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Corporate Governance

In order to speed up its response to management conditions and achieve enhanced transparency in its management, Kubota has been committed to enhancing its corporate governance structure. Moreover, by building an internal control system and implementing steady improvements continuously during its business activities, Kubota not only enforces the observance of laws and regulations, but also reduces risks.

Corporate Governance Structure

Ensuring Quick Response to Management Conditions and Improving Management Transparency

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 area and workplace, and make prompt and appropriate business decisions. In addition to its regular monthly meetings, it also meets as and when required. The Representative Directors instruct the Executive Officers on policies and decisions made by the Board of Directors. The Executive Officers report to the Representative Directors 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 and Compensation Advisory Committee meet to deliberate on nominations of candidates for Directors, and the compensation system and compensation level of the Directors with appropriate involvement and advice from the Outside Directors. Since March 2021, Outside Directors have been appointed to chair each committee, to conduct committee activities in an even fairer and more transparent manner.
The Nomination Advisory Committee met three times during the fiscal year for the purpose of discussing the nomination of candidates for Directors, and the nomination of Advisors with the appropriate involvement and advice from the Outside Directors. (Including one resolution in writing.) Meanwhile, the Compensation Advisory Committee met three times during the fiscal year for the purpose of discussing both the consistency of levels of compensation paid to the Directors, Executive Officers, and Advisors, and the adequacy of the stock compensation system with the appropriate involvement and advice from the Outside Directors.
(Including one resolution in writing.)

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

Kubota Corporation elects four Outside Directors and three 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 for their suitability at 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 TSE. Kubota elects those who have no conflict of interest with ordinary shareholders accordingly.

Reasons for Appointing Outside Directors (Independent Executives)

Kubota Corporation elected Yuzuru Matsuda as an Outside Director since Kubota Corporation 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 Corporation has no business relationship with Kato Memorial Bioscience Foundation, BANDAI NAMCO Holdings, Inc., or JSR Corporation, for which Mr. Matsuda concurrently plays an important role. Kubota Corporation places him as an Independent Executive since there is no particular vested interest between Kubota Corporation and him, and there appears to be no conflict of interest with ordinary shareholders.
Kubota Corporation elected Koichi Ina as an Outside Director since Kubota Corporation wishes to receive his advice about general management based on his adequate experience and considerable insight into management which he acquired through his duties as a president, chairman, and plant and manufacturing manager in the motor vehicle industry. Kubota Corporation has a business relationship with Daihatsu Motor Co., Ltd., at which Mr. Ina started his career, but the amount arising from the above transactions for the year ended December 31, 2020 was less than 2% of total consolidated revenues of the Company. Kubota Corporation has no business relationship with Sansha Electric Manufacturing Co., Ltd. and Central Japan Industries Association, for which Mr. Ina concurrently plays an important role. Kubota Corporation places him as an Independent Executive since there is no particular vested interest between Kubota Corporation and him, and there appears to be no conflict of interest with ordinary shareholders.
Kubota Corporation elected Yutaro Shintaku as an Outside Director since Kubota Corporation wishes to receive his advice about general management based on his accomplishments in actively promoting strategy and experience which he acquired through his duties as a member of the senior management of a medical device manufacturer. Kubota Corporation has no business relationship with Terumo Corporation, at which Mr. Shintaku started his career, and Santen Pharmaceutical Co., Ltd., J-Oil Mills, Inc., Tonen International Scholarship Foundation, and Hitotsubashi University Business School, for which Mr. Shintaku concurrently plays an important role. Kubota Corporation has a business relationship with KOZO KEIKAKU ENGINEERING Inc., for which Mr. Shintaku concurrently plays an important role, but the amount arising from the above transactions for the year ended December 31, 2020 was less than 2% of total consolidated revenue of the Company. Kubota Corporation places him as an Independent Executive since there is no particular vested interest between Kubota Corporation and him, and there appears to be no conflict of interest with ordinary shareholders.
Kubota Corporation elected Kumi Arakane as an Outside Director since Kubota Corporation wishes to receive her advice about general management based on her long career at a cosmetics manufacturer serving as a Director and being in charge of various areas of business, including product development, research, quality control, and purchasing. Kubota Corporation has no business relationship with KOSÉ Corporation, at which Ms. Arakane started her career, and KAGOME Co., Ltd. or TODA CORPORATION, for which Ms. Arakane concurrently plays an important role. Kubota Corporation places her as an Independent Executive since there is no particular vested interest between Kubota Corporation and her, and there appears to be no conflict of interest with ordinary shareholders.

