, such as appropriation of retained earnings, appointment of directors or Audit & Supervisory Board members, or establishment of measures to defend against a takeover. For issues involving particularly serious concerns, such as a social scandal, we consider our vote very carefully.

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