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Corporate Governance

The Company has designated “long-term and stable growth of corporate value” as its highest management priority. To realize this aim, the Company considers enhancement of the satisfaction of all the Company’s stakeholders and improvement of overall corporate value, while balancing economic value, social value, and corporate value, to be important. Especially, in order to achieve the long-term objectives of building “Global Major Brand Kubota” on the basis of its corporate philosophy “Kubota Global Identity,” the Company must be an enterprise that is trusted not just in Japan but also worldwide. In order to enhance the soundness, efficiency, and transparency of management, which are essential to earn trust, the Company is striving to strengthen its corporate governance.



Corporate Governance Structure (as of June 1, 2019)

In order to speed up its response to management conditions and achieve enhanced transparency in its management, Kubota has adopted the following corporate governance structure.

Corporate Governance Structure

Board of Directors

The Board of Directors makes strategic decisions and oversees the execution of duties by the Executive Officers. In addition to its regular monthly board meetings, it also meets as and when required to discuss and make decisions relating to management planning, financial planning, investment, business restructuring, and other important management issues.
Moreover, the Board of Directors holds a meeting once a year to report the results of risk management activities. This is done in order to verify that there are no inadequacies in the internal control system that could have a serious impact on corporate management with regards to the organization and operation of the management system for key risks identified by the Company.


Audit & Supervisory Board

Kubota is a company with an Audit & Supervisory Board, which oversees and audits the execution of duties by the Directors.
In addition to its regular monthly Audit & Supervisory Board Meetings, it is held as needed to discuss and determine auditing policy, audit reports, and other matters.


Executive Officers’ Meeting

Kubota has adopted the Executive Officer System in order to strengthen business execution by each department and make prompt and appropriate business decisions. In addition to its regular monthly meetings, it also meets as and when required. The President instructs the Executive Officers on policies and decisions made by the Board of Directors. The Executive Officers report to the President regarding the status of their execution of duties.


Management Committee and Investment Council

Kubota has a Management Committee and Investment Council in place in order to discuss and make decisions in regard to specific and important issues. The Management Committee meets to deliberate on important management matters, such as investments, loans, and mid-term management plans, before they are discussed by the Board of Directors. The Investment Council gives the President advice on matters to be decided by the President, except those deliberated by the Management Committee, as well as special matters.


Nomination Advisory Committee and Compensation Advisory Committee

Kubota has a Nomination Advisory Committee and Compensation Advisory Committee in place, in which more than half of the members are Outside Directors, to give advice to the Board of Directors.
The Nomination Advisory Committee discussing the nomination of new candidates for Directors, the reappointment of existing Directors, and the nomination of specially appointed advisers. Meanwhile, the Compensation Advisory Committee discussing both the consistency of levels of compensation paid to the Directors, Executive Officers, and specially appointed advisers, and the adequacy of the stock compensation plan with appropriate involvement and advice from the Outside Directors.


Policy for Appointing Outside Directors and Outside Audit & Supervisory Board Members

In selecting candidates for the positions of the Outside Directors and the Outside Audit & Supervisory Board Members, Kubota considers experience outside Kubota, professional insight, and other qualifications, and makes recommendations on them to the General Meeting of Shareholders after approval by the Board of Directors.
Kubota established policies related to criteria for independence when electing the Outside Directors by reference to the rules for Independent Executives defined by the Tokyo Stock Exchange(hereinafter the “TSE”). Kubota elects those who have no conflict of interest with ordinary shareholders accordingly.


Reasons for Appointing Outside Directors (Independent Executives)

Kubota elected Mr.Yuzuru Matsuda as an Outside Director since Kubota wishes to receive his advice about general management based on his adequate experience and considerable insight in management which he acquired through his duties as the long-time president of a listed company. Kubota places him as an Independent Executive since having satisfied requirements for an independent officer as stipulated by the TSE and requirements of the independence criteria set forth by the Company. And there appears to be no conflict of interest with ordinary shareholders.
Kubota elected Mr.Koichi Ina as an Outside Director since Kubota wishes to receive his advice about general management based on his adequate considerable insight into management which he acquired through his duties as a president, chairman, and plant and manufacturing manager in the automotive manufacture. Kubota places him as an Independent Executive since having satisfied requirements for an independent officer as stipulated by the TSE and requirements of the independence criteria set forth by the Company. And there appears to be no conflict of interest with ordinary shareholders.
Kubota elected Mr.Yutaro Shintaku as an Outside Director since Kubota wishes to receive his advice about general management based on his experience and a record of accomplishments at having actively promoted grobal strategy acting as management of a medical device manufacturer. Kubota places him as an Independent Executive since having satisfied requirements for an independent officer as stipulated by the TSE and requirements of the independence criteria set forth by the Company. And there appears to be no conflict of interest with ordinary shareholders.