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

Kubota Corporation elected Masaki Fujiwara as an Outside Audit & Supervisory Board Member since Kubota Corporation 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 Corporation has no business relationship with Sansha Electric Manufacturing Co., Ltd., for which Mr. Fujiwara concurrently plays an important role. Kubota Corporation places him as an Independent Executive since there is no particular vested interest between Kubota Corporation and him, and there seems to be no conflict of interest with ordinary shareholders.
Kubota Corporation elected Yuichi Yamada as an Outside Audit & Supervisory Board Member since Kubota Corporation expects him to further enhance its auditing processes through his expert viewpoints and from an independent standpoint. Having gained extensive experience and a record of accomplishments in corporate auditing while serving at a major audit firm, he also possesses extensive expertise on auditing in general, such as through working as outside audit & supervisory board member for other companies. Kubota Corporation has no business relationship with Japan Finance Corporation, Yuichi Yamada Certified Public Accountant Firm, or Sumitomo Metal Mining Co., Ltd., for which Mr. Yamada concurrently plays an important role. Kubota Corporation places him as an Independent Executive since there is no particular vested interest between Kubota Corporation and him, and there seems to be no conflict of interest with ordinary shareholders.
Kubota Corporation elected Yuri Furusawa as an Outside Audit & Supervisory Board Member since Kubota Corporation expects her to further enhance its auditing processes through her wide experience and expert viewpoints that she acquired by working in various positions domestically and internationally as a member of central government ministries.
In addition, she has also experienced business development globally and promoted work-style reform, women’s activities, and diversity in the center of the government. Kubota Corporation places her as an Independent Executive since there is no particular vested interest between Kubota Corporation and her, and there seems to be no conflict of interest with ordinary shareholders.

Attendance Rate of Outside Executives (Jan.–Dec. 2020)

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 Masaki Fujiwara 100% Kumi Arakane 100% Yuichi Yamada 100%*
  • Outside Audit & Supervisory Board Member Yuichi Yamada attended all Audit & Supervisory Board Meetings held after his appointment in March 2020.

System Supporting Audit & Supervisory Board Members

Kubota established the Office of Audit & Supervisory Board Members and has assigned five employees to exclusively support the Audit & Supervisory Board Members in performing their duties. Those employees’ independence is ensured as their appointment and evaluation require a discussion with and consent from the Audit & Supervisory Board Members. As of March 19, 2021, Kubota places four members 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 put in place a system for prompt reporting by Audit & Supervisory Board Members on matters that may have a significant impact on management, as well as a system wherein any expenses incurred related to execution of duties by the Audit & Supervisory Board Members are to be disbursed in a timely manner.
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.

Policy for Determination of Remuneration, etc. and its Calculation Method for Directors and Audit & Supervisory Board Members

1. Basic Policy Regarding Remuneration

  • The Company aims to have a remuneration plan that achieves sustainable and stable growth in the business areas of food, water, and the environment and sharing value with shareholders.

2. Procedures for Determining Remuneration

  • To ensure fairness and transparency, remuneration is determined by the Board of Directors after it has been deliberated on in the Compensation Advisory Committee, which is composed of Outside Directors, internal Directors and the Director in charge of the Human Resources and General Affairs Department.
  • The appropriateness of the overall remuneration level is verified based on a database of management remuneration at other major domestic corporations provided by external research organizations.

3. Overview of Remuneration Plan for Directors

  • Remuneration Composition and Composition Ratios
    • The remuneration for Directors (excluding Outside Directors) consists of basic remuneration, which is set by corporate rank, variable remuneration (bonuses for Directors), which acts as a short-term incentive linked to performance in a single fiscal year, and restricted stock compensation which is regarded as a medium- to long-term incentive.
    • The composition ratios of remuneration vary according to the Director’s bonus amount and are set so that the higher the corporate rank, the higher the ratio of the Director’s bonus will be. The ratio of “basic remuneration” to “bonus” to “stock compensation” for Directors for the fiscal year will generally be 45%:40%:15%.
    • The remuneration for Outside Directors consists of basic remuneration only because of the roles they play and the need to preserve their independence.
  • Basic Remuneration
    • The Company pays basic remuneration, which is set by corporate rank. The basic remuneration is determined within the range of the maximum aggregate amount of remuneration approved at the General Meeting of Shareholders, in consideration of operating results, remuneration levels of other companies, and other factors.
  • Variable Remuneration (Bonuses for Directors)
    • The Company pays variable remuneration (bonuses for Directors), which acts as a short-term incentive linked to performance in a single fiscal year. “Profit attributable to owners of the parent,” which represents results of business activities and constitutes the capital for shareholder returns, has been adopted as the indicator used to calculate the bonus amount. After the bonus amounts for each corporate rank are decided, these amounts are adjusted according to the degree of performance achievement in organizations of which the individuals are in charge, and then approval for that variable remuneration is obtained at the Ordinary General Meeting of Shareholders.
  • Restricted Stock Compensation
    • The Company pays restricted stock compensation, which is regarded as a medium- to long-term incentive.
    • The amount of stock compensation is decided 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.
Director and Auditor Remuneration (Jan.–Dec. 2020)
Position Number of persons Total amount of compensation (millions of yen) Total amount by type (millions of yen)
Remunerations Bonuses Restricted stock compensation
Directors (excluding Outside Directors) 6 815 405 302 108
Audit & Supervisory Board Members (excluding Outside Audit & Supervisory Board Members) 2 78 78
Outside Directors 3 51 51
Outside Audit & Supervisory Board Members 3 38 38
  • The amounts of restricted stock compensation are those shown as expenses for the fiscal year ended December 31, 2020.

Training for Executives

The Company holds annual executive forums related to SDGs, human rights, health and safety, the environment, quality, and starting in the fiscal year ended December 31, 2020, also related to ICT to promote digital transformation, for all of its Directors, Audit & Supervisory Board Members, and Executive Officers.
In the fiscal year ended December 31, 2020, such forums were held online on four occasions. Visiting lecturers were brought in, etc. and those in attendance were provided with opportunities to acquire and update knowledge necessary for supervising operations.
Kubota Corporation also conducts training hosted by external organizations for all newly appointed Executive Officers, featuring content pertaining to laws and regulations, and corporate governance.
Moreover, Kubota Corporation conducts inspections and engages in discussions with on-site executives at its overseas affiliates, and at the regional offices in Japan, so that those in attendance, including Outside Directors and Outside Audit & Supervisory Board Members, can gain a deeper understanding of the Group’s business activities and make appropriate management decisions.
Outside Directors attended more meetings via the internet and exchanged various opinions at the “2025 Medium-Term Management
Plan and Long-Term Vision (GMB2030) Review Meeting,” “Discussion with Audit & Supervisory Board Members Regarding Evaluating the Effectiveness of the Board of Directors,” “Business Strategy Meeting Regarding the COVID-19 Pandemic” and other meetings.
For Audit & Supervisory Board Members, meetings attended by the President are regularly held to share management issues, and exchanges of opinion also involving Outside Directors are regularly carried out in order to improve governance.

<Results for fiscal 2020>

President’s meetings: held on four occasions with the President and all five Audit & Supervisory Board Members participating in all of them Outside Directors’ meetings: held on one occasion with all three Outside Directors and all five Audit & Supervisory Board Members participating

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., Secretary and Public Relations Dept., ESG Promotion 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 holds online briefings and takes other steps to publicize its business activities to gain greater understanding.

(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 General Manager or Deputy General Manager of Corporate Compliance and Risk Management Headquarters, General Manager of Corporate Planning & Control Dept., General Manager of General Affairs Dept., General Manager of Secretary and Public Relations Dept., General Manager of Accounting Dept., and General Manager of Corporate Auditing Dept.; and, as observers, one full-time Audit & Supervisory Board Member and one Audit & Supervisory Board Member specializing in finance.
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.