Reasons for Appointing Outside Audit & Supervisory Board Members (Independent Executives)

Kubota elected Mr.Masaki Fujiwara as an Outside Audit & Supervisory Board Member since Kubota expects him to further enhance its auditing procedures during this period of further global advancement of the Company. Having served in key administrative and executive roles at Panasonic Corporation and its subsidiaries and affiliated companies, he has both considerable knowledge relating to administration and corporate accounting, and a good feel for global business through his long-standing experience stationed overseas. Kubota places him as an Independent Executive since having satisfied requirements for an independent officer as stipulated by the TSE and requirements of the independence criteria set forth by the Company. And there seems to be no conflict of interest with ordinary shareholders.
Kubota elected Ms.Kumi Arakane as an Outside Audit & Supervisory Board member since Kubota wishes her to further enhance its auditing procedures based on her long career at KOSE Corporation serving as a Director and being in charge of various areas of business, including product development, research, quality control, and purchasing. Ms. Arakane has also a high level of knowledge regarding business execution and company management, and as she currently serves as an Audit & Supervisory Board Member of KOSE Corporation; she is also well versed in those duties. Kubota places her as an Independent Executive since having satisfied requirements for an independent officer as stipulated by the TSE and requirements of the independence criteria set forth by the Company. And there seems to be no conflict of interest with ordinary shareholders.


Attendance Rate of Outside Executives (Mar. 2018–Feb. 2019)

Attendance rate of Outside Directors at Board of Directors' meetings Yuzuru Matsuda 100% Koichi Ina 100% Yutaro Shintaku 100%
Attendance rate of Outside Audit & Supervisory Board
Members at Audit & Supervisory Board meetings
Akira Morita 100% Teruo Suzuki 100% Masaki Fujiwara 100%

System Supporting Audit & Supervisory Board Members

Kubota established the Office of Audit & Supervisory Board Members and has assigned employees to exclusively support the Audit & Supervisory Board Members in performing their duties. Those employees’ independence is ensured as the employees’ appointment and evaluation require a discussion with and consent from the Audit & Supervisory Board Members.
Kubota places in the Office of Audit & Supervisory Board Members, to engage in audits exclusively for subsidiaries in order to provide support for Kubota’s Audit & Supervisory Board Members and improve internal control over the Kubota Group. Also, Kubota maintains a system which facilitates disbursement of expenses incurred related to execution of duties by the Audit & Supervisory Board Members.
Internal audit departments and the Independent Auditors of Kubota report audit plans and the results of audits to the Audit & Supervisory Board Members periodically, and as needed collaborate with each other.


Compensation of Directors and Audit & Supervisory Board Members

At the Meetings of the Board of Directors, the basic remuneration for the Directors is determined within the range of the maximum aggregate amount of remuneration approved at the General Meeting of Shareholders after it has been deliberated on in the Compensation Advisory Committee in consideration of the Company’s operating results, compensation levels of other companies, and other factors.
In addition, the total amount of bonuses for the Directors is decided by the General Meeting of Shareholders. The amount of stock compensation is determined at the Meetings of the Board of Directors after being deliberated on in the Compensation Advisory Committee, within the limits established by the total amount of the monetary compensation claims and the total number of common shares to be issued or disposed of as approved at the General Meeting of Shareholders.
Compensation for the Audit & Supervisory Board Members consists solely of basic remuneration in the light of their role and independency. Their compensation is determined upon consultation among the Audit & Supervisory Board Members within the range of the maximum aggregate amounts of compensation approved at the General Meeting of Shareholders in consideration of the roles of the respective Audit & Supervisory Board Members.


Directors and Audit & Supervisory Board Members Remuneration (Jan.–Dec. 2018)
Position Number of
persons
Total amount of
compensation
(million yen)
Total amount by type (million yen)
Remunerations Bonuses Restricted stock
compensation
Directors (excluding Outside Directors) 8 676 350 260 66
Audit & Supervisory Board Members (excluding
Outside Audit & Supervisory Board Members)
3 72 72
Outside Directors and Outside Audit &
Supervisory Board Members
6 74 74

Training for Executives

To provide opportunities to acquire and update knowledge necessary for supervising operations, Kubota holds annual executive forums led by visiting lecturers for all Directors, Audit & Supervisory Board Members and Executive Officers. (A total of three forums were held in FY2018 on themes of CSR, human rights, and safety/environment/quality.)
Kubota conducts training hosted by external organizations for all newly appointed Executive Officers, featuring content pertaining to laws and regulations, and corporate governance. For Outside Directors, Kubota conducts inspections and engages in discussions with on-site executives at its overseas affiliated companies and subsidiaries, and regional offices in Japan, so that those in attendance can gain a deeper understanding of the Group’s business activities and make appropriate management decisions. (Inspections held in FY2018: North America Site, China Site, Thailand Site, Europe Site, agricultural machinery exhibition in Europe, Kubota exhibition in Japan, etc.)
For Audit & Supervisory Board Members, management issues are shared at periodic meetings with the President. Also, opinion exchange meetings are held periodically with Outside Directors to improve governance. (Meetings with the President were held a total of four times, and meetings with Outside Directors were held a total of four times in FY2018.)


Themes of the Forums for FY2018 and the Attendance of Executives
Date Title of forum Theme No. of attending
executives
May 22, 2018 CSR Forum Water, Food and the Environment, and SDGs 32
August 21, 2018 Human Rights Training Roles that each individual should play in fostering a safetyconscious corporate culture 32
November 20,
2018
Safety, Environment and
Quality Forum
“Safety, the environment, and quality are the basis of corporate activity: that’s what management is all about”? Practical activities to help strengthen corporate culture ? Manufacturing is development of people 29

Policy for Constructive Dialogue with Shareholders

Kubota, recognizing that constructive dialogue with shareholders and investors contributes to the improvement of the Company’s sustainable growth and medium- to long-term corporate value, regularly stays abreast of the shareholder composition, makes timely and appropriate disclosure of a wide range of information ranging from financial information to non-financial information and promotes constructive dialogue with shareholders and investors. The policies for development of systems and operations for this activity are as follows.


  1. Basic policy
    • The Company holds briefings where the President and General Manager of Planning & Control Headquarters present the basic management policy, priority measures, and results of operation, with the aim of promoting constructive dialogue with domestic and foreign institutional investors. Furthermore, the Company promotes two-way communication, such as timely disclosure to all stakeholders including individual investors through active use of the Company website and executing questionnaire surveys.
  2. IR organizational structure
    • The General Manager of Planning & Control Headquarters is in overall charge of directing and promoting IR. The department in charge of IR plays a central role in developing its IR activities through organic coordination with each related department, such as Corporate Planning & Control Dept., Accounting Dept., Corporate Communication Dept., CSR Planning Dept., General Affairs Dept. and Legal Dept.
  3. Feedback to management
    • Subjects of dialogue with investors are reported back to the Board of Directors, the Executive Officers’ Meeting, and relevant departments by the President and General Manager of Planning & Control Headquarters as necessary.
  4. Dialogue with institutional investors and analysts
    • The Company holds individual and group meetings, product exhibitions and briefings on business operations, and results briefings with institutional investors and analysts. In addition, the Company discloses the results materials and the results briefings materials in both English and Japanese at the same time, and regularly holds tours and briefings on business operations in Japan and overseas.
  5. Dialogue with individual shareholders and investors
    • The Company aims to promote lively communication through such means as holding on-site factory tours for individual shareholders and inviting them to product exhibitions.
      Also, in addition to holding company information sessions for individual investors to provide an opportunity for the President and individual investors to directly engage in dialogue, the Company also works on public relations to improve understanding of the Company’s business activities through such activities as exhibiting in investor forums.
  6. Policy for insider information management when engaging in dialogue
    • Insider information, such as any undisclosed material facts, is not conveyed at the meetings with investors. The following section describes the structure and procedures regarding the timely disclosure of the Company information.
    1. Financial Information Disclosure Committee
      The Company has established the Financial Information Disclosure Committee so as to monitor and control financial information disclosure and, thereby, ensure its fairness, correctness, timeliness, and comprehensiveness. The committee consists of a committee chairperson, who is General Manager of Planning & Control Headquarters; committee members, who are Deputy General Manager of CSR Planning & Coordination Headquarters, General Manager of Corporate Planning & Control Dept., General Manager of General Affairs Dept., General Manager of Corporate Communication Dept., General Manager of Accounting Dept., General Manager of Global Management Promotion Dept., and General Manager of Corporate Auditing Dept.; and observers, who are full-time Audit & Supervisory Board Members. The committee meets periodically in order to draft and assess the Annual Securities Reports (“Yukashoken Hokokusho”) and the Quarterly Reports (“Shihanki Hokokusho”) pursuant to the Financial Instruments and Exchange Act. And the committee also meets in response to extraordinary events such as important decisions and material facts that must be disclosed immediately.
      In accordance with the intent and meaning of fair disclosure rules set out in the Financial Instruments and Exchange Act, the Company takes all reasonable care to avoid selective disclosure of information, such as by simultaneously releasing Japanese and English versions of results briefing materials with attached explanations and the minutes of question-and-answer sessions via the corporate website, and by working to enhance the timely and fair disclosure of information in order to promote proactive dialogue with investors.
    2. Company regulations for information disclosure
      The Company has declared that “The Kubota Group makes appropriate and timely disclosure of corporate information and fulfills its responsibilities for transparency and accountability in corporate activities” in the “Kubota Group Charter for Action” and has stipulated “Appropriate and Timely Disclosure of Corporate Information” and “Prohibition of Insider Trading” in the “Kubota Group Code of Conduct.” The Company strives to promote awareness and ensure thorough efforts in regard to the “Kubota Group Code of Conduct” and prevention of insider trading before it occurs through conducting education tailored to each management level within the Company.

Related Information

Kubota's research and development values thorough hands-on approach. As an agricultural and water expert, we challenge and attain the future of food, water, and the environment, realizing our customer's needs.

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